Clean Steelmaking: Transitioning to a Low-Carbon Future

The steel industry, accounting for approximately 7-9 percent of global CO₂ emissions, is a critical sector for industrial decarbonization. Transitioning from coal-based blast furnaces to low-carbon pathways such as hydrogen-based direct reduced iron (DRI) and electrified furnaces offers significant mitigation potential while reducing exposure to carbon pricing and trade measures. This study develops a low-carbon steel production (LCSP) optimization model to support industry practitioners and policymakers in strategic planning for sustainable decarbonization. The model incorporates natural gas- and hydrogen-based DRI ironmaking, scrap-DRI blending in electric arc furnaces, and life cycle CO₂ emissions and impurity considerations to ensure product quality requirements are met at minimum cost. The current framework is a deterministic, single-period linear programming model with decision variables including DRI feedstock blending ratios and scrap steel-(new) DRI steelmaking proportions. The objective function minimizes net system costs by accounting for revenues, operational expenditures, CO₂ offset and capture costs, and renewable energy credits. The LCSP model is implemented in the GAMS programming language and provides a flexible platform for assessing trade-offs between cost, emissions, and material quality in low-carbon steelmaking. See https://www.gams.com.

Jhih-Shyang Shih

Fellow

Jhih-Shyang Shih is a fellow at RFF. His research interests lie in integrated system analysis of environmental and resource policy and decisionmaking.

Ethan Ziegler

Research Analyst

Ethan Ziegler

Alan Krupnick

Senior Fellow; Director, Industry and Fuels Program

Alan Krupnick is a senior fellow at RFF.

Marc Hafstead

Fellow

Marc Hafstead is an RFF fellow and director of the Carbon Pricing Initiative and the Climate Finance and Financial Risk Initiative.

Aaron Bergman

Fellow

Aaron Bergman

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