Clean Ironmaking Investments Signal Breakthrough for American Steel

BOSTON, MA – With a major technological transition underway in the U.S. steel sector, Ceres has released a new report that highlights a breakthrough in clean steel production.  

The report, The Future of American Steel, also provides key insights for investors, automakers, and policymakers on how to manage risks and opportunities in the industry’s transition to a cleaner, more competitive future. 

Globally, the steel industry is responsible for more than seven percent of the world’s total emissions. As the Ceres report highlights, an emerging development in efforts to reduce pollution in the steelmaking process is the use of direct reduced iron, or DRI – an energy-efficient way to prepare iron ore for conversion into steel by using natural gas or hydrogen, rather than coal. Steelmakers are increasingly building DRI mills because they meet the quality and price requirements of their largest customers, automakers. For example, U.S. Steel and Hyundai have announced plans to build two DRI mills that would supply automakers with advanced, high-strength steels. 

“Simply put, DRI mills are cleaner, more flexible, and better equipped to compete in today’s steel market. Compared to traditional steelmaking, they offer clear advantages in managing risk and adapting to changing demand while controlling costs,” said Dan Seligman, Ceres’ director of heavy industry and author of the report. “Together with electric-arc steelmaking, direct reduced iron is poised to drive a more competitive and resilient future for the American steel sector.” 

As the steel industry moves towards a more advanced and less polluting future, investors, automakers, and policymakers have a key role to play.  Among the report’s recommendations by category include: 

For investors: 

• Encourage steelmakers to adopt pollution reduction goals. Whether validated by either the Science Based Targets Initiative or the Global Steel Climate Council—these goals show investors that steel companies are effectively managing emissions. 

• Encourage steelmakers to disclose climate transition action plans. While setting targets is a crucial step, transition action plans help investors understand how companies plan to meet their pollution reduction goals. 

• Encourage steelmakers to certify sites to ResponsibleSteel. These standards ensure that steelmakers are adhering to cleaner steel production methods, therefore managing a variety of financial risks. 

For automakers: 

• Set targets and measure progress. Consider setting pollution reduction targets and disclosing intensity across all major materials, including steel, ensuring demand for DRI steel. 

• Ensure comprehensive pollution accounting. Adopt uniform accounting practices for all pollution throughout the steelmaking process from mining ore to production of raw steel both within and outside the facilities. This will allow for easier comparison between steel suppliers and encourage progress to cleaner production. 

• Enable finance for new technologies. Sign offtake agreements to help support financing for the deployment of next-generation iron and steel manufacturing. 

For policymakers: 

• Enable energy diversification. Policymakers at both the federal and state level can adopt strategies to ensure affordable, reliable clean energy for steel production. This includes subsidies, rate structures, and permitting reform. 

• Ensure a just transition from traditional blast furnace sites. As steel mills modernize production, policies should ensure steelworkers are trained to operate new facilities. 

Supporting and investing in clean steel production will not only reduce emissions, but it will also unlock economic opportunities and strengthen the competitiveness of the U.S. steel industry in the global market. 

About Ceres 

Ceres is a nonprofit advocacy organization working to accelerate the transition to a cleaner, more just, and resilient economy. With data-driven research and expert analysis, we inspire investors and companies to act on the world's sustainability challenges and advocate for market and policy solutions. Together, our efforts transform industries, unlock new business opportunities, and foster innovation and job growth – proving that sustainability is the bottom line. For more information, visit ceres.org.