Europe's coal-based steelmaking — an Industrial Revolution relic now pushed to 2045

The EU’s Steel and Metals Action Plan (SMAP), published on March 19, sends strong signals about the need for a green and competitive steel industry. The European Commission rightly acknowledges that the use of clean energy can bring benefits to the EU's energy system while reducing costs for the industry.

But without firm commitments to phase out coal-based steelmaking, the plan risks leaving Europe locked into decades more of high-emission production — jeopardising the EU’s climate targets and delaying the industrial transformation that workers and communities deserve.

Since the industrial revolution, iron and steelmaking plants have grown up close to coalfields. Steel mills in the Ruhr Valley, Silesia, and South Wales all developed around coal deposits. Ever-larger blast furnaces were built to transform iron ore into iron, using this coal.

Even in Europe today, most steel is still made using iron from coal-fired blast furnaces, and so has a horrifying climate footprint of around two tonnes of carbon dioxide per tonne of steel. Consequently, the sector is responsible for 5.7 percent of total EU emissions.

With the climate crisis accelerating, this needs to change. Blithely continuing this production model is simply not compatible with Europe’s planned 90-percent cut in net greenhouse gas emissions by 2040.

Within the EU, there are still 47 coal-fired blast furnace-based steel plants in operation, resulting in around 133 million tonnes of CO2 per year, the majority of which comes from the coal used in blast furnaces to produce virgin iron. The methane emissions from mining that coal are not even included in these numbers.

Retirement dates have now been announced for 32 of these 47 furnaces, so the compass is pointing in the right direction to phase out coal-based steel production. But its needle is quivering, and policymakers must pay attention because a careful analysis of company data reveals four big problems.

A quartet of difficulties

Number one: timeframes are too long. Out of the 32 blast furnaces with retirement dates, six of them are currently set to continue operating beyond 2035, even though full carbon pricing from 2034 should render them unprofitable. Could the owners of some of these plants try to delay or sabotage the EU Emissions Trading System (ETS) or the Carbon Border Adjustment Mechanism (CBAM)?

Number two: major investments in extending the life of blast furnaces are still happening. Two companies have snuck out new investments in coal-powered blast furnaces this year. By fully ‘relining’ a furnace with refractory bricks, operations can traditionally be extended for around 20 years.

ArcelorMittal in France (Dunkirk and Fos-sur-Mer plants) and SHS/Rogesa are being very coy about how these relinings affect their transition plans and how many years or decades the revamped furnaces will run. Two decades of production would emit an additional 164 million tonnes of CO2 which, per year, rivalling Cost Rica’s annual emissions. 

Companies are often happy to announce new green labels or pilot test results — yet they rarely boast about the lifetime extensions of coal-based blast furnaces in press releases. If these ones hadn’t appeared in investor reports — due to their multi-million euro costs — we wouldn’t even know about them.  

Number three: most worrying of all, there are 13 coal-based blast furnaces with no retirement date at all and six of these are coming to the end of their current lifespans. If these furnaces get relined and operate for another 20 years, that’s another potential 271 million tonnes of CO2 in the atmosphere — or about as much as Spain’s total greenhouse gas emissions in 2023.  

The business case for coal-based steel will end in 2034, when the last free allowances for steelmakers under the ETS are phased-out. This should incentivise companies to sort out clear transition plans now.

But uncertainties are rippling through the sector after some companies announced reviews of their decarbonisation policies and backtracked on their commitments. Here, the precedent set by the commission reopening and watering down other Green Deal files is not helpful. 

Number four: the alternative sources of iron are coming on stream too slowly. As blast furnaces retire, steelmaking in Europe will continue but it will look different. It will be fed by recycled scrap steel, by near-zero-emissions iron made with green hydrogen on site, or by importing transportable green iron from southern/northern Europe, or from allies such as Canada and Australia. And in a decade or more, perhaps it will be made with iron produced using other new so far unproven technologies.

So far, steel companies have announced 33 EU projects for “near-zero-emissions-capable” iron or steel but a number of these are now delayed.

ArcelorMittal’s postponement of all five of its European decarbonisation projects sent particularly large shockwaves through the sector. The first movers in greener iron production — known as direct reduction of iron oxides and requiring green hydrogen — are moving in Sweden and Germany, but the followers are yet to follow.

This is not just a numbers game. It is about transition and transformation; how an industry makes steel and what workers do for a living

Meanwhile, conversations about shipping green iron within the EU or from locations with more plentiful renewable energy for green hydrogen (such as Australia or Canada) are barely started, with investment in new supply chains yet to happen. 

This is not just a numbers game. It is about transition and transformation; how an industry makes steel and what workers do for a living. Honest conversations, clear policy incentives and corporate leadership are needed for this. And they need to start now.  

The competitive and upgraded steel industry of the future will enable the car-making, renewable energy, construction, and manufacturing jobs of the future. But it’s an upheaval that needs careful planning. A realistic review of blast furnace retirement dates and transition plans needs to start now.

The EU’s Clean Industrial Deal is set to loosen state aid rules, reduce energy costs, create preferential procurement, and fast track permitting for steelmakers to be both more competitive and greener.

But member states and commission’s executive vice-presidents Teresa Ribera and Stéphane Séjourné, need to insist that companies step up. For metallurgical coal to be phased out — not down, but out — it is essential that decision-makers stand firm on the timelines for phasing out free allowances in the EU-ETS.

Policy makers should require retirements compatible with EU climate targets and ensure that just transition measures are in place years before a shutdown. By now, every EU steelmaker should have commitments to no further investment in coal-powered infrastructure and set clear retirement dates for every site. 

Blast furnaces burn coal. They pollute the air that workers and citizens breathe and lock Europe into outdated, high-emissions pathways. Policymakers now face a clear choice: enable a bold, managed phase-out of all 47 coal-fired blast furnaces, or risk falling short of Europe’s climate commitments. A coal-free industrial transition, underpinned by firm timelines, social safeguards, and accountability, is not optional — it is essential.