Understanding Green Steel: Why It Matters and What Comes Next

A Q&A with Jon Gordon

The United States is at a defining moment for the future of primary steelmaking. For the past year, CALSTART has engaged automakers, green steel innovators, and other stakeholders to assess how the country can transition to near-zero-emissions steel in time to meet climate, competitiveness, and community health goals. The pathway is clear: the United States must rapidly replace its remaining coal-based steelmaking with green primary steel and low-emissions secondary production to meet the needs of the automotive, construction, and technology sectors.

If green steel is a new concept to you, you’re not alone. While steel is one of the world’s most essential materials, the way it’s traditionally produced remains one of the largest industrial sources of carbon pollution globally. At the same time, a new generation of technologies and projects is emerging that could fundamentally reshape how steel is made in America, creating stronger domestic supply chains and a more competitive industrial economy in the process.

To help break down what green steel is, why it matters, and how it can scale in the United States, we sat down with Jon Gordon for a wide-ranging Q&A covering everything from hydrogen-based steelmaking and industrial policy to automaker purchasing power, community impacts, and the future of American manufacturing.

1. For someone new to the concept, what exactly makes steel “green”? What’s different from how steel has traditionally been produced?

Steel is one of the most useful materials we have. It builds our bridges, our buildings, and our cars. But making it has always required enormous amounts of heat, and for more than a century, we have generated that heat by burning coal.

Traditional steelmaking works in two basic steps. First, we take iron ore out of the ground and heat it in a furnace to extract the iron. Second, we refine that iron into steel. Both steps burn fossil fuels, and all that burning releases carbon dioxide.

Green steel makes the same product, but instead powers the process with clean electricity and/or hydrogen. A standard steel mill today emits roughly two tons of CO2 for every ton of steel it produces. Green steel gets that number below 0.4 tons, and the best emerging technologies can get much closer to zero.

2. Why is it called “green” steel?

The word “green” signals that this steel is produced with low or near-zero emissions. It follows the same logic as green energy or green building. You may also hear it called clean steel or low-emissions steel. The names vary, but the goal is the same: making one of the world’s most essential materials without loading the atmosphere with carbon.

3. What are the biggest sources of emissions in conventional steelmaking today?

It comes down to how we generate heat. Making steel requires incredibly high temperatures, and for over a century the industry has reached those temperatures by burning fossil fuels. Coal goes in, carbon dioxide comes out. That process, repeated across thousands of facilities worldwide, makes steel responsible for roughly 8% of global greenhouse gas emissions, roughly on par with all the world’s passenger cars combined. Powering the iron-smelting step, called the blast furnace, is the biggest single source of emissions.

4. Are there different “types” of green steel, or is it one standard approach?

There are a few different pathways, and the technology is still evolving. The most developed approach, used by Stegra, uses hydrogen to chemically reduce iron ore, which is then melted in an electric arc furnace powered by renewable electricity. A second pathway, being developed by Boston Metal, uses electricity alone to extract iron directly from ore through a process called Molten Oxide Electrolysis. A third approach, pursued by Electra in Colorado, uses low-temperature electrochemical processes that can run on intermittent renewable power.

What ultimately matters is not which pathway a producer uses, but how many tons of CO2 they emit per ton of steel. The target is below 0.4 tons. Technology will keep advancing, and the goal is to keep driving that number down while also reducing costs and scaling production.

5. Why does green steel matter in the context of transportation and clean mobility?

You cannot fully decarbonize transportation without addressing steel. A vehicle is roughly 60% steel by weight, and when you account for all the emissions that go into manufacturing a car, steel can be responsible for up to 40% of that footprint. For electric vehicles, where tailpipe emissions are zero, manufacturing emissions become an even larger share of a vehicle’s lifetime impact.

This is where the auto industry’s purchasing power becomes critical. Ford, GM, and other major automakers are enormous consumers of steel, and they have deep, long-standing relationships with the biggest producers in the country like Cleveland Cliffs and US Steel (now Nippon). When an automaker signals that it wants lower-carbon steel, steelmakers respond. They follow the money. Automakers have both the leverage and the responsibility to drive green steel demand at scale. Clean cars need clean steel.

6. What would surprise people most about the role steel plays in climate change?

Most people think of tailpipes and power plants when they think about climate change. Steel rarely comes up. But the U.S. is actually a quiet leader in low-carbon steel production.

About 70% of American steel is already made using recycled steel in an electric arc furnace which melts scrap metal, a process that produces a fraction of the emissions of traditional blast furnace steel. That gives the U.S. a significant advantage over countries like China, where coal-based steelmaking still dominates. The challenge is the remaining 30% of U.S. production that still relies on blast furnaces. That slice generates roughly 75% of the entire sector’s emissions. Solving that problem is the task in front of us.

7. What are the biggest challenges preventing green steel from scaling right now?

The technology is ready. The challenge is capital.

A single commercial-scale green steel facility costs billions of dollars to build. That investment requires government support to reduce early risk, access to competitive green financing, and crucially, purchase commitments from major steel buyers. When a company like Ford or Microsoft agrees to buy green steel before a plant is even built, that commitment gives developers something tangible to show lenders. It can lower financing costs and turn a project that might otherwise stall into one that moves forward.

Policy stability also matters enormously. Tax credits, loan guarantees, and federal procurement commitments can be the difference between a project breaking ground or sitting on a shelf.

8. What role should government policy play in accelerating green steel in the U.S.?

Think of it as three things: carrots, sticks, and convening.

On the carrot side, government should provide subsidies and tax credits that reduce the cost of building and operating green steel facilities. Expanding Buy Clean policies, which require federal agencies to purchase lower-carbon materials, would create a powerful and reliable demand signal.

On the stick side, a carbon border adjustment is the most important near-term tool. This means applying tariffs on imported goods based on their carbon content, leveling the playing field for cleaner American producers competing against cheaper, dirtier imports. This is one of the rare climate policies with genuine bipartisan support. The Foreign Pollution Fee Act, introduced by Republican Senators Bill Cassidy and Lindsey Graham, and the Clean Competition Act on the Democratic side, both move in this direction. These legislative efforts have bipartisan support, but nothing has been passed yet. Going further, a domestic carbon price on steel would make polluters pay for the real cost of their emissions, but that remains a harder political lift.

On the convening side, government is uniquely positioned to bring steelmakers, automakers, unions, and communities to the same table. Working through barriers together, whether financing gaps, workforce transitions, or permitting challenges, is something only government can organize at the necessary scale.

9. Are there any promising projects or regions in the U.S. that give you optimism?

Yes, several.

Boston Metal, based in Massachusetts, is developing a steelmaking process called Molten Oxide Electrolysis that uses electricity to produce steel with zero direct carbon emissions. In 2025 they successfully commissioned an industrial cell that produced tonnage steel, validating the technology’s scalability toward commercial production. A demonstration plant is expected “in the coming years.”

Electra, based in Colorado, takes a different approach: low-temperature electrochemical iron production that can run on intermittent renewable power. They are building a demonstration plant designed to produce 500 tons of iron beginning in mid-2026, with output going to Nucor, which is both a customer and an investor. Electra has also secured purchase agreements with Meta and Toyota Tsusho, exactly the kind of cross-sector commitments that make ambitious projects financeable.

On the larger infrastructure side, Hyundai Steel’s planned $6 billion facility in Louisiana could become the most significant near-term green steel development in the country. If built to be hydrogen-ready, it has the potential to serve as a national model for what next-generation primary steelmaking looks like.

10. What does success look like 10 to 15 years from now for green steel?

We are trying to decarbonize primary steelmaking, that 30% of U.S. steel that’s not made from recycled steel. This means ramping up to 20 million tons per year of green steel, and phasing out 20 million tons of fossil fuel-based steel. To do so by 2050 will require about 8-12 green steel facilities going live.

In the next 10-15 years, success would mean at least 4 commercial-scale green steel plants operating domestically, out of the 8 to 12 total facilities the country will eventually need. It would mean automakers are buying green steel as a routine part of their supply chains, not as a premium experiment. And it would mean we’ve stopped reinvesting in blast furnaces which lock in another generation of coal-based production.

It also means the communities that have lived alongside steel mills for generations are starting to breathe cleaner air.

The steel transition is not just a climate story. It is a story about health, competitiveness, and whether America builds industrial infrastructure that works for the next century or keeps extending assets from the last one.

About Jon Gordon

Jon is leading CALSTART’s efforts to decarbonize steel and aluminum used in vehicles. By engaging our member companies and other consumers of steel and aluminum, he is analyzing automotive supply chains and identifying opportunities to make the automotive sector a first-mover in steel and aluminum decarbonization. For questions, contact Jon at jgordon@calstart.org.