Decarbonising the Steel Industry

27 March 2026

By: Dr David Mulrooney and Jeannie De Vynck

Direct Air Capture (DAC) is part of the toolkit to decarbonise heavy industry. For the steel sector, where process emissions are difficult to eliminate, DAC complements production-side changes, enabling carbon removal, compliance and value creation.

Why the Steel Industry is Hard to Decarbonise

Steel production is inherently carbon intensive due to both energy demand and process chemistry. Traditional steelmaking routes, particularly the blast furnace–basic oxygen furnace (BF–BOF) route, rely on coke (derived from coal) to reduce iron ore into iron. This reduction reaction directly generates CO₂, meaning emissions are embedded in the process itself.

The carbon footprint of the steel sector (EU Joint Research Centre | World Steel):

The steel industry contributes approximately 7%–10% of global CO₂ emissions.
It accounts for around 5% of total EU CO₂ emissions (steel production in the EU emits ~180–220 million tonnes of CO₂ annually).
Typical emissions intensity is about 1.92 tonnes of CO₂ per tonne of steel produced.

Decarbonising the steel industry is challenging due to the need for very high temperatures above 1000°C, reliance on fossil carbon in the reduction process, and strong global competition that limits the ability to increase prices.

Furthermore, the long lifetimes of furnaces and plants are an issue because these assets are designed to operate for several decades, often 20 to 40 years, and require very high capital investment to build or replace. Replacing or retrofitting with low-carbon technology before the end of life is expensive and can disrupt production. Additionally, shutdowns for major upgrades are difficult to schedule in a competitive market, and companies may delay changes to avoid financial losses.

As a result, even with efficiency improvements, emissions reductions remain constrained without fundamental process changes or external carbon management solutions like Direct Air Capture.

How Direct Air Capture can be used to Decarbonise Steel Production

Direct Air Capture offers a way to address emissions that cannot easily be eliminated at source. When integrated strategically, DAC can support steel decarbonisation through multiple mechanisms.

Co-locating DAC with Steel Plants

DAC systems can be installed alongside steel plants to reduce transport and infrastructure needs, make use of existing utilities, and connect directly with the plant’s energy systems. Moreover, steel plants operate continuously, making them suitable for steady DAC operation.

Use of Low-Grade Waste Heat to Power DAC

Steel production generates large quantities of low- and medium-grade waste heat from:

Blast furnace exhaust gases
Basic oxygen furnace off-gases
Continuous casting and rolling processes
Coke oven gas streams

This waste heat can be used to power DAC sorbent regeneration, reducing external energy demand and improving overall system efficiency.

Example: NEG8 Carbon’s DAC Technology

NEG8’s DAC system can be regenerated at 65°C. This is compatible with the temperature of water returning from blast furnace cooling systems, which is typically 60–80°C after removing heat from the furnace shell cooling elements.

At present, this heat is usually lost through cooling towers and is not used in the plant. By diverting part of this hot water to NEG8 units, the waste heat can be used to capture CO₂ without adding extra fuel cost.

Air exhaust from sinter plant cooling systems is another heat source in a similar temperature range and could also be used.

Waste Heat Source	Typical Temperature	NEG8 Compatibility
Blast furnace stave cooling water return	60–80°C	Primary integration source
Sinter cooler exhaust air	50–100°C	Secondary integration source
EAF (Electric Arc Furnaces) cooling circuits, where applicable	60–90°C	Compatible

CO₂ Utilisation

Captured CO₂ can be reused.

Synthetic fuels
CO₂ is used as a feedstock in the production of eFuels like eMethanol or eSAF.
Chemical feedstock
CO₂ can be used in polymers or industrial chemicals.
Mineralisation in steel slag
CO₂ is reacted with steel slag to form stable carbonates. When finely ground, it serves as an excellent Supplementary Cementitious Material (SCM) in concrete. Alternatively, the mineralised slag can be used as an aggregate in concrete.

Carbon Credits and Compliance

DAC allows steel producers to generate verified carbon removals that can offset emissions, be sold/traded in carbon markets, and help the industry to reach emissions reduction goals and remain compliant. It also creates a financial return to support investing in decarbonisation efforts. The regulation of CO₂ emissions from the steel industry in the EU is not covered by a single law, but rather it is governed by a framework of linked regulations. These include the EU Emissions Trading System (EU ETS), the Carbon Border Adjustment Mechanism (CBAM), the Industrial Emissions Directive (IED), and the Fit for 55 policy framework which includes the ETS and CBAM. (See: EU Climate Regulations Explained)

Regulation	Function	Impact on steel industry
EU ETS	Carbon pricing (cap-and-trade)	Direct cost per tonne CO₂
CBAM	Import carbon pricing	Protects EU steel competitiveness
IED	Emission control at source	Requires BAT and permits
MRV rules	Data compliance	Enables accurate carbon accounting
Fit for 55	Policy framework	Tightens emissions targets

As of February 2026, the EU has established a certification framework for Direct Air Capture under the Carbon Removals Certification Framework, but it is not yet permitted within the EU ETS, with a decision on its inclusion expected in the 2026 ETS review.

Other Approaches to Decarbonising Steel

While DAC handles carbon emissions, production-side changes are also progressing.

Green Steel vs Regular Steel

“Green steel” typically refers to steel produced with:

Hydrogen-based direct reduced iron (DRI)
Electric Arc Furnaces (EAF) powered by renewable electricity
High scrap content

Compared to conventional steel, coal is replaced with hydrogen or electricity, and process emissions are greatly reduced.

Challenges of Green Steel

Despite its potential, green steel faces challenges such as the high cost of hydrogen, limited renewable electricity, restricted scrap supply for EAF routes (EAF is when steel is produced by melting metal using electrical energy rather than using coal-based reduction), and the need for major infrastructure changes.

Conclusion

Direct Air Capture offers a complementary approach by removing the steel industry’s carbon emissions, integrating with existing plant operations, and enabling new value streams through CO₂ utilisation and carbon markets. When combined with production-side innovations, DAC supports compliant, low-carbon steel production in line with EU climate targets. At present, no single technology fully replaces conventional steelmaking at scale, meaning a combination of solutions is required.

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Interested in NEG8 Carbon’s CO₂ capture technology?

Contact the NEG8 Carbon Team