Acknowledgements: The authors wish to thank Elizabeth Boatman (5 Lakes Energy) and John Cooney (Industrious Labs) for their support and collaboration on illustrating the impact of health-harming pollution. This collaboration does not imply an endorsement of the contents of this report, and any errors are the responsibility of RMI.

Investment in reviving or “relining” the seven aging blast furnaces in the Great Lakes region is a multi-billion dollar bet that risks continuing job decline at these assets, weakens the ability of the US steel industry to compete in the global market, and perpetuates serious health and climate emissions harm from coal-based steel production.

Although the seven remaining coal-based blast furnaces represent only about a quarter of US steel production, these plants generate approximately 75 percent of the industry’s emissions. Continuing business-as-usual operations at these sites for the next few decades risks blowing past the domestic steel industry’s carbon budget by nearly two-fold (RMI analysis based on ORNL and MPP data).

The remaining coal-based steelmaking assets, located in Indiana, Michigan, Ohio, and Pennsylvania, collectively account for 31% of domestic production and together employ 18,000 workers.

Fortunately, there’s still time to change course. Blast furnaces nearing end-of-life typically require up to $400 million in reinvestment to extend their operations for another 20 years. Several — including Gary Works, Burns Harbor, and Dearborn Works — are facing this decision before the end of this decade. These reinvestment deadlines represent a window of opportunity to avoid stranded assets and pivot toward more modern, cleaner technologies that are more competitive in the long run. The accelerating US clean energy transition has led to a surge in market demand for low-emissions products, driving shifts in domestic production and manufacturing. These shifts, combined with existing federal incentives, create new pressures and tailwinds for legacy steelmakers and state policymakers.

With stable jobs, climate goals, and the health of neighboring communities on the line, fast-approaching reline dates represent a critical decision point with major implications for the future of American primary steelmaking: lock in coal and its consequences for decades to come, or invest in a modern, cleaner, and more competitive industry for the future.

What is at stake?

Relines place heightened pressures on steelworkers and local workforces downstream of the steel supply chain, whose jobs, families, and livelihoods rely on maintaining the historic competitiveness of the US primary steel industry. With the increase in scrap-based production and the shift of manufacturing jobs to the US South observed in recent decades, several blast furnaces have been forced to idle, leading to significant layoffs. Status quo operations and relines risk continuing these trends, as these assets would become increasingly uncompetitive in the market.

The remaining blast furnaces have been widely reported as dominant sources of industrial pollution in the states they operate in, many of which are considered the dirtiest industrial polluters across the Great Lakes region (see Exhibit 2) and chronically expose neighboring communities to health-harming pollutants and chemicals. A subset of these chemicals (carbon monoxide, sulfur dioxide, nitrogen oxides, and fine particulate matter) are known as “criteria air pollutants” as human exposure limits have been established. Exposure to pollution from coal-based steelmaking (including coke-making upstream) is projected to cause premature deaths, lost work and school days, and respiratory health impacts for local residents. All operating blast furnaces fall within the worst 15 percent of industrial plants in their respective states for predicted health risk. Relining at these sites and continuing status quo production threatens to lock in health-harming pollution and exposure for another 20+ years.

Even with proposed partial decarbonization investments, blast furnaces cannot meet clean steel thresholds, preventing the Great Lakes region from capturing the increasing demand for low-emissions steel in the United States, driven by federal procurement priorities and corporate purchasing targets. Based on recent announcements, they are inclined to extend the life of these assets, suggesting the use of hydrogen (H2) injection or carbon capture, utilization and storage (CCUS) at some future stage. However, neither of these technologies is planned or currently employed.

Blast furnace and basic oxygen furnace (BF-BOF) production has many concurrent operations on-site that each release large amounts of carbon dioxide independently, meaning that to significantly reduce onsite emissions via CCUS, producers would have to aggregate all these streams across the plant or install individual capture systems at each point source, both of which would be costly and logistically challenging. As such, no steel producer globally is trialing this pathway, and no blast furnaces in the United States have applied CCUS technology beyond the pilot scale. The recently announced CCUS project at USS’s Gary Works intends to capture 50,000 tCO₂e per year, equivalent to less than 1 percent of total site-level process emissions.

Similarly, H2 injection, which can offset some amount of coal (specifically, pulverized coal injection), is shown to reduce direct emissions by approximately 20 percent due to technical and physical limits. Nippon Steel’s Super Course50 technology, which represents the highest level of BF emissions reduction achieved to date, estimates a 33 percent reduction in direct emissions from the combined use of CCUS and hydrogen injection (depicted in Exhibit 3). Nippon steel projects this technology may be able to reach a 50 percent reduction by 2040, which is not 1.5C aligned.

Another path is possible. Instead, producers can redirect these investments toward a cleaner, more modern, and competitive production pathway. Regardless of how the proposed sale of US Steel shakes out, this moment presents a critical opportunity for primary steel suppliers to realize substantial emissions reductions for each dollar invested in cleaner technology, positioning their portfolios to meet the clean market demands of the future.

Direct Reduction (DRI) technology using renewably-produced hydrogen offers the most promising commercial-scale pathway to near-zero emission primary steelmaking today. Investment in H2-Ready DRI technology at BF sites would avoid costly relines and, when properly planned, can offer significant benefits for the local, state, and regional communities and economies in both the near- and long term.

Today, only a 100 percent renewable-powered H2 DRI coupled with an electric arc furnace (H2-DRI-EAF) pathway is capable of reaching near-zero carbon emissions and is well-positioned to meet the highest emissions performance threshold set by leading market standards, which have already been linked to green premiums (Exhibit 3).

Beyond climate alignment, transitioning to DRI-EAF steelmaking (even when initially fueled by natural gas) can reduce health-harming criteria air pollutants compared to conventional coal-based production facilities (Exhibit 4). However, due to the nature of industrial facilities and processes, continued mitigation, monitoring, and reporting of these pollutants will be necessary regardless of production technology.

Ultimately, fully replacing natural gas and coal with renewable electricity and hydrogen in DRI-EAF production processes would further reduce pollutants, with some residual emissions of sulfur dioxide (SO₂) due to sulfur in ore and flux, and nitrous oxide (NOx) due to combustion in air. Based on limited reported data, it is estimated that ~15 percent – 30 percent of particulate matter may remain in a fossil-free pathway, due to the melting and mixing of materials in the furnace, and best-available dust capture systems should be required to mitigate harms.

Pollution reduction potential relative to the BF-BOF pathway is estimated from a limited sample of self-reported facility data in EPA’s National Emissions Inventory (NEI). Only the Louisiana DRI facility has reported to NEI, and steelmakers do not all report the same sets of compounds.

Aligning and improving the quality and frequency of facility-level emissions is crucial to accurately identify and mitigate pollution-related health risks, and to provide communities transparency of operations. While all six criteria air pollutants are recorded and published in the National Emissions Inventory (NEI) every three years, states set their own rules for how often and in what format local regulatory agencies require permitted facilities to report. For access to annual reporting data, local air quality programs will publish facility-level emissions data in state-level emissions inventories and, in the best cases, interactive dashboards.

Looking beyond emissions, making investments now will set up the local and regional steel economy for long-term competitiveness in the domestic and global markets. Early capital investment to transition to H2-ready DRI effectively future-proofs facilities by allowing them to blend in increasing quantities of clean hydrogen as supply becomes available. The Department of Energy's Industrial Demonstration Program funding for Cleveland Cliffs is facilitating the transition of their BF in Middletown, Ohio to a DRI that can eventually run on hydrogen.

The capital investment required for relining can range from approximately $150M to $425M compared to the investment for a new DRI (the most emissions-intensive step of the process) which typically costs between $600M to $800M. Beyond that, however, the operational cost gap driven by energy costs remains. With existing federal incentives (renewable energy and hydrogen tax credits), an energy cost gap of approximately $2.50/kg H2 is estimated to remain in the near-term compared to coal-based production (Exhibit 5).

Modernizing and investing in the transition away from coal presents an avenue for blast furnace states to revitalize local communities by making use of existing infrastructure and protecting skilled workforces and union jobs. Compared to coal-based steelmaking, a hydrogen-based DRI EAF is projected to require comparable levels of direct employment for mining, iron, and steelmaking (retaining more jobs than maintaining the status quo by the end of this decade) as well as an additional ~750 full-time jobs to produce the renewables and hydrogen upstream (per 2 Mpta steel production).

Furthermore, research has also projected an additional 2,290 “indirect” and “induced” jobs (685 more than a BF-BOF investment), which includes jobs created from suppliers of materials used in the production of steel, as well as jobs created from the spending from direct and indirect employees. It is important to also consider the effect of steel revitalization on downstream markets, including steel processors, fabricators, and downstream manufacturers whose employment relies on the long-term viability of the industry.

What are the remaining barriers to achieving this equitable and climate-aligned transition, and how can we overcome them to incentivize near-term investment?

Economic support is still needed to close the cost gap today, build upstream infrastructure, secure worker transition, and undertake meaningful community engagement to modernize the steel industry to shift away from blast furnace technology. A remaining cost gap for cleaner steel production exists compared to the incumbent process even beyond what federal incentives can cover (Exhibit 6).

Closing this gap can be achieved by a variety of means at the federal or state level:

1. Reducing the capital cost gap with an Investment Tax Credit or grant tied to emissions performance.
2. Reducing the operating cost gap via production tax credit or contract-for-difference mechanism for either the fuel (hydrogen) or product (iron/steel).
3. Support for renewable electrolysis-based hydrogen production and transmission, including siting and permitting renewable energy and hydrogen pipelines and storage.

Importantly, conditions and stipulations for workforce transition and meaningful community engagement are critical in ensuring that the transition of these facilities provides value to the community and workers.

Demand for cleaner steel is only growing. We are approaching critical decision points: invest hundreds of millions of dollars in assets that will be outcompeted, or instead invest to modernize and transition assets for the future. If done right, this will offer competitive business advantages, slash emissions, improve community health outcomes, and secure jobs and economic development, continuing a proud legacy of industrial innovation and resilience of American steel.