steel plant worker

US Businesses Need Low-Emissions Steel, and It’s Time for US Steelmakers to Get It to Them

Demand from corporations is about to bring green steel to a tipping point, presenting a huge opportunity for US steelmakers as the near-zero emissions market jump-starts.

The iron and steel sector can achieve net-zero emissions by 2050. The most important action to get there is transitioning away from current unabated fossil-based technologies to cleaner innovations such as hydrogen-based steel. In fact, Mission Possible Partnership estimates that 70 such near-zero emissions steel plants need to be built by 2030 for the sector to stay on track. Yet that investment isn’t happening in most of the world. Not one near-zero emission iron and steel project has been announced in the United States.

At RMI, we believe things are about to change, as US companies which purchase steel are sending a strong, clear demand signal for near-zero emissions steel, which can now be competitively met with US supply due to the federal incentives kick-starting a new low-emission marketplace.

To match these first movers in the low-emissions steel market, RMI is launching the Sustainable Steel Purchasing Platform to enable steel demand to be aggregated across both direct and indirect steel purchasers. We believe the time for sustainable steel has arrived, and here’s why.

Companies are responding to two critical trends. First, the changed business environment created by the Inflation Reduction Act (IRA) and the Infrastructure and Investments Jobs Act (IIJA), which have provided strong financial incentives for low-emissions energy and will require domestic companies to build renewables, grid infrastructure, and re-shore industrial production — all activities which will rely on US steel supply.

Second, corporations across the economy are calling for cleaner steel to address emissions from their supply chains. Clean supply lines will require new facilities and shifts in manufacturing processes to reduce emissions. Suppliers will need to make investment decisions soon to meet their customer’s 2030 decarbonization milestones. If the projected US demand for steel in 2030 is met with current, fossil-intensive steelmaking methods, US carbon emissions from steel production could increase by 25 percent (or 22 million tons of CO2) per year.

Given these market trends, US annual demand for near-zero emissions steel is anticipated to reach 6.7 million tons (Mt) by 2030. To put this in context, the United States produced approximately 82 Mt of steel in 2022, with a typical steel plant producing 2 million tons per year. Since not one ton of US steel currently produced is near-zero emissions, American steelmakers are at a critical investment juncture: build near-zero emissions steel plants now or miss the boat by forcing US companies to import to meet their near-zero emissions steel needs.

The Energy Transition Is Being Built with Steel

In recent years, US manufacturers have continued to import steel to fulfill their demand. Today, around a quarter of all steel used in the United States is imported, according to the US Geological Survey. The IRA and IIJA are poised to radically alter this import dependency.

Reliance on domestic steel sourcing will be a fundamental strategy for many companies looking to maximize IRA benefits, as several incentives require US sourcing minimums to qualify for federal funds. Exhibit 1 showcases this rise in steel demand in key sectors impacted by the IIJA and IRA.

The US clean energy push to build renewables, revamp transmission infrastructure, and re-shore industrial manufacturing incentivized in recent federal legislation, is expected to generate roughly 39.7 Mt of new steel demand from now to 2030.

In some cases, current federal funding support dictates domestic sourcing requirements. For example, to qualify for cost-share grants from IIJA and tax credit bonuses in the IRA, any steel, iron, and manufactured products must be produced in the United States. Additionally, under the Buy American Act, any goods that the federal government directly buys must meet domestic requirements: predominantly iron or steel products must be 95 percent US-made and all other manufactured products (that are less than 50 percent steel) must be 60 percent US-made. This Buy American threshold for manufactured products is set to increase over time, to 65 percent US-made by 2024 and 75 percent by 2029.

Overall, the Buy American requirements will need to be met by domestically manufactured steel for goods purchased by the federal government, such as automobiles, buildings, infrastructure, and defense applications, which collectively amount to approximately 9 Mt of annual steel demand by 2030. As the Environmental Protection Agency develops standards for the federal Buy Clean initiative, which will prioritize American-made and lower-carbon construction materials, targets can be set to create the need to lower emissions for multiple consumer profiles, such as automotive and renewable energy which typically uses ore-based steel and construction and manufacturing which largely relies on scrap-based steelmaking.

Cleaner Supply Chains

The other key factor in the rapid, near-term growth for low-emissions steel in the United States is corporate climate commitments. To fulfill emissions reduction targets, many infrastructure and manufacturing companies — for example, appliance and machinery manufacturers, automakers, and construction companies — must address the emissions associated with the steel their products are made with.

By analyzing corporate sustainability commitments and steel use from 58 companies representing approximately 40 percent of the US steel market, RMI estimates the near-zero emissions steel demand from these companies will reach 6.7 Mt in 2030. The automotive sector will represent half of this demand (Exhibit 2). Car makers are uniquely poised to lead in the low-emissions steel market, with 77 percent of annual US car sales originating from companies that have already publicly committed to clean up their supply chain, some of which have even publicly committed to start using near-zero emissions steel. To realize deep decarbonization across complex supply chains, interim steps and progress will need to be made in key sourcing markets — like steel — by 2030.

Auto companies directly buy steel from mills, and the additional cost of near-zero steel has a marginal impact on the total cost of a car. Driving emissions out of the supply chain by purchasing low-emissions steel will be a key component of automobile companies reaching their targets with a modest cost increase: steel represents roughly 30 percent of this industry’s supply chain emissions while the cost of low-emissions steel, (assuming a 50 percent premium in cost per ton in 2030), translates to less than a $200 increase per car. New vehicles that offer reduced lifecycle emissions hold opportunities for automakers to capture market share of environmentally-conscious consumers in the growing EV market, which is expected to represent half of new US car sales by 2030.

US carmakers should take inspiration from their European competitors, moving past MOUs to purchase agreements. Volvo recently announced it will buy low-emissions steel from the HYBRIT facility in Sweden. Actions from large steel buyers, which are also responding to the EU’s carbon border adjustment mechanism, have helped capacity for low-emissions steel grow steadily, as facilities with production expected in 2027 have been announced in France and Germany.

While automotive companies are well-placed to lead on near-zero emissions steel, other sectors can also add weight. For example, renewable energy developers, where sustainable steel procurement not only aligns with their company mission but may also be required in future public auctions.

Tying Together Purchasing Power

Even for US auto manufacturers which represent a large slice of low-emissions steel demand, individual carmakers still lack the volume required to shift a steel facility to produce low-emissions steel. A first-of-its-kind steelmaking facility can easily take four to six years to site, plan, construct, and ramp up production, which means that investment decisions based on firm revenue streams from steel purchase agreements are needed now to meet 2030 demand volumes.

Pooling near-zero emissions steel demand by translating corporate commitments into specific, joint procurement will support steel producers to make the necessary facility-level investments to satisfy the growing demand for low-emissions steel. Companies and coalitions — like the First Movers Coalition and SteelZero have laid the foundation by establishing ambitious targets. Now, by pooling interested buyers big and small up and down the supply chain it will be possible to deliver on those commitments and stimulate the required investment. These early buyers of sustainable, near-zero emissions steel will most likely use multiple contracting options to meet their diverse set of steel needs. To accommodate these contracting options such as direct purchase or decoupled mechanisms, the Sustainable Steel Purchasing Platform is working with buyers across sectors to develop the necessary implementation details.

Taken together, the need to meet near-term corporate emissions commitments and support growth sectors impacted by the IIJA and IRA creates enough demand to support offtake from at least three low-emissions steel facilities (2 million tons per year) in the US by 2030. According to the technology roadmap by Mission Possible Partnership, 8 percent of US production in 2030, or 9.4 Mt, must be met by near-zero emission ore-based steel plants for the US steel sector to stay within its 1.5⁰C carbon budget. Companies and their consumers can direct their purchasing power to ensure the US steel sector achieves this climate goal and strengthens local communities.

The Sustainable Steel Purchasing Platform will look to solidify the US market appetite for low-emission steel and facilitate a collaborative procurement to enable investment. Through aggregating demand from motivated, sustainable buyers and working with technical partners to define key product-level parameters the Sustainable Steel Purchasing Platform looks to create transparency on commercial volumes that satisfy deep-decarbonization for industrial supply lines. The first step for this joint procurement effort will be a Request for Information (RFI) to steelmakers, to align contract terms and emissions requirements — followed by a buyer-led Request for Proposal (RFP) for low-emissions steel later this year. Companies looking to participate in the Sustainable Steel Purchasing Platform and secure volume in the inaugural US supply of low-emissions steel can reach out to Lachlan Wright ( or Jessica Terry ( to get involved. RMI and our key collaboration partners across the industry are looking forward to establishing a new sustainable supply line for steel – we hope you will join us.