Emerging Green Steel Markets Surrounding the EU Emissions Trading System and Carbon Border Adjustment Mechanism

The global steel industry accounts for 8–10 % of global CO2 emissions and requires deep decarbonisation for achieving the targets set in the Paris Agreement. However, no low-emission primary steel production technology has yet been commercially feasible or deployed. Through analysing revisions and additions of European Union climate policy, we show that green hydrogenbased steelmaking in competitive locations achieves cost-competitiveness on the European market starting 2026. If the deployment of competitive lowemission steelmaking is insufficient, we show that the European steel industry loses competitiveness vis-à-vis countries with access to low-cost renewable energy. Therefore, we assess the options for the European steel industry to relocate the energy-intensive ironmaking step and trade Hot Briquetted Iron for rapid deep decarbonisation of the European steel industry. Lastly, we discuss complementing policy options to enhance the Carbon Border Adjustment Mechanism’s strategic value through European Union-lead global climate cooperation and the possibility of sparking an international decarbonisation race.