November 2025

The shift to clean steelmaking is a crucial part of the energy transition – but progress remains far off track. Recycling offers an immediate, cost-effective way to cut emissions, yet by 2050 it can only meet about half of global steel demand. The rest will need to come from near-zero emission primary steelmaking using iron ore — which today accounts for less than 0.1% of global output. 

Trade has a vital role to play in this transition, but for now it remains a barrier. The international exposure of the steel sector, the lack of differentiation between high- and low-emission products, and the high costs of near-zero emission steel all make clean steel uncompetitive and inhibit investment. Overcapacity in global steel markets is further weakening confidence to invest in decarbonisation and fuelling trade tensions — with more than half of the G20 countries having raised trade barriers on steel since 2024. 

While carbon pricing has dominated policy debates, this report finds that targeted clean steel subsidies are likely to be essential to unlock investment in new primary steelmaking technologies. These can be designed to be revenue-neutral for governments, low-cost for consumers, and without creating risks to industrial competitiveness.  

The report also suggests a new diplomatic focus on trade and steel at the international level:  

• Tariff exemptions for clean steel, to give near-zero emission steel an advantage in international trade. 
• Green iron trade partnerships that allow countries with high energy costs to import green iron from regions with the best renewables and ore resources — supporting both competitiveness and sustainable industrial development. 
• Agreed principles for clean steel subsidies, supported by common definitions and standards, to reduce the risk of trade disputes and give greater confidence to investment.  

These measures are likely to be less difficult to agree than common carbon prices, and could shift current debates on trade in steel from negative-sum to positive-sum dynamics.   

The report proposes that major steel producers such as China, India, and the EU, along with potential green iron exporters such as Australia, Brazil, and South Africa, should begin a diplomatic process to create and grow global markets for clean iron and steel.    

This is a report of the Breakthrough Agenda Policy Network, whose member institutes are: African Centre for Economic Transformation (headquartered in Ghana), Chatham House (UK), Council on Energy, Environment and Water (India), Energy Foundation China, Institut du Développement Durable et des Relations Internationales (IDDRI, Paris), Institute for Global Environmental Strategies (IGES, Japan), Institute of Climate and Society (ICS, Brazil), and Instituto E+ Transição Energética (Brazil). The network and its research have also benefitted from the expertise of other contributing experts.