未来能源研究所-清洁炼钢：向低碳未来过渡 Clean Steelmaking Transitioning to a Low-Carbon Future

CleanSteelmaking:

TransitioningtoaLow-CarbonFuture

Jhih-ShyangShih,EthanZiegler,AlanKrupnick,MarcHafstead,andAaronBergman

WorkingPaper25-23October2025

AbouttheAuthors

Jhih-ShyangShihisafellowatResourcesfortheFuture(RFF).Hehasextensive

experienceinenergyandenvironmentalmodeling.Hisresearchfocusesonintegrated

systemanalysisofenvironmentalandresourcepolicyanddecisionmaking.Hiswork

hasbeenpublishedinleadingjournals,includingPNAS,EnvironmentalScience&

Technology,theReviewofEconomicsandStatistics,andtheEuropeanJournalof

OperationalResearch.

EthanZieglerisaresearchanalystatRFF,whereheworksonE4ST.Hepreviously

studiedeconomicsandenvironmentalscienceatAmericanUniversity,wherehe

conductedoptimizationmodelingresearchontheeffectsoffoodwaste.

AlanKrupnickisanRFFseniorfellowanddirectoroftheIndustryandFuelsProgram.

Krupnickisanexpertontheoilandgassector,reducinggreenhousegasemissions

fromthisandtheindustrialsectors,andcost-benefitanalysis.Inparticular,Krupnick’s

recentresearchfocusesongreenpublicprocurement,decarbonizedhydrogenand

taxcredits,anddevelopingmarketsforgreennaturalgas.Hisportfolioalsoincludes

guidingthevalueofinformationagendacoveredbyourVALUABLESinitiativewith

NASA,thevaluationofreducingasthmarisks,estimatingthevalueofstatisticallife,

andissuesofregulatoryreform.

MarcHafsteadisanRFFfellowanddirectoroftheCarbonPricingInitiative

andtheClimateFinanceandFinancialRiskInitiative.Hisresearchhasprimarily

focusedontheevaluationanddesignoffederalandstate-levelclimateandenergy

policiesusingsophisticatedmulti-sectormodelsoftheUSeconomy.WithStanford

ProfessorandRFFUniversityFellowLawrenceH.Goulder,hewroteConfrontingthe

ClimateChallenge:USPolicyOptions(ColumbiaUniversityPress)toevaluatethe

environmentalandeconomicimpactsoffederalcarbontaxes,cap-and-tradeprograms,

cleanenergystandards,andgasoline.Hisresearchhasalsoanalyzedthedistributional

andemploymentimpactsofcarbonpricingandthedesignoftaxadjustment

mechanismstoreducetheemissionsuncertaintyofcarbontaxpolicies.

AaronBergmanisafellowatRFF.PriortojoiningRFF,hewastheLeadfor

MacroeconomicsandEmissionsattheEnergyInformationAdministration(EIA),

managingEIA’smodelinginthoseareas.BeforeworkingatEIA,Bergmanspentalmost

adecadeinthepolicyofficeattheDepartmentofEnergy,workingonabroadarray

ofclimateandenvironmentalpolicies.BergmanhasworkedintheWhiteHouseatthe

OfficeofScienceandTechnologyPolicy,managingtheQuadrennialEnergyReview

andhandlingthemethanemeasurementportfolio,andattheCouncilonEnvironmental

Quality,workingoncarbonregulation.Bergmanenteredthefederalgovernmentin

2009asaScienceandTechnologyPolicyFellowwiththeAmericanAssociationforthe

AdvancementofScience,afterworkinginhighenergyphysics.

ResourcesfortheFuturei

CleanSteelmaking:TransitioningtoaLow-CarbonFutureii

Acknowledgements

WegratefullyacknowledgediscussionswithDallasBurtraw,MilanElkerbout,AlArmendariz,JanMares,andAndrewGossett.

AboutRFF

ResourcesfortheFuture(RFF)isanindependent,nonprofitresearchinstitutionin

Washington,DC.Itsmissionistoimproveenvironmental,energy,andnaturalresourcedecisionsthroughimpartialeconomicresearchandpolicyengagement.RFFis

committedtobeingthemostwidelytrustedsourceofresearchinsightsandpolicysolutionsleadingtoahealthyenvironmentandathrivingeconomy.

Workingpapersareresearchmaterialscirculatedbytheirauthorsforpurposesof

informationanddiscussion.Theyhavenotnecessarilyundergoneformalpeerreview.TheviewsexpressedherearethoseoftheindividualauthorsandmaydifferfromthoseofotherRFFexperts,itsofficers,oritsdirectors.

SharingOurWork

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ResourcesfortheFutureiii

Abstract

Thesteelindustry,accountingforapproximately7–9percentofglobalCO2emissions,isacriticalsectorforindustrialdecarbonization.Transitioningfromcoal-based

blastfurnacestolow-carbonpathwayssuchashydrogen-baseddirectreducediron(DRI)andelectrifiedfurnacesofferssignificantmitigationpotentialwhilereducing

exposuretocarbonpricingandtrademeasures.Thisstudydevelopsalow-carbon

steelproduction(LCSP)optimizationmodeltosupportindustrypractitionersand

policymakersinstrategicplanningforsustainabledecarbonization.Themodel

incorporatesnaturalgas-andhydrogen-basedDRIironmaking,scrap-DRIblending

inelectricarcfurnaces,andlifecycleCO2emissionsandimpurityconsiderationsto

ensureproductqualityrequirementsaremetatminimumcost.Thecurrentframeworkisadeterministic,single-periodlinearprogrammingmodelwithdecisionvariables

includingDRIfeedstockblendingratiosandscrapsteel-(new)DRIsteelmaking

proportions.Theobjectivefunctionminimizesnetsystemcostsbyaccountingfor

revenues,operationalexpenditures,CO2offsetandcapturecosts,andrenewable

energycredits.TheLCSPmodelisimplementedintheGAMSprogramminglanguageandprovidesaflexibleplatformforassessingtrade-offsbetweencost,emissions,andmaterialqualityinlow-carbonsteelmaking1

1See

.

CleanSteelmaking:TransitioningtoaLow-CarbonFutureiv

Contents

1.Introduction1

2.LiteratureReview3

2.1.ModelAnalyses3

2.2.DecarbonizationofSteelmaking4

3.TheLow-CarbonSteelProduction(LCSP)Model5

3.1.SystemConfiguration5

3.2.TheLCSPModelDescription6

4.ModelInputDataforDefaultScenario7

5.ScenarioDescriptionsandResults8

5.1.DefaultScenarioResults(S0)9

5.2.ScenarioS1:S0+IncentivestouseHighQualityScrap9

5.3.ScenarioS2:S1+Minimizing(CCSCosts)+CheaperHPrice($2.5/kgH)1122

6.Conclusions12

References14

AppendixA.TheLow-CarbonSteelProduction(LCSP)Model16

A.1.Formulation20

A.1.1.Hydrogenfeedstock20

A.1.2.H-basedDRIproduction202

A.1.3.CCSassociatedwithHproduction212

A.1.4.CostrelatedtoHproductionCO2222

A.1.5.Naturalgasfeedstock23

A.1.6.NG-basedDRIproduction24

A.1.7.CCSassociatedwithNGproduction25

A.1.8.CostrelatedtoNGproductionCO252

A.1.9.Ironorefeedstock26

ResourcesfortheFuturev

A.1.10.Steelscrapfeedstock27

A.1.11.Steelproduction/outputanddemand27

A.1.12.Impuritylimitforindividualsteelproductp28

A.1.13.Objectivefunction28

AppendixB.ModelDefaultInputData31

CleanSteelmaking:TransitioningtoaLow-CarbonFuture1

1.Introduction

Thesteelindustryisasignificantcontributortoglobalgreenhousegasemissions,

accountingforapproximately7percentoftotalglobalCO2emissions,dueprimarilytoitsrelianceoncarbon-intensiveproductionprocesses.IntheUnitedStates,thesteelsectorplaysavitalroleintheindustrialeconomy,producingaround80millionmetrictonsofcrudesteelannually,makingitoneofthelargeststeelproducersglobally.AdefiningfeatureoftheUSsteelindustryisitsdominantuseofelectricarcfurnace

(EAF)technology,whichcontributesapproximately70–75percentofnationalsteeloutput—farexceedingtheglobalaverageofabout30percent.

EAFsteelmaking,whichreliesonelectricitytomeltscrapordirectreducediron

(DRI),presentsamoreflexibleandlower-emissionsalternativetotheconventional

blastfurnace–basicoxygenfurnace(BF-BOF)route,whichdependsoncoal-derivedcokeforironorereduction.IntheUnitedStates,thepredominanceofEAFsoffersa

structuraladvantageintermsofcarbonintensity.WhileBF-BOFproductiontypicallyemitsbetween1.8and2.2metrictonsofCO2pertonofsteel,EAFprocessesemitonly0.4to0.6metrictonsofCO2pertonofsteel,contingentonfactorssuchaselectricitysourceandinputmaterialcomposition.EAFsaretypicallychargedwithsteelscrapbutcanalsoincludeotheriron-bearingmaterialssuchasdirectreducediron(DRI),hot

briquettediron(HBI),orpigiron.

AkeychallengeforEAFsisthevariabilityinscrapquality.WhileEAFscanremove

someimpuritiesduringrefining,theyarelesseffectivethantraditionalBF-BOF

methodsateliminatingcertainresidualelements,suchascopper,zinc,andtin1Theseelementstendtoaccumulateinrecycledscrapandtheresultingsteel,whichlimitstheuseofhigh-residualscrapintheproductionofflatproductsorhigh-specificationsteels(e.g.,thoseusedinthedefenseindustry).BecausetheseimpuritiescannotberemovedintheEAFprocess,dilutingscrapwithlower-residualmaterialslikeDRIorpigiron,

termedchargeblending,iscommonlyusedtomanagetheirlevels.by.

Amidgrowingdecarbonizationimperatives,theUSsteelsectorisincreasingly

consideringinvestinginemergingtechnologies,includinghydrogen-basedDRI,carboncaptureandstorage(CCS),andenhancedscrapprocessing.Althoughdecarbonizingprimaryironproductionandsecuringreliablelow-carbonelectricityremainkey

challenges,theUSindustries’EAF-centricsystemprovidesarelativelyfavorablefoundationfortransitioningtowardlow-emissionssteel.

Globally,ironandsteelindustryemissionsgenerallystemfromcoal-intensiveprimarysteelmaking.Asthephysicalandregulatoryimpactsofclimatechangeintensify,thesectorfacesmountingpressuretoalignwithnet-zerotargets.Thisconvergenceof

1ScrapqualityisamajorissueforEAFs.UnlikeBF-BOFroutes,whichprimarilyuseiron

oreandcancontrolimpuritiesmoresystematically,EAFsrelyonrecycledscrapsteel.

Thecompositionofscrapcanvarywidelyandmaycontainunwantedresidualelementslikecopper,tin,andzinc,whicharedifficulttoremoveintheEAFprocess.Thisvariabilityaffectsthequalityofthesteelproduced,makingscrapqualityacriticalfactorinEAF

operations.

ResourcesfortheFuture2

policy,investor,andconsumerexpectationsunderscorestheurgencyofemissions

reductions—notonlyasanenvironmentalimperativebutalsoasastrategiceconomicnecessity.

SeveraltechnologiesareemergingasalternativestoBF-BOFandEAFthatcan

contributetothedecarbonizationofsteelproduction,withnaturalgas–baseddirect

reducediron(NG-DRI)servingasakeytransitionalsolution.NG-DRIofferssubstantialCO2emissionsreductionsrelativetocoal-basedblastfurnacesandprovidesabridgetowardtheeventualdeploymentofcleanhydrogen-basedDRI(H2-DRI).H2-DRI,whichsubstituteshydrogen(eitherblueorgreen)forfossilfuels,holdsthepotentialfornear-zerodirectemissions;however,widespreadadoptionofH2-DRIremainsconstrainedbyhighproductioncostsandlimitedsupportinginfrastructure.

Carboncapture,utilization,andstorage(CCUS)alsorepresentsapromisingpathwayformitigatingemissionsfromexistingproductionroutesduringthetransitiontomoresustainabletechnologies(Jordan,etal.,2025).

MoststeelmodelsusedinenergyandclimatepolicyanalysisaccountforenergyuseandCO2emissionsbutdonotaddressthequalityofthesteelproduced.2GiventheimportantroleofscrapinfuturesteelproductionusingEAFtechnology,modelsareneededthatincorporatebothimpuritylevelsandCO2emissionsintensityinthefinalsteelproduct.

Thisstudypresentsacost-minimizingblendingmodelforlowCO2emissions

productionviaEAFtechnology,accountingformultipleinputmaterialsandproduct

outputs,eachwithspecificimpurityandCO2emissionsintensityconstraints.The

modeloptimallyallocateshydrogen-basedandnaturalgas–basedDRIalongside

variousscrapgradestosatisfyproduct-levelqualityrequirementswhilemeeting

assumedsystem-wideemissionstargets.Inparallelwithtechnologicalinnovation,

policyinstrumentsarecriticalforacceleratingemissionsreductionsinthesteelsector.Market-basedmechanisms—suchastradableemissionscreditsystems,industrial

tradableperformancestandards,andcarbonpricing—encouragecleanerproduction

byenablingfirmsthatoutperformemissionstargetstogainfinancialbenefits,either

throughcredittradingorbypayinglowercarboncosts.TheCarbonBorderAdjustmentMechanismlevelstheplayingfieldbyapplyingacarbonpricetoimportsfrom

countrieswithoutstrongclimatepolicies,protectingdomesticindustriesfromcarbonleakagewhileencouragingglobalemissionsreductions(Park,etal.,forthcoming).

Together,thesetechnologicalandpolicyapproachescancatalyzethesteelindustry’stransitiontowardamorecarbon-efficientandcompetitivefuture.

Thispaperproceedsasfollows:Section2reviewstheliteratureonmodelanalysesanddecarbonizationofsteelmaking.Section3introducesthesystemconfigurationand

2EPPAisamultiregion,multisectorCGEmodeloftheglobaleconomydevelopedbytheMITJointProgramontheScienceandPolicyofGlobalChange.Thismodeliswidely

usedtoassesstheeconomicimpactsofclimatepolicies,energypolicies,andtechnologychanges.Itcapturesinteractionsbetweensectors,regions,andhouseholds,accountingforproduction,consumption,trade,andemissions.

CleanSteelmaking:TransitioningtoaLow-CarbonFuture3

thelow-carbonsteelproduction(LCSP)model.Section4providesdetailsonthedatainputs.Section5analyzesthescenariosandpresentstheresults.Finally,Section6

concludeswithkeyinsightsandpotentialavenuesforfutureresearch.

2.LiteratureReview

2.1.ModelAnalyses

Manyeconomicandenergymodelshavebeenusedtoanalyzesteelsectorsaround

theworld.TheLCSPmodelpresentedherewasinspiredbythosemodelsbuthasthestrategicadvantageofaspecializedframeworktoaccountforonlycertainaspectsoftheindustry.Manymodelsusedforresearchingaspectsoftheironandsteelindustriesarebroaderinscope.Forinstance,MIT’sEconomicProjectionandPolicyAnalysis

(EPPA)modelincludesmultiplesectorsoftheglobaleconomy.Inarecentanalysis

byGurgeletal.(2025),EPPAwasemployedinanalyzingadvancedsteelmaking

techniques,whichcanreduceemissionsintheindustrialsectorintothefuture.Resultsfromabasescenarioshowedthatfrom2020to2050,steelmadefromBF-BOFplantswillbealmostentirelyovertakenbysteelmadethroughscrap,andemissionsfromsteelproductionwilldecreasebyover50percent.ItwasalsousedinBenavidesetal.(2024)tounderstandcostdifferencesbetweenBF-BOFsteelplantsandmoresustainable

DRI-EAFproductionroutes.Includingmultipleeconomicsectorsinamodelcan

furthercapturerelationshipsamongindustries,especiallyinthecontextofemissionsmitigation.Manygovernmentsandindustryleadersarelookingtoreducetheir

industrialemissionsoverthenextquartercentury;ourmodelcanprovideadeeperunderstandingofthecostsandlogisticsofconvertingthemeansofsteelproduction.

Becauseofitswidescopeandtemporalresolution,MIT’sEPPAmodelhasbeenusedinmultiplecasestoexaminechangesintheironandsteelindustry.EPPA’sfunctionalityiscenteredontheGlobalTradeAnalysisProject(GTAP)DataBase,managedby

PurdueUniversity.ThedatasetcontainsbilateraltradeinformationandallowsEPPAtostudytheinput-outputrelationshipsacrossmultipleeconomiesandsectors.Themodelendogenouslysetspricesandincludesfeaturessuchaspopulationandlanduse.Contrastingly,theLCSPmodeliscountryandsectorspecific.Withitshigher

spatialresolution,inputdataismorespecific,andthismodelcanbeusedtoanswermoreprecisequestionsregardingadvancementsinsteelmaking.AstheLCSPmodelisexpandedinthefuture,itmayincorporatecertainfeaturesoftheEPPAmodel,

especiallysincebothmodelsarewrittenandsolvedinGAMS.

Similarly,manyanalysesofinternationalsteelmarketshavebeenconducted.Wangetal.(2022)usetheC3IAM/NET-ISoptimizationmodeltosimulatethedynamicsofthesteelindustryinChina.Theiranalysisfindsthatthemosteffectivewaytodecarbonizethesectorwouldbebytransitioningtowardtheusageofenergy-savingsteelmakingtechnologylikeEAF,whichwouldcontributeabout22percentofpotentialemissionsreductionsbetween2020and2060.AstudyofIndia’shigh-emissions-producing

industries,withafocusonsteel,utilizedtheEPPAmodeltoshowtheimportance

ResourcesfortheFuture4

ofgovernmentsupportintheindustry’stransition.Theresearchillustratedthe

importanceofcarbonpricingforthesector.Ifitismadeeconomicallycompetitive,CCSdeploymentreducesemissionsby80percentin2050relativetoascenariowithno

governmentintervention(Paltsev,etal.,2022).

2.2.DecarbonizationofSteelmaking

Carboncapturetechnologyisbeingsupportedworldwide,withover600projectsin

thepipelineglobally(GlobalCCSInstitute2024).TheUnitedStateshouses15ofthe50operationalCCSplantsintheworldandhasallocatedover$8billioninappropriationsforCCSprogramsuntil2026(CBO2023).CoupledwithitsexistingfleetofEAF

plants,theUShasacomparativeadvantageintheabilitytoproducelow-carbonsteelproducts.WithitsfocusonEAFsteelproductionintheUS,theLCSPmodelspecializesinmodelingtheseinfrastructuraladvancements.

SteelmakersintheUSandaroundtheworldhavesetapathtodecarbonizingtheindustryoverthenextquartercentury.Theusageofscrapinsteelproductionwillplayacriticalroleinthisprocess,asitrequiresonlyone-eighthoftheenergyof

thatproducedbyusingironore(Çiftçi2018).In2017,steelmakersrecycledabout84

percentofglobalscrapsupplies,makingitoneofthemostrecycledmaterialsinthe

world.Itisprojectedthatin2030,therewillbearoundonebilliontonsofscrapsteel,

whichcouldbeusedtoregeneratenewsteelthroughEAFprocesses.TheInternationalEnergyAgency’sSustainableDevelopmentScenariorequiresthattheaverageCO2

emissionsintensityofsteelproductiondecreaseby60percentby2050;inthisscenario,scrapwouldmakeup45percentoftotalmetallicinputs(IEA2020).

Despitethewidespreadapplicationofscrapsteel,theimportanceofitsutilization

infuturesteelproductionisdebatedbyresearchersaroundtheworld.The

AustralianorganizationResponsibleSteelhasbeenamajorproponentofthesliding

scaleapproach,whichsetsdifferentstandardsforsteelproducedfromhigh-and

low-emittingsources(ResponsibleSteel2022).Theapplicationofthisstandard

acknowledgestheimportanceofbothscrapandironoreinthefutureofsteelmaking.TheGlobalSteelClimateCouncil(GSCC)hasbeencriticalofthisframework,noting

thatseparatestandardscouldallowforsteelplantswithhigheremissionslevelsto

markettheirproductas“sustainable”inthesamewayalow-emittingplantmight

(Alkaff2023).Italsoarguesthatdifferentstandardsincentivizehigh-emittingplants

topostponeimprovingthesustainabilityoftheirproductionprocesses.Instead,the

GSCChasestablisheditsownSteelClimateStandard,withasinglesetoftechnology-agnosticstandards,whichwouldrewardproducersalreadyusingmethodsinvolving

scrap(GSCC2024).Regardlessoftheapproach,thesteelindustryseemssetonapathtoincreaseitsrecycledscrapapplicationintothefuture.

EAFplantsaretypicallyoperatedusingscrapsteelbutcanalsouseDRIasaninput,madeusingeithernaturalgasorhydrogen.Hydrogen-basedDRIisstillanemergingtechnology,butsignificantinvestmentshavebeenmadearoundtheworld.Midrex,aNorthCarolina–basedcompanythatspecializesindirectreductiontechnology,haspartneredwithotherorganizationstosupplyH2-basedDRIplantsinSwedenand

CleanSteelmaking:TransitioningtoaLow-CarbonFuture5

Finland(MidrexTechnologies2025).Stegra’sgreenhydrogen,iron,andsteelplantsinSweden,oncetheyareoperationalin2026,areexpectedtocutsteelsectoremissionsbymorethan7milliontonsannually(Stegra2025).TheHydrogenBreakthrough

IronmakingTechnology(HYBRIT)project,apartnershipbetweenLKAB,SSAB,

andVattenfall,hasademonstrationsiteinSwedentotestgreensteelproduction

methods.Theplantwillmakecarbon-freesteelproductsavailableonthemarketin

2026(HybritDevelopment2025).InAustralia,ProgressiveGreenSolutionsstarteditsMid-WestGreenIronProject,whichwillseethebuildoutof1.4GWofgreenhydrogenelectrolyzerstoproducesevenmilliontonsofgreenironpelletsannually.Around

halfofthesepelletswillbefurtherprocessedtoproduceovertwomilliontonsofHBIannually,aformofironmoresuitableforlong-distancetransportandlesspronetoreoxidation(Martin2025).

Although90percentofChina’ssteelismadeusingBOFtechnology,small-scale

projectsareappearingthroughoutthecountry.Theseprojectsareproducingonly

smallamountsofgreensteel,around10,000metrictonseach,butmanycompaniesarepartneringwithinternationalbuyers,whichcancreatestrongincentivestoincrease

investments(Kaufman2025a,b).Indiaisanothermajorproducerinthesteelindustry.In2024,theConfederationofIndianIndustryandtheWorldWildlifeFundpartneredtocreatetheIndianGreenSteelCoalition,whichaimstodecreasethecarbonintensityofsteelproductionby30percentby2030,relativeto2023(WWF-India2025).The

operablestatusofgreensteeltechnologyvariesaroundtheworld,butnumerouscountrieshaveestablishedtheirroleinseekingtodecarbonizethesteelsector.

3.TheLow-CarbonSteelProduction(LCSP)Model

3.1.SystemConfiguration

Figure1illustratesanintegratedsystemdiagramforEAFsteelmaking.Itcapturesthequantityflowsoffeedstocks(ironore,DRI,andscrap),energyinputs(naturalgas,

hydrogen,andelectricity),CO2emissions(fromenergyproduction,transportation,CCS,andsteelmaking),andimpurity(copper),aswellastransactionsofCO2offsetsandrenewableenergycredits(RECs).

Inthenaturalgas(NG)boxcomponent,weestimatetheproductionandtransportationcosts,alongwiththeassociatedemissionsofnaturalgas,basedonthespecific

quantitiesneededtoprocesseachtypeofironore.Theironoreboxcomponent

providescorrespondingestimatesfortwodifferentgradesofironore:onewithhighandtheotherwithlowironcontent).Inthehydrogenboxcomponent,weassess

theproductionandtransportationcosts,alongwithemissions,forthreesourcesofhydrogen:g