What Is the Green Steel Mandate? And What It Means for the Steel Industry

Steel has long been valued for its strength, durability, and reliability.

Today, it is increasingly being evaluated for something else entirely. Its carbon footprint.

Across global markets, governments and major buyers are setting new expectations for how steel is produced. What was once a purely performance-driven material is now being assessed through emissions data, procurement standards, and environmental disclosures.

This shift has given rise to what many are calling the “green steel mandate.”

What Is the Green Steel Mandate?

The green steel mandate refers to government policies and procurement standards that set limits on the carbon emissions associated with steel production.

Rather than changing the material itself, these mandates focus on how steel is made. In many cases, publicly funded projects must meet defined carbon intensity thresholds or source steel produced through lower-emission methods.

Instead of banning traditional production outright, these policies use purchasing requirements to encourage the steel industry to reduce emissions over time.

In simple terms, the mandate creates demand for steel with a smaller carbon footprint.

What Is Green Steel?

Green steel is not a new type of steel.

It has the same structural strength and mechanical properties as conventional steel. The difference lies in how it is produced.

Traditional steelmaking relies heavily on coal-based blast furnaces, which release significant amounts of carbon dioxide. On average, this process emits roughly 1.92 tonnes of CO2 per tonne of steel produced.

That average reflects a mix of production methods worldwide. In regions that rely primarily on coal-based blast furnaces, emissions can be significantly higher.

Green steel refers to steel made using lower-emission production methods, such as:

• Electric Arc Furnaces (especially when powered by renewable energy)

• Hydrogen-based reduction instead of coal

• Increased use of recycled scrap

• Energy efficiency improvements in steel plants

The goal is to reduce emissions per ton of steel without changing the performance of the finished product.

What Does This Mean for the Steel Industry?

Since the green steel mandate focuses on how steel is produced rather than how it performs, it places growing pressure on traditional coal-based production methods.

While blast furnaces will not disappear overnight, the industry is gradually shifting toward lower-emission technologies such as electric arc furnaces, hydrogen-based reduction, and renewable energy integration.

Changes in Production

Steel production is built on long investment cycles. Blast furnaces and integrated mills are designed to operate for decades, often with significant capital tied up in existing equipment.

Transitioning to lower-emission production is not a minor adjustment. It requires substantial reinvestment in new systems such as electric arc furnaces, hydrogen-based direct reduction units, and in some cases carbon capture technologies.

These technologies also depend on reliable access to low-carbon electricity and emerging hydrogen infrastructure. In many regions, the speed of steel decarbonization will depend as much on energy policy and grid development as on the steel industry itself.

The shift toward green steel, therefore, is not simply about changing inputs. It involves reshaping the industrial infrastructure that supports steel production.

Cost and Market Impact

Although interest in lower-emission steel is growing, roughly 70% of global production still relies on traditional blast furnace methods.

Lower-carbon steel currently carries a premium. In Europe, certified grades often cost €100–€300 more per ton than conventional steel, in some cases translating to 30–50% higher prices. At the same time, supply remains limited, with demand for certified low-CO2 steel exceeding available production in several markets.

While costs are elevated today, long-term projections suggest the gap may narrow. As renewable energy and hydrogen technologies scale, green steel could move closer to cost parity over time.

In the short term, the transition introduces pricing pressure and supply constraints. In the long term, broader adoption may stabilize the market.

Supply Chain Impact

As emissions standards tighten, carbon intensity is becoming part of procurement decisions.

Suppliers may now be required to provide verified emissions documentation alongside traditional material specifications. However, there is no single global definition of “green” steel, and certification frameworks vary.

This introduces additional complexity into sourcing decisions and increases the importance of transparency across the supply chain.

Scaling Challenges in the Transition to Green Steel

Although interest in green steel remains strong, scaling production has proven more complex than early announcements suggested.

Recent reporting from Leadership Group for Industry Transition indicates that new green steel project announcements slowed in 2025 compared to previous years, and currently planned low carbon production still represents only a small share of global steel output.

Some projects have experienced delays or pauses, reflecting challenges related to capital costs, energy availability, and market demand.

These developments highlight an important reality: transitioning a sector that produces nearly two billion tons of steel annually requires sustained investment, policy consistency, and long-term market confidence.

Conclusion

The green steel mandate does not change the strength or performance of steel. It changes how steel is produced, evaluated, and sourced.

By linking emissions limits to procurement standards, governments and major buyers are influencing production methods, pricing, and supply chain transparency across the industry.

The transition will be gradual. Traditional production methods still dominate global output, and scaling lower-emission technologies requires sustained investment and stable policy support.

While progress may be uneven, the direction of the industry is clear: emissions performance is becoming part of how steel is evaluated.