Recycling: The most direct path to ‘green steel’

The Bureau of International Recycling (BIR), Brussels, which represents more than 30,000 companies across 71 countries, advocates for a circular economy approach to steel decarbonization.

Steel production accounts for approximately 8 percent of global energy sector emissions and 30 percent of industrial emissions. While there is no universal definition of “green steel,” it is widely understood to refer to steel that is produced with low or near-zero carbon emissions based on carbon intensity measurements.

While the industry pursues various decarbonization pathways, BIR affirms that recycled steel maximization across production methods offers the most immediate, commercially viable and sustainable solution for producing low-carbon “green steel.” We call on policymakers to recognize the role of recycled materials in global standards, trade policies and industrial strategies that support the transition to a sustainable steel industry.

Standards based on actual emissions, not production method

Among the various methodologies to define and certify “green steel,” the “sliding scale” approach creates an uneven playing field that favors primary steelmakers while penalizing recycled steel-based production. Despite the fact that electric arc furnace (EAF) steel with high recycled content produces significantly lower emissions (approximately 0.3-0.7 metric tons of CO2 per metric ton of production, depending on electricity mix and scrap grade, versus 2.3 metric tons for blast furnace-basic oxygen furnaces, or BF-BOFs), some standards allow high-emission steel to be classified as “green” based solely on the production method rather than its actual carbon footprint.

Decarbonizing the steel sector will require at least a 50 percent and up to a 90 percent emissions reduction by 2050 to align with global net-zero targets, according to the International Energy Agency’s “Iron and Steel Technology Roadmap.” While multiple strategies are being explored, circular economy principles and increased recycled steel use are central to achieving meaningful emissions reductions, according to “Climate Change 2022: Mitigation of Climate Change” by Working Group III of the Intergovernmental Panel on Climate Change at the United Nations.

We call for total emissions-based standards with clear, time-bound commitments to reductions that apply equally to all production methods. Standards must reflect the true lifecycle emissions of steel production and reward actual environmental performance.

Alternative standard approaches

A more effective standard must focus on absolute emissions and/or consider the true lifecycle emissions of steel products. Doing so would create clear, science-based thresholds that drive meaningful decarbonization across steel production methods.

The Global Steel Climate Council (GSCC) has proposed an alternative to the sliding scale approach. GSCC’s Steel Climate Standard applies to all steel producers equally, focusing on actual emissions intensity across time rather than production method. This approach ensures that steel with higher recycled content receives appropriate recognition for its environmental benefits, while encouraging primary steelmaking to decarbonize.

Environmental benefits of recycled steel

The environmental benefits of using recycled steel extend far beyond carbon emissions. A holistic analysis of recycled steel-based steelmaking demonstrates its various advantages over primary production methods.

Research demonstrates that recycled steel delivers substantial environmental benefits compared with primary steel production. Studies have found that for every kilogram of steel scrap recycled, 1.5 kilograms of CO2-equivalent emissions are saved, representing a 73 percent reduction compared with primary steel production.

Additionally, recycled steel requires 64 percent less primary energy (a 13.4 megajules savings per kilogram) and reduces iron ore consumption by 1.4 kilograms per kilogram of steel produced—a 90 percent reduction in raw material requirements, according to the Brussels-based World Steel Association’s “Sustainability Indicators: 2024 Report.”

The carbon footprint comparison between methods of steel production is striking. Primary steel production through BFs generates an average of 2.32 metric tons of CO2 per metric ton of steel, while recycled steel production via EAFs generates about 0.3-0.7 metric tons of CO2 per metric ton of steel, depending on electricity mix and scrap grade.

The circular economy approach to steel production also decreases reliance on raw material extraction. The global steel industry currently consumes vast quantities of natural resources, with annual iron ore production exceeding 2.5 billion metric tons and metallurgical coal production surpassing 1.1 billion metric tons. Prioritizing recycled steel significantly reduces the depletion of these finite natural resources.

Current scrap use and future potential

Steel recycling rates vary considerably by region, reflecting different industrial structures and policy frameworks. According to recent data from the BIR’s “World Steel Recycling in Figures: January-June 2024 update,” recycled steel usage rates in crude steel production were 20.9 percent for China, 23 percent for India, 35.4 percent for South Korea, 36.7 percent for Japan, 59.2 percent for the EU-27, 69 percent for the U.S. and 84.8 percent for Turkey. The global steel scrap market is projected to grow from 543.2 million metric tons in 2024 to 727.1 million metric tons by 2030, representing a compound annual growth rate of 5 percent.

Also, Organization for Economic Cooperation and Development data indicate that recycled steel input in global steel manufacturing could increase to 45 percent by 2050 from approximately 30 percent today, with higher shares achievable through improved recycling technologies and economic incentives. This shift would dramatically reduce the steel sector’s carbon footprint while also alleviating the pressure on virgin resource extraction.

This growth trajectory indicates substantial potential for increasing recycled steel use globally. Enhanced collection systems, improved sorting technologies and supportive policy frameworks could drive recycled steel input rates higher across all regions. Such increases would dramatically reduce the sector’s carbon footprint while alleviating pressure on natural resource extraction and supporting the transition to a circular economy model for steel production.

The shortage narrative

A recurring argument from the primary steel industry is that a shortage of recycled steel will hinder the transition to low-carbon production. However, much of the data supporting this claim originates from companies that rely on iron ore and coal, raising concerns about their objectivity.

According to independent meta studies, recycled steel availability is expected to increase in line with demand, particularly as consumption in mature markets reaches saturation and more material becomes available for recycling, per the International Renewable Energy Association’s “Towards a Circular Steel Industry.” Nonetheless, the “shortage” narrative is increasingly being used to justify restrictive trade policies in major exporting regions like the EU and U.K.

These export restrictions would not lead to more domestic use of recycled steel but instead would disrupt well-functioning global supply chains, leading to less collection and more landfilling in exporting regions, which do not have the capacity to absorb all these materials. When policy interventions are necessary, domestic capacity for quality upgrading should be preferred to trade controls.

Global trade in recycled steel must remain open and fair

So-called “scrap leakages” are misleading. Recycled steel flows to where it is most needed, supporting industrial development and decarbonization worldwide. Restricting exports of recycled steel would disrupt global supply chains and force countries to rely more heavily on emission-intensive primary production. These restrictions would not increase domestic use of recycled steel but instead lead to less collection and capacity in exporting regions.

We are calling for policies that will ensure equitable access to recycled steel by maintaining open and fair trade. Restricting recycled steel exports undermines these global decarbonization efforts and deepens north-south divides by limiting the access to materials that are needed for low-carbon production.

The recycling industry must be part of policy discussions

Recycling industry expertise is essential for designing effective standards, trade policies and investment frameworks that promote circular steel production.

Recycling industry representatives must be included in policy development processes for steel decarbonization to ensure circular economy solutions remain central to transition strategies.

Public policies must create demand for recycled steel

The transition to “green steel” can be accelerated by economic incentives that recognize and reward the environmental benefits of recycled steel. Current market structures and policy frameworks can implicitly favor emission-intensive primary production despite clear environmental advantages of circularity.

We call for public procurement policies and regulatory incentives that drive demand for genuinely low-carbon steel, including minimum recycled content requirements in key sectors such as construction and automotive. To further improve the purity of recycled materials, support also should be directed toward improving collection, sorting and quality of recycled steel.

The impact of standards

Certain green steel standards can use methodologies that create an uneven playing field. They employ sliding scale methodologies that benefit noncircular mechanisms of decarbonization.

This model, developed by primary steelmakers in Germany and adopted by organizations such as ResponsibleSteel and the International Energy Agency, places rapidly diminishing value on recycled content percentages against emissions intensity thresholds, creating an inherent bias against EAFs and BOF producers that use high proportions of recycled steel.

In fact, the sliding scale punishes the use of recycled steel in steelmaking by applying lenient thresholds for primary steelmaking, which uses less recycled material as infeed. This system unfairly favors primary producers while penalizing facilities that use recycled materials.

The sliding scale approach is premised on the argument that recycled steel is scarce and merely shifting it between producers does not reduce overall emissions. While it is true that recycled material is finite, much like iron ore, it is not scarce. Nonetheless, proponents of the sliding scale claim that it justifies easier standards for primary producers, despite this presumed scarcity being contradicted by market realities and recycling rates globally.

Certain methodologies for defining green steel, particularly those using sliding scale approaches, create inequities in how steel producers are evaluated.

Under such standards, a BF-BOF with high emissions can be labeled as a producer of green steel, while an EAF with identical or even lower emissions can fail to qualify simply because it uses higher recycled steel content.

This contradicts the fundamental principle that green standards should reward actual carbon emissions reductions and not specific technologies. A fair and effective standard must focus on absolute emissions and not the production method.

Policy recommendations

The steel industry stands at a critical crossroads. While emerging technologies could offer long-term solutions, using recycled steel in EAFs provides an immediate pathway to emissions reductions of up to 74 percent compared with primary, or ore-based, steel production. To achieve meaningful progress on steel decarbonization, the BIR requests that policymakers take these measures:

• Adopt emissions-based standards that apply equally to steel producers.
• Reject trade restrictions on recycled steel that undermine global decarbonization efforts.
• Implement procurement policies that create demand for genuinely low-emission steel.
• Focus subsidies on existing recycling-based, low-carbon steelmaking.
• Include the recycling industry in all policy development processes.

A fair transition must include policies that support infrastructure development, investment in innovation and economic incentives to encourage adoption of low-carbon steel production methods worldwide. Strengthening material efficiency, improving recycling systems and ensuring free and fair trade in recycled steel will be essential to achieve net-zero goals while fostering industrial growth.

BIR remains committed to advocating for the benefits of the global recycling industry and supporting a sustainable transition to truly green steel through circular economy principles.

Visit www.bir.org/en for more information on the Bureau of International Recycling.