Steel built the modern world, but at a hidden cost. Today, every ton of new steel emits roughly 1.8 tons of CO₂, making it one of the world’s most carbon-intensive processes in the Heavy Industries. Globally, it represents about 8-9% of CO2 emissions, about 3.7 billion tonnes annually. The irony? The same material that fueled the Industrial Revolution is now at the heart of its clean-energy reboot. The new revolution is about going green and reinventing an era-defining industry.
As steelmakers transition from their coal-based blast furnaces to cleaner electric arc furnaces (EAFs), the industry is undergoing a transformation in its technology and philosophy. While revolutionary methods, like green hydrogen, promise deep emissions cuts, evolutionary strategies—like unifying power and process control—offer a clear path to incremental gains in efficiency, flexibility, and sustainability. At Schneider Electric, we are partnering with steel manufacturers worldwide to navigate both pathways, providing the digital infrastructure, consulting expertise, and intelligent automation needed to transition confidently to green steel production, either simultaneously or in stages.
From blast to arc: Reshaping the foundation of steel
The global steel industry and its downstream clients are all on the move. Whether it’s the car, buildings, or construction industry, development cycles and innovation are ever more rapid. Further, consumers are also demanding a choice for clean and green products.
To give context to the process, blast furnace-basic oxygen furnace (BF-BOF) routes currently dominate, accounting for roughly 71% of global output. However, this share is expected to decline to 60% by 2030. In its place, EAF production is set to grow from 29% to around 40%, driven by its capacity to cut carbon emissions by up to 95% when powered by renewable electricity.
Unlike traditional blast furnaces, which continuously burn coal, EAFs melt scrap or pre-processed iron using electricity in a batch process.
EAFs offer:
- Better control
- Higher potential steel quality
- Greater flexibility
- The ability to shut down quickly
- A pathway to circularity by enabling the use of recycled scrap
However, scaling EAF production itself presents new challenges, particularly when electrification must coincide with scale and steep decarbonization goals.
Hydrogen: The hope and the hurdles
One of the most ambitious routes to green steel involves direct reduced iron (DRI) processed with green hydrogen. The idea is simple: use solar or wind power to generate hydrogen, which then reduces iron ore into sponge iron, feeding into an EAF unit. However, the financing and logistics are anything but simple for existing and new sites.
Hydrogen is volatile, difficult to store, and extremely energy-intensive to produce. Today, the average cost of green hydrogen sits around $6 per kilogram, well above the level needed for mass-market viability. Replacing one ton of virgin steel production requires approximately 54 kg of hydrogen, and in total, the hydrogen-powered steelmaking process demands nearly three times the energy of standard EAF operations.
Despite this, leading steelmakers are investing heavily in hydrogen-based approaches. One example is our collaboration with H2 Green Steel, a landmark initiative in Sweden that’s helping to define what large-scale, hydrogen-powered steelmaking can look like. We support these next-generation projects by helping clients manage unprecedented scale, complexity, and power demands, including energy requirements that can exceed 1.3 gigawatts per site.
For context, that’s roughly the output of a typical nuclear power plant, all dedicated to a single steel facility. Designing, supplying, coordinating, and optimizing this power level requires robust infrastructure and a trusted partner who understands how power and process must work together seamlessly. Supporting this trend has been our primary focus over the last four to five years.
Optimizing what exists: An evolutionary path forward
Not every steelmaker is ready for the full leap to hydrogen-powered steelmaking, which is energy and capital-intensive. Many existing players are pursuing a more gradual, evolutionary approach—optimizing existing EAF operations for power quality, energy efficiency, and seamless control. Here, incremental change adds up and can be the best approach to take.
Technologies like SMS’s X-pact® AURA and Danieli’s Q-One, for example, utilize multi-cell furnace architectures to help reduce power quality issues—like flicker and harmonics—that can arise when companies replace blast furnaces with two or more electric arc furnaces (EAFs). These innovations minimize peak demand and stabilize current draw, making it easier to scale EAFs without destabilizing the facility’s surrounding grid and at times, its neighbors.
As a long-standing partner to steelmakers, we support this design and are creating this path by combining power and process control into unified architectures that respond in real time to the complex dynamics of electric steelmaking. Through deep domain expertise, open automation platforms, and lifecycle consulting, we help manufacturers balance capital expenditures (CapEx) with long-term operational expenditure (OpEx) gains. While some integration methods remain proprietary, the goal is always the same—smarter steelmaking, grounded in tangible value.
Partnering beyond the equipment
We don’t assume or approach green steel as a one-size-fits-all product pitch. Instead, we act as a trusted technical and consulting partner, helping steelmakers align energy strategy, plant design, and market realities. We love visiting sites and suggest possible changes that would not disrupt production, improving the overall case.
For steel producers beginning their decarbonization journey, the path forward typically follows these steps:
- Establish your energy strategy. Determine how you will source and manage the significant electrical demands of green steel production, including potential renewable energy sources.
- Design your furnace systems. Consider scale, process flexibility, and power quality requirements, especially when integrating hydrogen-based DRI and large-scale EAFs. These processes require a significant amount of power, and their throughput requirements must also be aligned.
- Develop your efficiency strategy. Explore ways to optimize power and process control, improve visibility, and reduce operating costs through automation.
- Secure off-take or pricing models. Plan how to differentiate and monetize low-carbon steel in an increasingly sustainability-driven market.
This stepwise guidance is particularly important, especially as plant operators face a convergence of electrical infrastructure constraints, new power quality risks, and pressure to demonstrate genuine progress in sustainability. Without the first two points under control, clients would have potential “regret costs” in their capital spend.
Going somewhere: The future of steel is already taking shape
Leading-edge producers are already reshaping their operations to meet demand from automakers, construction firms, and policymakers seeking low-carbon materials for their clients. Others are beginning their journey with incremental upgrades that improve visibility, reduce downtime, and prepare the ground and case for more significant changes.
Find out more about our green steel solutions, or download our Industry Perspectives paper.
Add a comment