From Concept to Commitment – Iron and Steel Producers Answer the Call for Near-Zero Steel

Inaugural Sustainable Steel Buyers Platform North American request for proposal proves market is ready for low-emissions steel.

Fully decarbonizing the steel industry will require massive investment in new, near-zero emission (NZE) technologies in both iron- and steelmaking. To unlock the financing for these capital-intensive projects, project developers must be able to demonstrate sufficient demand for green iron and steel. RMI’s Sustainable Steel Buyers Platform (SSBP) was designed to help address this challenge, bringing together ambitious corporates and first-mover iron and steel suppliers to accelerate near-zero steel production.

Large steel buyers recognize that addressing hotspots in inventory emissions will require tackling ironmaking upstream, leading several ambitious buyers to seek out and support commercial-ready projects to meet near-term targets and supply chain objectives. As appetite for NZE steel grows and supply falls short, collaborative RFPs intervene as market-accelerating mechanisms to aggregate existing demand, provide clear price signals to both sides of the market, and pave a path to bankable contracts.

The first request for proposal (RFP) serving the North America market is now nearing completion, indicating there are major players on both sides of the procurement process who are  ready to take the leap into a cleaner steel future.

By the numbers: Near-zero projects and technologies

The SSBP launched in 2023 to aggregate demand from a group of nine ambitious buyers who are collectively seeking over one million tons of near-zero emission steel, largely to meet the rising demands of North American data centers, renewable energy development, and commercial and industrial equipment.

The first RFP received 13 first-of-a-kind commercial-scale project proposals targeting product delivery in the early 2030s. The projects represent high-impact investments in both iron and steel, largely focusing on NZE ironmaking technologies in addition to several capital-intensive interventions in scrap-based steelmaking and downstream processing.

Submissions are also largely accommodating of both physically delivered procurement and book and claim transactions to address the diverse needs of leading supply chain actors. RMI is collaborating with buyers and suppliers to design fit-for-purpose procurement models that provide a direct link of financing between supply chain actors, including the book and claim mechanism and multi-party frameworks.

Exhibit 1.

Note: Information is provided with varying levels of verification and has not yet been validated by project execution or production data.

How SSBP works

RMI facilitated a collaborative process that included extensive consultation with buyers, producers, and ecosystem actors, including standard-setters and civil society (see Exhibit 2). The process was designed to not only deliver bankable agreements, but to collect valuable insights along the way that could support other buyers and producers entering the market. In the next section, we unpack four key insights from the SSBP process.

Exhibit 2

What we’ve learned so far

Insight #1. Diverse technologies and players are driving decarbonization

The proposals received signaled near-term readiness to serve rising demand for NZE iron and steel in the North American market from multiple technologies and a diverse range of producer profiles. Bidders included legacy steelmakers, new technology start-ups, and large-scale energy and industrial operators eager to forward integrate into higher-value iron products. In line with the emerging growth of standalone iron production and trade, the majority of submissions represent sizable ironmaking investments.

Proposals also indicated that multiple innovative ironmaking pathways are advancing and finding partners to advance their production using pilot and demo scale to large-scale operations, including electrochemical, bio-based, and sodium-based processes. Greenfield sites for commercial-ready direct reduced iron (DRI) technologies are also poised to take the next leap, deploying renewably produced hydrogen to serve as the iron reductant.

Complementing progress on ironmaking pathways, several multinational steelmakers are investing in retrofits and fuel-switching in scrap-based electric arc furnaces (EAF) to make tangible shifts in secondary steelmaking. These technologies level up scrap-based interventions, significantly boosting full-system efficiency and zeroing out the remaining emissions from downstream processing.

Insight #2: Despite unique barriers and needs, near-zero technology is poised for near-term production

Beyond meeting emissions impact and delivery parameters set forth in the RFP (see Exhbit 1), these projects are evaluated based on competitive premiums, scalability, and operational, engineering, and commercial viability.[1]

Each technology pathway has its own unique challenges and needs. Successful execution of the hydrogen-based DRI projects relies heavily on reliable, affordable power, where access to large-scale renewable electricity, transmission, and supportive policy remain critical milestones in securing attractive sites and reaching final investment decision (FID). For smaller-scale novel ironmakers, modular design and flexible scale-up helps mitigate investment risk and improve cost efficiencies, but they face unique challenges, namely manufacturing capacity constraints, new supply chain development, and securing incumbent partnership for technological de-risking. Brownfield EAF investments boast comparative advantages from existing infrastructure and permits, yet face similar price and supply dependencies on hydrogen and other lower-carbon heating sources.

Despite existing hurdles, first mover suppliers are pressing ahead on near-term timelines — intent on climbing technology readiness curves, securing strategic sites and partners, and advancing engineering across both commercialized hydrogen-based DRI and smaller-scale novel ironmaking pathways. All bids project production by the early 2030s. For suppliers to meet this timeline, locking premium offtake potential into binding multi-year, take-or-pay agreements is a lynchpin to bankability, and offers a hedge against uncertain policy support and volatile future energy prices.

Insight #3: The market is moving towards bankable, replicable contracts

To support pioneering agreements, work is underway to design credible and replicable first-of-a-kind contracts in steel and other climate-differentiated commodities. Integrating comprehensive, consistent emissions performance criteria — including emissions thresholds, benchmarks, and calculation methodologies — into standard commercial terms will be critical to ensure efficient price signaling necessary to grow the transparency of and trust in the market.

When combined with binding long-term offtakes, emission attribute certificate or book and claim purchasing has also shown promise for bankability. Several bidding suppliers are actively exploring the use of book and claim as a promising and demonstrated commercial strategy in securing long-term premium coverage, improving project financials, and lending confidence to financers.

Across the steel value chain, the book and claim model — where product-level emissions attributes are decoupled from an associated unit of physical product — is emerging as a critical financing and procurement tool to firm up demand sourced from complex supply chains and directly link buyer premiums to first-of-a-kind (FOAK) projects.

Insight #4: Early purchases set the tone for the market

Beyond project financing, sustainability parameters of the RFP provide several additional functions for differentiated market development. By holding strong to near-zero emissions frameworks, this procurement initiative builds ambition among first movers. It also supports greater policy and market alignment around existing, high-integrity steel emissions standards, bringing greater clarity around decarbonized product performance and comparability. This alignment, and ongoing work to harmonize existing standards, helps market actors navigate a crowded and conflicting green steel landscape, particularly as the global market is increasingly shaped by national emissions-linked trade and policy mechanisms.

Starting the flywheel for a scaled market

In a market challenged by policy setbacks and global trade headwinds, SSBP is demonstrating that there is, in fact, demand for NZE iron and steel and producers are pushing projects forward to meet the moment.

To learn more about SSBP and get involved in future procurement efforts, please contact sustainablesteel@rmi.org for more information.

[1] including technology readiness, scalability, power and feedstock availability (MOUs, allocations), project partnerships (particularly for operators/developers of electrolyzers and DRI), and other approvals (site, environment, permits).

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