Averting the steel carbon lock-in through strategic green investments

Abstract A new wave of steel capacity additions in emerging economies threatens to lock in coal-based production for decades. By combining detailed steel production modelling with plant-level data in an integrated assessment model, we estimate that existing and planned coal-based steel plants could commit the world to nearly 60 Gt CO₂. If current policy and investment trends continue beyond current plans, committed emissions reach 115 Gt CO₂, consuming 20% of the remaining carbon budget for limiting peak warming to 1.7°C. We show that 60% of this lock-in can be avoided at moderate average abatement costs of $100–150 tCO₂⁻¹. In India alone, 22 Gt CO2 of future emissions could be avoided by leveraging climate finance to redirect $50 billion this decade towards hydrogen-ready direct reduction steel plants. Near-term investment decisions on new steelmaking capacity therefore represent a critical opportunity to avert the carbon lock-in and align the sector with climate targets.