Steel has played a foundational role in Europe’s modern identity. After World War II, six countries created the European Coal and Steel Community in 1951—a bold experiment in peacebuilding through economic cooperation. It laid the groundwork for today’s European Union.
Decades later, steel remains central to European industry, supplying vital sectors like construction, automotive, shipbuilding, and machinery. According to EUROFER, Europe produces more than 130 million tonnes of crude steel annually, making it a global heavyweight alongside China and India.
But the picture is changing. Today, Europe’s steel sector faces three converging challenges:
- Climate regulations: The EU has pledged to become the first climate-neutral continent by 2050. This includes cutting emissions from heavy industry in Europe.
- Global overcapacity: Countries like China are producing vast amounts of steel cheaply, undercutting EU producers.
- Ageing infrastructure: Many blast furnaces are 50+ years old and nearing retirement.
Pressure is mounting for Europe to transition away from coal-based steelmaking, which is among the most polluting industrial activities. But doing so without losing industrial strength—or jobs—requires a delicate balance of policy, investment, and innovation.
How Is Steel Made in Europe Today?
Steel in Europe is made in two main ways. One is the blast furnace–basic oxygen furnace (BF-BOF) method, where iron ore and coal are used to make new steel from scratch. The other is the electric arc furnace (EAF) method, which melts down scrap steel using electricity.
Today, more than half of Europe’s steel still comes from the BF-BOF route. It’s the older, more polluting method. Here’s how it works: iron ore is heated in a blast furnace along with coke, a fuel made from coal. This creates liquid iron, which is then turned into steel. The downside? This process gives off over 2 tonnes of CO₂ for every tonne of steel produced. It also emits air pollutants that harm both people and the environment.
The cleaner option is the EAF method, where recycled steel is melted using high-voltage electricity. If that electricity comes from renewable energy, the emissions can be up to 85% lower than in the coal-based process. But EAFs rely on enough scrap metal being available—and not all types of steel can be made from scrap alone.
That’s why there’s growing interest in a third method: using hydrogen to reduce iron ore, a process known as H₂-DRI. The idea is to make new steel without coal, and with far fewer emissions. Some pilot projects in countries like Sweden and Germany are already testing this.
Still, green hydrogen is expensive and not widely available yet. So for now, most of Europe’s steel is still made the old-fashioned, high-emission way.
Can Europe Make Green Steel Before It Loses the Game?
Yes. Europe’s steelmakers know change is coming. Coal-based production must end if the EU is to reach its climate goals. But behind the technical shift lies a larger question: can Europe decarbonise without losing its industrial base?
The race is already on. Countries like Sweden and Germany are leading with hydrogen-based projects such as HYBRIT and Salzgitter SALCOS. These aim to produce steel using green hydrogen instead of coal, slashing emissions almost entirely. More than 60 low-carbon steel initiatives are now underway across the EU, supported by national subsidies and EU funds like the Innovation Fund.
But it’s a high-stakes gamble. Green steel is much more expensive to produce—especially with today’s electricity prices. Without stronger demand, many producers risk financial losses. Large customers like automakers and construction firms aren’t yet fully committed to paying the green premium.
Meanwhile, global competition is intensifying. China, India, and even the U.S. are ramping up their own low-carbon steel efforts. If the EU lags behind, it could lose not just climate credibility—but jobs, factories, and influence.
To level the playing field, the EU is introducing tools like the Carbon Border Adjustment Mechanism (CBAM) to tax carbon-heavy imports. But enforcement won’t be easy, and trade partners are already pushing back.
The truth is simple: Europe can lead the green steel transition—but only if it scales up fast, builds public support, and avoids a collapse of its existing steel base in the process.