Strategies shaping green steel production are accelerating

Green steel, even in Europe where it was born, continues to remain a limited market. Yet 2026 is a candidate to be the first year in which uncertainties end and regional divergence becomes clear on a global scale. Regulations, cost structures, and energy access conditions are transforming green steel from a global target into a regional arena of competition.

At the centre of this transformation lies the European Union's Carbon Border Adjustment Mechanism (CBAM). Set to impose financial obligations from January 2026, CBAM will force producers and importers to measure emissions with unprecedented precision. This step effectively ends "green" branding based on loose definitions, while making certification, traceability, and transparent emission accounting mandatory.

Regulatory clarity grows in Europe, but so does cost pressure

However, as regulatory clarity grows in Europe, cost pressure is rising just as fast. Although green steel premiums remained stable at €120–180 per tonne throughout 2025, production costs are creating a burden that exceeds this premium. With electricity's share of total costs in electric arc furnaces and DRI/EAF systems reaching 20 percent, high energy prices and slow-moving renewable infrastructure investments are straining many projects. As a result, major producers such as Salzgitter, ArcelorMittal, Thyssenkrupp, and SSAB have been forced to postpone or reconsider their green transition timelines.

A year of reckoning in Europe

This picture confronts Europe with a "year of reckoning." Producers that achieve early compliance with certification standards (such as LESS and Responsible Steel), secure access to clean energy, and present emissions data transparently will lead, while others face the risk of falling behind in both regulatory costs and market confidence.

MENA stands out with its advantages

Unlike Europe, the Middle East-North Africa (MENA) region has a structural advantage in low-carbon steel. Most production in the region is already EAF-based, with CO₂ emissions per tonne well below the global average. Abundant natural gas, strong solar energy potential, and developing hydrogen projects make MENA an ideal DRI/HBI supplier for Europe. However, the mismatch between the region's long-steel-dominated production structure and Europe's flat steel demand prevents this potential from being fully utilised.

China cautious due to CBAM

Although China is making rapid technological progress in green steel, CBAM costs are making it cautious about the European market. While many Chinese producers have reached the capacity to reduce emissions by 30–40 percent, the EU's assumed emission values create a cost exceeding €140 per tonne for Chinese steel. While this limits trade in the short term, it is seen as a pressure factor that could accelerate China's decarbonisation process in the long run.

The picture in the US is more fragmented

The Trump administration's retreat from climate policies has caused the green steel movement to lose momentum at the federal level. While the fact that US steel is largely EAF-based is presented as a "natural advantage," a green steel premium has not formed in the market, and demand depends more on state-level incentives and corporate preferences.

According to analysis by Fastmarkets, this picture reveals that 2026 will be a year of regional divergence rather than a global leap in green steel. Europe will pay a price while setting direction through regulations; MENA will try to convert its raw material and energy advantage into strategic power; China will enter a cost-sensitive adaptation process; and the US will remain in search of a clear direction.

Mixed outlook for green steel projects in Europe

ArcelorMittal aims to be one of Europe's largest green steel investors, but a significant portion of its projects are delayed. The 2.3 million tonne DRI investment planned for 2026 at the Gijón, Spain facility has been postponed. The approximately €1 billion investment still carries uncertainty. The 2.5 million tonne DRI project planned for Dunkirk, France has been cancelled entirely. The 2.5 million tonne EAF investment at Belval, Belgium is planned for the 2025–2026 period but has not yet been finalised. EAF conversions at Eisenhüttenstadt and Fos-sur-Mer are on the agenda but timelines have been pushed back. The 2.5 million tonne DRI investment planned for Ghent, Belgium points to post-2030.

Germany follows a more determined path in green steel

• Thyssenkrupp Duisburg aims to commission its 2.5 million tonne DRI unit and associated EAF investments in the 2026–2027 period. Total investment is approximately €2 billion.
• Salzgitter's SALCOS project stands out as a long-term transformation project of €2 billion, planned for completion by 2033, with both 2 million tonne DRI and 2 million tonne EAF capacity.
• SHS Holding aims to commission a 3.5 million tonne DRI/EAF combination capacity in the 2028–2030 period.

Sweden leads in hydrogen-based green steel

• The HYBRIT consortium (SSAB–LKAB–Vattenfall) plans to commission its 1.35 million tonne DRI demonstration plant in Gällivare in 2026.
• SSAB's EAF conversion in Oxelösund will be completed by end of 2026.
• SSAB's 2.5 million tonne EAF investment in Luleå has been postponed to 2029.
• Stegra (H2 Green Steel) is running one of Europe's most ambitious projects with 2.5 million tonne DRI and equivalent EAF investment. Initially targeted for 2025, commissioning has been delayed to late 2026. Total investment is at the €6.5 billion level.

Italy among countries struggling with the transition

• At the Acciaierie d'Italia (Taranto) facility, 2 million tonne DRI and EAF investments are planned but projects are on hold due to uncertainties regarding financing and government support.
• The United Kingdom is focusing on EAF conversion with high public support.
• Tata Steel Port Talbot plans to commission two EAFs with a combined 3.2 million tonne capacity in the 2027–2028 period. Investment is £1.25 billion.
• British Steel planned approximately 2 million tonne EAF investments each at its Scunthorpe and Teesside facilities, but the 2025 target has been postponed.
• In the Netherlands, Tata Steel IJmuiden is planning approximately €3 billion in investment for a transition to DRI and EAF technology by 2030, and the project is among those progressing.

Projects in Eastern Europe are more fragile

• At the Liberty Galați facility in Romania, DRI and EAF investments were planned but the process is not advancing due to financing issues.
• In Czechia, EAF conversions at Ostrava and Třinecké Železárny facilities have been postponed to post-2030.