Decarbonization has been in the spotlight of the European steel industry for a few years now; however, scaling up production and obtaining premiums for green steel raises tough questions about resource availability, regulations, economics and even definitions.
During Fastmarkets’ International Iron Ore & Green Steel Summit 2025, taking place June 17-19 in Barcelona, panelists — including Fernando Pessanha Santos, chief strategy officer of Hydnum Steel, Paulo Carvalho, managing director of decarbValue Limited, and Jose Noldin, chief executive officer of GravitHy — discussed the reality of the green steel market in Europe.
What does green steel actually mean in 2025?
In the past few years, European steel producers have accelerated their decarbonization efforts, and a new market for steel with a reduced carbon footprint has emerged, with all the major flat steel suppliers in Europe developing their own green steel brands — XCarb, Arvzero, SSAB Zero, Bluemint, Greentec, among others.
But there is no common standard or official definition for “green steel” as of yet.
“There is no definition so far. We’re about to produce 1.5 million tonnes [of steel] at the end of 2027 [and] beginning of 2028. And we see sustainability as a whole [concept], not only emissions [threshold]. We reuse residual ‘gray’ water to reduce fresh water consumption, we use 100% renewable energy, we use scrap, and we aim for zero emissions for the steel we produce,” Fernando Pessanha Santos said. “It’s difficult to have a definition that encompasses everything. But so far there is no consensus.”
“Green steel is a sort of ambition,” Jose Noldin said. “We have to recognize that we have far too many [different] definitions [of what green steel is]. And now we need to converge and consider the [specific carbon] footprint. The definition has to be accepted by the market, by the customers, because they dictate the rules. But one thing is clear — we should consider [green] physically reduced carbon emissions, which means that we don’t believe that [green steel] should be qualified as such via the mass balance approach… Green steel is a steel produced with minimized CO2 content. We need to agree that green steel is a steel produced with less than X kg of CO2 per 1 tonne of steel.”
“Steel is not alone in the economy, and Europe is not alone in the world. Other regions are also discussing the standards. There is no definition or other standard [in Europe],” Paulo Carvalho said. “There are standards emerging in other industries — for example for green hydrogen, renewable electricity — we can learn from these industries.”
“India has introduced its own definition for green steel and quantified the carbon emissions levels with a star rating system in December 2024. I’m not talking about the metrics of those specific thresholds [in India] at this point, but there is a definition there and that gives some clarity to market participants,” Carvalho added. “There is no widely accepted [green steel] definition yet.”
Access to raw materials
Between 40 million and 50 million tonnes of new green steelmaking capacity — using just electric-arc furnaces (EAFs) or EAFs and direct reduced iron (DRI) — is expected to come online in Europe in 2025-2030, Fastmarkets’ research team estimates.
Moving to the DRI/EAF production route, however, raises concerns in the European market, notably regarding access to raw materials — DR-grade pellets, high-quality scrap — and energy resources.
“If we look at 100 million tonnes of DRI projects announced globally, indeed we have a problem [with resource availability]. And we have to react. It’s not a top-down approach, it’s a bottom to top approach,” Noldin said. “So, in our case, at GravitHy we have already secured 50% of our feedstock with one major high-grade pellet producer — Rio Tinto. And we have positive discussions with other suppliers. There might be a scenario where there will be a shortage [of feedstock] in the future, but for the first wave of [DRI/hot briquetted iron] projects, [the shortage] should not be so dramatic.”
“When you have a shortage or scarcity of a resource, it also brings opportunity. For high-grade pellets, there is a scarcity; if there is a scarcity, there is a premium, and that’s an incentive for more capacities to come, new technologies to evolve,” Pessanha said. “And last but not least is the energy factor. Green transition is all about energy. Having access to green energy at an affordable price is a base to build green steel transformation on.”
“A few things the iron ore industry has been doing are good in terms of a solution [for the feedstock supply issue]. First of all, additional pelletizing capacity; one can only pelletize with access to high-grade iron ore — new capacities built in Algeria, in Egypt, other places… will be part of the solution to increase the availability of feedstock for DRI plants. And there is blending, of course, [the process of combining different types of iron ore to achieve a desired composition]. This could help alleviate any availability [issue] on the DR side,” Carvalho said.
Green steel demand in Europe: current situation and how it can be stimulated
One of the opportunities for steelmakers in their transition to cleaner production routes is to get premiums for decarbonized steel products.
However, the willingness to pay premiums remains relatively low across the supply chain.
Sources pointed out that for steel service centers, steel products represent nearly 100% of the cost, and paying any premium is a challenge; meanwhile, for the automotive sector, for example, the price of steel is relatively low, only “a fraction of their costs.”
“The closest you are to the end user and more premium goods or luxury products, they have a lot of willingness and for them it doesn’t impact the cost,” Pessanha said.
“We clearly see a demand from different sectors, different actors,” Noldin said.
Noldin pointed out that the lack of standards and definition of green steel is another setback for its adoption in supply chains.
“Some [customers] are a bit lost. What exactly should I buy to cope with my decarbonization objectives or to serve my end customers that are asking for green steel? So the definition, again, if it’s something that we need to converge,” he said.
“[Green steel] still remains niche product, for niche applications [where paying green premium is affordable],” Carvalho said. “The balance of supply and demand is completely different in different segments of the market.”
For example, in the long steel sector, which mainly uses the EAF route of steel production, the acceptance of premium charges by customers is more difficult when compared with flats because this method of production was already considered more ecologically sound.
Fastmarkets’ methodology defines European green long steel as “steel produced with Scope 1, 2 & 3 emissions at a maximum of 0.5 tonnes of CO2 per tonne of steel.”
Fastmarkets’ assessment for green steel, differential to steel reinforcing bar (rebar), domestic, delivered Northern Europe was €20-30 ($23-35) per tonne on Wednesday June 11, stable week on week
In sharp contrast, premiums for flat steel were a lot higher.
Fastmarkets’ methodology provides the following definition for European green flat steel: “Steel produced with Scope 1, 2 & 3 emissions of maximum 0.8 tonnes of CO2 per tonne of steel.”
For example, Fastmarkets’ weekly assessment for green steel, domestic, flat-rolled, differential to HRC index, exw Northern Europe was €170-200 per tonne on Thursday June 12, flat week on week.
In Europe, 79% of carbon steel long products are produced via the EAF route, while 96% of flat products are produced using the blast furnace-basic oxygen furnace (BF-BOF) route.
Looking ahead
In recent months, the European steel sector has been facing rising production costs, increased pressure from low-cost imports from Asia and the ongoing deterioration of the steel demand-supply balance in Europe.
Apparent steel consumption in the EU amounted to 127 million tonnes in 2024, down by 2.3% from 130 million tonnes in 2023 and lower than during the 2020 pandemic year, when it stood at 129 million tonnes, data from the European steel association Eurofer shows.
And imports’ share in domestic steel consumption in Europe was estimated to be around 30% in 2024, sources told Fastmarkets at the sidelines of the event.
Amid the crisis unfolding in the European steel industry, there were concerns about decarbonization being pushed back and becoming a secondary issue.
However, panelists remained optimistic regarding the green steel transition in Europe, expecting a regulatory framework to drive the change.
“It’s a legal obligation from Europe to achieve carbon neutrality by 2050. And the steel industry is a part of the solution. You cannot achieve the green new objective without decarbonizing the steel industry,” Noldin said. “I remain optimistic that we continue to decarbonize the steel industry in Europe, and this is not a risk. It’s not a threat to the European steel industry. It’s a fantastic opportunity.”
“In January 2026, the big change [Carbon Border Adjustment Mechanism] is coming and it’s going to touch the most sensitive part of the human body, the pocket. [CBAM] can be a very, very important driver and catalyst, or it may accelerate the transition because it changes the market dynamics, changes pricing, changes the cost structure. A green producer will be more competitive than a gray producer within a couple of years,” Pessanha said.
