Steel – Commercializing pioneering technologies in an evolving policy landscape2.2 Steel contributes 7% of global CO2e emissions.99Introduction Steel is one of the most polluting industrial sectors, contributing approximately 7-9% of global CO2 emissions, a share that keeps the industry central to national climate strategies and competitiveness debates.100 In 2024, the International Energy Agency (IEA) helped develop an emerging consensus on practical definitions for near-zero and low-emissions steel and outlined the underlying measurement methodologies needed for interoperability across markets.101 The policy environment is shifting in ways that directly affect suppliers’ investment cases. The European Union’s Carbon Border Adjustment Mechanism (CBAM) entered a transitional reporting phase in October 2023 and moves to its compliance phase in 2026, paced with the phase- out of free allowances in the EU Emissions Trading System (ETS) up to 2034. This transition raises the effective carbon price exposure of conventional industrial production routes while rewarding verifiable low-emissions pathways.102 In parallel, buyers’ initiatives – from coalitions and certification schemes to sustainable public procurement – are beginning to signal demand and reduce uncertainty. However, suppliers still encounter a fragmented landscape of standards, offtake structures and permitting regimes.103 Against this backdrop, leading steel suppliers interviewed for this report consistently underscored both the urgency and complexity of the transition. For suppliers in the vanguard, the transition represents both strategic reinvention and existential pressure. Suppliers voiced caution that capital markets and customer commitments remain limiting factors in attempts to decarbonize the industry. For suppliers in the vanguard, the transition represents both strategic reinvention and existential pressure. What emerges from these perspectives is a picture of an industry that recognizes its centrality to global decarbonization yet grapples with system-level friction. Suppliers are navigating an investment landscape that is partially incentivized, partially penalized and heavily dependent on the alignment of regulation, finance, buyer commitment and input materials. This chapter distils the insights shared by suppliers who are operating at the frontier of low-emissions steel, triangulated with credible secondary sources. Sector landscape and the maturity curve Technology is shifting The core technological storyline is clear: steel production is advancing away from high-emissions blast furnace/basic oxygen furnace (BF/BOF) technology towards lower-emissions alternatives, including scrap-based electric arc furnaces (EAF), hydrogen-fuelled direct iron reduction (DRI) with EAF and carbon capture, utilization and storage (CCUS)-enabled transitional pathways – albeit at different paces and with different regional fits. Turning Challenge into Opportunity: Supplier Voices from Heavy-Emitting Sectors 34

Turning Challenge into Opportunity 2025