Sustainable Steel Market - Global Forecast 2026-2032

The Sustainable Steel Market size was estimated at USD 9.11 billion in 2025 and expected to reach USD 10.03 billion in 2026, at a CAGR of 10.63% to reach USD 18.48 billion by 2032.

Steel is an indispensable component of modern society, yet it accounts for approximately 8 percent of global carbon dioxide emissions, making decarbonization of steelmaking a critical climate priority. In 2023, the industry emitted roughly 1.92 tonnes of CO₂ for every tonne of crude steel produced, underscoring the urgent need for cleaner production processes.

Against this backdrop, a convergence of investor demand, regulatory pressures, and technological breakthroughs is driving a profound transformation. Companies and policymakers are aligning on ambitious net-zero commitments, while emissions-intensive blast furnace methods are being challenged by lower-carbon alternatives. As the industry moves toward a more sustainable future, stakeholders must navigate complex trade-offs between cost, scalability, and environmental impact to remain competitive and responsible.

The steel sector’s decarbonization journey has been propelled by a wave of green technologies that promise substantial carbon reductions. Green hydrogen-based direct reduced iron (DRI) plants, coupled with electric arc furnaces (EAFs), are displacing traditional coke-fired blast furnaces, slashing CO₂ emissions per tonne of steel by up to 70 percent compared to conventional methods.

Simultaneously, modular electrolytic production routes---notably low-temperature electrolysis and molten oxide electrolysis (MOE)---have progressed from pilot phases to the cusp of commercialization. The successful SIDERWIN trial and Electra’s commercial-scale LTE units demonstrate the potential to decarbonize production cost-effectively by the end of this decade.

Policy mechanisms are reinforcing these technological shifts. The European Union’s Carbon Border Adjustment Mechanism (CBAM) and the Steel and Metals Action Plan are incentivizing lower-carbon imports and underpinning investments in cleaner steel. However, in the United States, federal support remains in flux, and energy cost volatility continues to shape strategic decisions for new facility projects.

Since the initial imposition of 25 percent Section 232 tariffs in 2018, U.S. policy has aimed to shield domestic steel producers from global excess capacity, seeking to bolster national security and industrial resilience. However, exemptions and alternative agreements with key trading partners diluted these measures until March 2025, when all exclusions were terminated, reinstating a uniform ad valorem rate across major suppliers.

In June 2025, the U.S. administration raised steel tariff rates to 50 percent, while maintaining a 25 percent rate for imports from the U.K. pending the status of new economic agreements. This adjustment was designed to further insulate domestic producers and encourage onshore investment, as capacity utilization had risen above the 80 percent target after the 2018 tariffs.

According to the United States International Trade Commission, the cumulative effect of Section 232 measures reduced covered steel imports by 24 percent and increased domestic steel production by 1.9 percent. Import price increases of 22.7 percent were nearly fully passed through to U.S. buyers, elevating average domestic steel prices by 0.7 percent annually.

Despite these domestic gains, downstream industries endured significant cost pressures. From 2018 to 2021, construction and automotive segments alone absorbed an annual $3.4 billion reduction in output, as higher steel prices rippled through building, transport, and manufacturing value chains.

The sustainable steel market can be dissected by product type, analyzing how flat steel, long steel, rebar steel, and structural steel each present unique decarbonization challenges and opportunities. Flat steel, critical for automotive body panels and appliances, benefits most directly from electric arc furnace recycling, whereas structural steel used in construction often relies on integrated mill processes that are now incorporating hydrogen DRI to meet emission targets.

Production technology segmentation reveals a clear divide between electric arc furnace-based facilities, which recycle scrap with lower energy intensity, and emerging molten oxide electrolysis units, which promise zero-carbon primary production. Supply chains are adapting to support both scrap collection systems and new power infrastructure for electrolytic plants.

Material grade segmentation highlights the divergent decarbonization pathways for alloy, carbon, HSLA, and tool steels. High-strength low alloy and tool steels, with their high alloy content, incur higher emissions in conventional processes, making them prime candidates for breakthrough technologies such as hydrogen reduction and advanced welding techniques that minimize post-production machining.

Application segmentation spans building and infrastructure, household appliances, industrial equipment manufacturing and packaging, medical devices, and transport systems. Infrastructure projects---from bridges to pre-engineered buildings---are increasingly specifying low-carbon steel, while equipment manufacturers are seeking higher consistency in scrap-derived EAF coils to maintain performance standards.

End-user industry segmentation underscores that automotive, construction, electronics, and healthcare sectors are each driving demand for greener steel. Automotive OEMs are forging long-term offtake agreements for hydrogen-DRI steel, builders are integrating carbon-intensity tracking in procurement, electronics manufacturers are requiring certified low-emissions material, and healthcare equipment suppliers are exploring sterilizable recycled steel alloys for surgical tools.

In the Americas, the United States stands out with an electric arc furnace share exceeding 70 percent of production, supported by clean energy incentives under the Inflation Reduction Act. Canada and Mexico are likewise expanding scrap-based capacities, yet they remain sensitive to U.S. tariff policies and cross-border trade dynamics.

The Europe, Middle East & Africa region is pioneering green hydrogen DRI deployment, exemplified by Sweden’s Hybrit project and Spain’s Hydnum Steel investment. The EU’s CBAM and the UK’s evolving carbon leakage consultations are driving local producers to ramp up low-carbon output while foreign suppliers adapt to new border measures.

Asia-Pacific faces the dual pressures of China’s coal-heavy blast furnaces and India’s rapid capacity expansion. China must curb over 90 million tonnes of coal-based output to align with 2025 climate targets, while India’s unconstructed capacity growth presents a timely opportunity to pivot toward electric arc furnaces and hydrogen-DRI early in the build-out phase.

Nucor has emerged as a sustainability leader by setting Science-Based Emissions Targets certified by the Global Steel Climate Council, pledging to reduce hot-rolled steel emissions across Scopes 1, 2, and 3 to 0.975 tonnes of CO₂ per tonne by 2030 and achieving net zero by 2050. Its 24 electric arc furnaces already utilize nearly 80 percent scrap feedstock, positioning the company at one-third the emissions intensity of traditional integrated mills.

SSAB, in partnership with LKAB and Vattenfall under the Hybrit consortium, rolled the world’s first fossil-free steel in 2021 and recently commissioned a large-scale hydrogen storage facility, reducing hydrogen production costs by 25-40 percent. This breakthrough underpins the viability of hydrogen-DRI at commercial scale and sets a benchmark for other European producers.

ArcelorMittal and POSCO are similarly expanding their low-carbon portfolios by retrofitting blast furnaces with hydrogen injection capabilities and constructing new EAF capacities. Both firms have announced multi-billion-dollar investments in green hydrogen projects, aiming to produce millions of tonnes of DRI steel annually by 2030.

Innovators such as Electra and Boston Metal are advancing electrolytic routes to steel, with Electra building commercial-size low-temperature electrolysis units and Boston Metal demonstrating high-value metal production via molten oxide electrolysis. These modular technologies promise scalability and cost reductions, attracting strategic investments from established steelmakers.

Industry leaders should prioritize integrated decarbonization roadmaps that marry near-term emissions reductions with long-term technology adoption. This entails maximizing scrap use through electric arc furnace expansions while securing renewable power off-take agreements to ensure stable, low-carbon electricity for EAF operations.

Concurrently, corporations must engage in strategic partnerships across the hydrogen and electrolyzer value chains, collaborating with energy providers, equipment manufacturers, and research institutions to de-risk project development and accelerate deployment timelines. Joint ventures can unlock economies of scale for critical components like electrolyzers and hydrogen storage systems.

Moreover, companies must refine carbon accounting frameworks and transparent material labeling to satisfy evolving regulatory mandates and customer demands under CBAM and other border adjustments. Implementing digital traceability solutions will strengthen market positioning and support premium pricing for certified low-carbon steel products.

Finally, steelmakers should cultivate long-term supply agreements with key end-user industries, aligning material specifications with automakers, builders, and consumer goods firms pursuing sustainability targets. Such offtake arrangements underpin project finance models for green steel facilities and facilitate predictable revenue streams.

This research synthesizes insights from a robust combination of primary and secondary sources. Primary data were gathered through in-depth interviews with industry executives, policymakers, and technology developers, ensuring diverse perspectives across the value chain. Secondary information was extracted from authoritative publications including international agency reports, peer-reviewed studies, regulatory filings, and financial disclosures.

Quantitative data were triangulated across multiple databases to validate production volumes, technology deployments, and tariff impacts. Trend analyses employed time-series data to discern shifts in capacity utilization, trade flows, and emissions intensities. Qualitative insights complemented these findings, illuminating strategic rationales and operational challenges faced by market participants.

The methodology also included scenario modeling to assess the potential uptake of green hydrogen, electrolysis, and recycling routes under varying policy and economic conditions. All findings underwent peer review by subject-matter experts to ensure accuracy, relevance, and impartiality. The result is a comprehensive, evidence-based perspective on the sustainable steel landscape as of mid-2025.

The sustainable steel transition represents both a formidable challenge and a transformative opportunity for industry leaders. As emissions regulations tighten and customer expectations evolve, the ability to deploy lower-carbon technologies at scale will define the competitive landscape.

This executive summary has outlined the major technological, policy, and market forces reshaping the sector through 2025, highlighting how green hydrogen DRI, advanced electrolysis, and scrap-based EAFs are converging to drive significant decarbonization. Regional narratives demonstrate that tailored strategies are essential, with each market facing distinct regulatory and resource contexts.

Strong partnerships, transparent carbon accounting, and proactive engagement with end-users will underpin successful decarbonization pathways. By acting decisively on the insights and recommendations herein, steel producers and their stakeholders can secure resilient growth while contributing to global climate objectives.

If you are ready to deepen your understanding of the sustainable steel market and gain access to exhaustive data, strategic frameworks, and expert analyses, please reach out to Ketan Rohom, Associate Director of Sales & Marketing. He can provide tailored guidance on report customization, answer any queries you may have, and facilitate your acquisition of the full research report. Connect with Ketan to ensure your organization is equipped with the insights needed to lead in the transition to low-carbon steel production.