Europe’s automotive industry could play a decisive role in accelerating the market for near-zero emission steel, according to a new assessment highlighting the growing pipeline of green steel projects across the EU.
The analysis argues that strong lead-market policies and long-term demand signals from car manufacturers will be essential to secure investment in low-carbon steelmaking technologies and bring more projects to final investment decisions.
Automotive sector seen as catalyst for green steel demand
The automotive industry currently consumes around 15 million tonnes of mostly flat, high-quality steel annually in Europe. Much of this material is still produced via conventional blast furnace routes, making the sector a critical target for decarbonisation.
According to the assessment, Europe already has enough announced near-zero capable steel projects in development to potentially meet automotive demand for climate-neutral steel by 2035 — provided that clear demand-creation mechanisms are introduced.
Agora Industry identified around 34 million tonnes of announced near-zero steelmaking capacity in Europe based on direct reduced iron (DRI) technology. Around 25 million tonnes are currently progressing through different project stages, ranging from permitting and investment planning to construction.
The report describes this as evidence that Europe remains one of the global leaders in near-zero capable steel production technologies.
Investment decisions still depend on stronger market signals
Despite the growing project pipeline, the report warns that many projects remain at an early stage and could still face delays or cancellations without stronger commercial incentives and policy support.
Only a limited number of projects have so far reached final investment decision (FID), while even fewer have entered construction.
According to the authors, long-term offtake agreements and ambitious lead-market policies will be essential to provide the investment security required for large-scale green steel production.
“Steelmakers require robust, long-term demand signals for low- and near-zero emission steel to secure investments and build these new iron and steel plants,” the report states.
Near-zero steel projects still face economic challenges
The report notes that rising carbon prices under the EU Emissions Trading System and government support measures have already helped stimulate investment in low-carbon steel technologies. However, high upfront costs and uncertain future demand continue to weigh on investment decisions.
Agora Industry argues that distinguishing truly “near-zero emissions steel” from lower-emission transitional technologies will also be important for future lead-market policies.
The report defines near-zero steel as technologies compatible with a fully net-zero energy system, including hydrogen-ready DRI routes, while fossil gas-based DRI technologies are classified as lower-emission transitional solutions rather than fully climate-neutral production pathways.
Source and Photo: Agora Industry
