Europe Green Steel Market Size, Share, and Growth Forecast from 2025 - 2032

Europe Green Steel Market Size and Share Analysis

The Europe green steel market is predicted to reach a size of US$ 236.2 Mn by 2025. It is anticipated to witness a CAGR of 75.3% during the forecast period to attain a value of US$ 12,004.3 Mn by 2032.

Green steel adoption in Europe is estimated to surge owing to stringent environmental policies, push for carbon neutrality, and developments in clean steel production technologies. The region is at the forefront of the push for carbon-neutral manufacturing. For example,

• The EU Green Deal targets aim for a carbon-neutral Europe by 2050 and the steel industry, which accounts for 7% to 9% of carbon dioxide emissions are under significant pressure to decrease emissions.
• Companies like SSAB, ArcelorMittal, and Tata Steel are committing to carbon-neutral steel production by 2050, driving a shift toward low-emission steel production technologies.

Key Highlights of the Industry

• EU Green Deal mandates aim to decarbonize the steel industry by pushing for low-carbon technologies like green hydrogen-based steelmaking.
• Hydrogen-based direct reduction (H2-DRI) is a leading technology to replace coal and coke used in traditional blast furnaces.
• The European Union is investing significantly in research and development for green hydrogen production, driving growth.
• Demand for green steel is being spurred by industries that prioritize sustainability in their supply chains.
• The European Commission's Green Deal and Fit for 55 initiatives include various funding mechanisms and subsidies for companies adopting green technologies, spurring expansion.
• Electric Arc Furnace (EAF) technology, which uses scrap steel as feedstock, is gaining traction in Europe due to its lower emissions compared to traditional blast furnaces.
• Based on production technology, the hydrogen Direct Reduced Iron (DRI) – Electric Arc Furnace (EAF) segment is likely to hold a share of 43% in 2025 owing to its feasibility.
• By application, the automotive segment is anticipated to hold a share of 39% in 2025 owing to rising demand for low-carbon steel to produce vehicle components.
• By application, the building and construction segment is set to hold a share of 41% in 2025.
• Germany is set to exhibit a CAGR of 2.3% through 2032 in Europe green steel market owing to government policies supporting expansion.

Market Attributes	Key Insights
Europe Green Steel Market Size (2025E)	US$ 236.2 Mn
Projected Market Value (2032F)	US$ 12,004.3 Mn
Market Growth Rate (CAGR 2025 to 2032)	75.3%
Historical Market Growth Rate (CAGR 2019 to 2023)	71.3%

Government Support in Germany to Augment Demand

Germany is predicted to lead the Europe green steel market with a share of 37% in 2025. The country has one of the most advanced steel industries in Europe. It is home to some of the biggest steel producers, like ThyssenKrupp, Salzgitter, and ArcelorMittal, which are already investing heavily in green steel technologies.

• ThyssenKrupp has committed to producing green steel by 2050, with investments in hydrogen-based steel production.

The country has set ambitious climate goals and is actively investing in decarbonization technologies for heavy industries like steel. The country is a prominent player in the EU Green Deal and has introduced several supportive policies.

• The government of Germany launched the ‘National Hydrogen Strategy’ which focuses on increasing green hydrogen production for use in various industries including steelmaking.
• Germany's Climate Protection Program 2030 aims to cut greenhouse gas emissions by 55% by 2030 with significant efforts to decarbonize the steel sector.

Technological Maturity and Feasibility of Hydrogen DRI –EAF to Spur Growth

Hydrogen Direct Reduced Iron (DRI) – Electric Arc Furnace (EAF) is projected to hold a share of 43% in 2025. Transition to Hydrogen DRI-EAF offers a substantial reduction in carbon dioxide emissions, one of the primary drivers of its adoption in the green steel market.

Hydrogen DRI uses hydrogen to decrease iron ore into direct reduced iron (DRI) in a much cleaner process.  This process produces water vapor (H2O) instead of carbon dioxide (CO2), offering a carbon-neutral alternative to conventional methods.

• Hydrogen DRI has the potential to reduce CO2 emissions from steel production by up to 90% compared to traditional blast furnace methods.
• Adoption of Hydrogen DRI-EAF in Europe could cut emissions from steel production by over 150 million tons per year by 2050, significantly contributing to Europe’s climate-neutral goals by 2050.
• The EU’s ‘Fit for 55’ package and the European Investment Bank are providing financial incentives and subsidies for the transition to low-carbon steelmaking processes.

Hydrogen DRI-EAF combination is increasingly becoming commercially viable. Prominent steel producers and technology providers in Europe are making significant investments to scale up and commercialize this technology.

• HYBRIT (Hydrogen Breakthrough Ironmaking Technology), a joint initiative by SSAB, Vattenfall, and LKAB in Sweden, is a pioneer in developing hydrogen-based direct reduction processes for steelmaking.

Steel’s Importance in Automotive Manufacturing to Facilitate Adoption

Automotive is anticipated to hold a share of 39% in 2025. The industry is undergoing a prominent transformation with a strong shift toward Electric Vehicles (EVs) and sustainable mobility solutions. Steel, being a primary material for vehicle manufacturing, plays a crucial role in meeting these goals.

Growing demand for low-carbon steel to produce vehicle components that meet sustainability standards is likely to spur expansion. Automotive manufacturers are increasingly integrating sustainable materials in vehicle production to reduce the carbon footprint of vehicles.

European Union (EU) has stringent emissions standards, which include ambitious targets for the automotive industry to reduce its carbon footprint. These regulations are driving manufacturers to adopt green steel to comply with sustainability and emissions goals.

Automotive companies in Europe are under increasing pressure to meet these standards, driving them to seek low-carbon steel alternatives like green steel produced via Hydrogen DRI-EAF or electric arc furnaces.

Automakers like Volkswagen, BMW, and Mercedes-Benz, are increasingly committing to carbon-neutral manufacturing processes. By using green steel, they aim to significantly reduce the carbon footprint of their vehicles.

Europe Green Steel Market Introduction and Trend Analysis

Potential growth in the Europe green steel industry is predicted to be driven by the rising EV market in the region. As automakers strive to decrease the carbon footprint of their manufacturing processes, the green steel industry is predicted to witness demand.

Research and development int efficient green steel production technologies is likely to accelerate, with increased investments in Hydrogen DRI-EAF and other low-emission technologies. Public and private sector funding will continue to flow in green steel projects, driving the shift to sustainable practices across various industries.

• As of 2023, hydrogen-based steel production will see further development and commercialization. The Hydrogen DRI-EAF process is expected to become the dominant technology by 2025.

Historical Growth and Course Ahead

The Europe green steel market growth was robust at a CAGR of 71.3% during the historical period from 2019 to 2023. The period witnessed a significant increase in the adoption of green steel driven by EU regulations and climate goals.

The automotive industry in Europe was one of the leading sectors adopting green steel. Manufacturers like Volkswagen, BMW, and Mecedes-Benz committed to using low-carbon steel to produce their vehicles, especially EVs.

The demand for green steel also grew in the construction sector, where sustainability is becoming a core component of building designs. This sector was a significant contributor of the green steel market as architects and construction firms seek to decrease the carbon footprint of building materials.

In the forecast period, regulations like the Carbon Border Adjustment Mechanism (CBAM) are set to impose higher costs on high-carbon steel. This further incentivizes the shift to low-carbon steel solutions. EU’s Green Deal and its push for carbon neutrality by 2050 is predicted to continue driving the demand for green steel in construction and automotive industries.

Market Growth Drivers

High Consumer Demand for Sustainable Products

Consumers in Europe are becoming more conscious of the environmental impact of the products they buy. For example,

• A 2022 survey revealed that 50% of consumers in Europe reported their willingness to pay more for sustainable products.

There is a growing demand for eco-friendly steel in industries like automotive, construction, and consumer electronics. Companies like Volvo and BMW have set ambitious targets for carbon-neutral vehicle production by 2030, creating strong demand for low-carbon steel.

For consumer, buying sustainable or green products is not just about the environment but also about the brand loyalty. This shift in consumer preferences is pressuring manufacturers, including steel producers, to align their operations with sustainable practices.

Surging Investor Pressure on ESG Goals

Investors in Europe are incorporating ESG criteria in their decision-making processes. Companies producing high-carbon steel or engaging in unsustainable practices are therefore less likely to attract investments. For instance,

• A 2021 study revealed that ESG investments have grown by 30% annually with billion flowing in sustainable companies and funds.

Investors are looking for companies that have clear, credible plans for reducing emissions. Steelmakers in Europe are facing increasing pressure from investors to align their business models with sustainability goals. A few companies are raising capital through green bonds to fund their transition to green steel production.

• For example, ArcelorMittal, has raised significant amounts through green bonds to finance projects aimed at reducing emissions and developing low-carbon steel technologies.
• As of 2022, 200 global investors managing more than US$ 5 trillion in assets have committed to supporting the Paris Agreement and net-zero emissions targets.

Market Restraining Factors

Concerns Regarding Energy Consumption

Hydrogen-based DRI technology, which is central to green steel production, is still in its early stages of commercialization. While pilot projects are underway in Europe, scaling these systems to full industrial capacity remains a challenge. Energy consumption is a significant concern, as hydrogen-based production methods require large amounts of energy to generate and process hydrogen. For example,

• A study by the International Energy Agency (IEA) indicated that hydrogen-based steel production can be 3 to 4 times more energy-intensive than traditional blast furnaces, though future technological improvements could reduce this gap.

Scaling up hydrogen production to meet the demand of large-scale steel mills is particularly challenging. Europe's current green hydrogen production capacity is limited and developing it to support industrial needs may require massive investments in infrastructure and supply chains.

Market Growth Opportunities

EU Carbon Border Adjustment Mechanism (CBAM)

Carbon Border Adjustment Mechanism is a critical part of the European Gren Deal, aiming to help the EU to achieve its ambitious target of net-zero greenhouse gas emissions by 2050. This adjustment mechanism is designed to encourage non-EU countries to adopt stronger climate policies, thus pushing for a global alignment of carbon pricing.

 

CBAM is estimated to drive the adoption of green steel production methods. As the European steel industry works towards becoming carbon-neutral, the CBAM acts as a safeguard, ensuring that the region’s investments in green steel technologies are not undermined by cheap and carbon-heavy imports.

 

Focus on Circular Economy and Recycling

Circular economy encourages the use of scrap steel, which can be recycled multiple times with minimal energy input compared to producing steel from raw ore. Recycling steel helps lower carbon emissions and is therefore an essential component of green steel production. The electric arc furnace (EAF) commonly used in green steel manufacturing, is more energy-efficient when utilizing recycled scrap steel. For instance,

• The recycling process in EAF steel production produces up to 60% less carbon emissions than traditional blast furnace methods that use coal-based methods.

Recycled steel helps in achieving climate goals by lowering the carbon footprint of steel manufacturing. The global steel recycling rate stands at 90% for scrap steel, making it one of the highest recycling rates of any industry.

• According to a report from the World Steel Association, nearly 700 million tons of steel are recycled annually, which saves both energy and raw materials.

Competitive Landscape for the Europe Green Steel Market

Companies in the Europe green steel market are heavily investing in low-carbon steel production technologies. SSAB has committed to producing hydrogen-based steel by using the HYBRIT technology.

Businesses are integrating circular economy practices and ae therefore focusing on the reuse and recycling of steel. Recycling facilities and partnerships with various industries like helps companies source quality scrap steel, thereby reducing the need for raw materials.

Organizations are aligning their strategies with EU Green Deal initiatives and the EU Carbon Border Adjustment Mechanism (CBAM) which aim to set a carbon price on steel imports. This gives an edge to green steel producers within Europe, ensuring they can maintain competitiveness while adhering to stringent environmental regulations.

Recent Industry Developments

 

• In January 2025, SNCF Réseau, rail infrastructure manager of France, signed a one-billion-euro six-year contract with Saarstahl Rail for eco-friendly rails. The steel used in these rails will be produced with an electric arc furnace, decreasing the carbon footprint of the product.
• In January 2025, GMK Center published a report highlighting how Ukraine can help in the decarbonization of the steel industry in Europe. The report states that the country has the potential to supply 20 to 25 million tons of raw materials for DRI production.
• In December 2024, Stegra, a Swedish company raised about US$ 7 Bn to build the world’s first industrial-scale plant for green steel in Boden. The plant aims to produce zero-emissions steel using green hydrogen starting 2026.
• In December 2024, the Executive Vice President of the European Commission, Stefan Sejourne, stated that the European Commission (EC) will consider extending measures to restrict steel imports to protect the sector during its decarbonization process.
• In November 2024, the Stockholm Environment Institute published a report estimating the potential demands for renewable electricity and renewable hydrogen in the EU’s green steel transition.

Europe Green Steel Market Report Scope

Attributes	Detail
Forecast Period	2025 to 2032
Historical Data Available for	2019 to 2023
Market Analysis	US$ Million for Value
Key Countries Covered	Germany U.K. France Italy Greece Netherlands Poland Rest of Europe
Key Market Segments Covered	Production Technology Application Country
Key Companies Profiled in the Report	ArcelorMittal Voestalpine SSAB Salzgitter AG Ansteel Group Boston Metal China Baowu Group Cleveland-Cliffs H2 Green Steel Nippon Steel Corporation Nucor Corporation Steel Dynamics, Inc. United States Steel Corporation
Report Coverage	Market Forecast and Trends Company Share Analysis Competitive Intelligence DROT Analysis Market Dynamics and Challenges Strategic Growth Initiatives
Customization and Pricing	Available upon request

Market Segmentation

By Production Technology

• Hydrogen Direct Reduced Iron (DRI) – Electric Arc Furnace (EAF)
• Renewable-Electric Arc Furnace (EAF)
• Molten Oxide Electrolysis (MOE)

By Application

• Automotive
• Building and Construction
• Home Appliances
• Electronics
• Others

By Country

• Germany
• U.K.
• France
• Italy
• Greece
• Netherlands
• Poland
• Rest of Europe

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