Averting the steel carbon lock-in through strategic green investments
- Clara Bachorz
- Jakob Dürrwächter
- Chen Chris Gong
- Adrian Odenweller
- Michaja Pehl
- Felix Schreyer
- Philipp C. Verpoort
- Gunnar Luderer
- Falko Ueckerdt
2026-05-21
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 GtCO 2 . If current policy and investment trends continue beyond current plans, committed emissions reach 114 GtCO 2 , consuming 20% of the remaining carbon budget for limiting peak warming to 1.7 °C. We show that 60% of this lock-in risk can be avoided at moderate average abatement costs of US$100–150 tCO 2 −1 . In India alone, 22 GtCO 2 of future emissions could be avoided by leveraging climate finance to redirect US$50 billion this decade towards hydrogen-ready direct reduction steel plants. Near-term investment decisions on new steelmaking capacity represent a critical opportunity to avert the carbon lock-in and align the sector with climate targets.