The world is approaching a positive tipping point towards clean steel. Here’s how to accelerate it

Steel is such an integral part of our lives that it has been called the backbone of modern civilization. Increasing urbanization and the need for new buildings, infrastructure and automotive vehicles have driven global demand for steel, leading to a doubling of steel production from 2000 to 2020.

However, steel is also responsible for 7-8% of global carbon dioxide (CO2) emissions, because the high temperatures required to make it are currently met by fossil fuels, particularly coal, which is also used as a chemical agent in the production process.

Decarbonization of the steel sector is therefore important for achieving net-zero emissions and for accelerating a broader industrial transition.

This transition is now beginning to take shape. Clean steel technologies, new policy approaches and innovative forms of international cooperation are converging in ways that suggest the world may be nearing a “positive tipping point”: a threshold beyond which reinforcing feedback loops make rapid, self-propelling change possible.

This shift was evident at the 2025 UN Climate Conference (COP30) in Belém, Brazil, where leading companies, governments, and economists signalled that near-zero-emissions steel is edging from niche experimentation towards commercial reality.

Strong demand for low-emission materials and growing access to renewably generated electricity are now directly shaping multibillion-dollar investment strategies. The three drivers or enabling conditions for a positive tipping point for clean steel are competitive cost, increasing market demand and supportive policy.

The steel industry has long been labelled “hard to abate” but the evidence increasingly suggests this perception is outdated.

Breakthrough direct reduced iron (DRI) technologies, which replace coal with green hydrogen (produced by splitting water using hydrogen electrolysers powered by renewable energy) in primary ironmaking, have demonstrated strong technical performance and rising investor confidence.

Modelling from the University of Exeter, Cambridge Econometrics and partners shows that once DRI technology gains early market share, learning-by-doing quickly reduces costs and accelerates adoption. As more hydrogen electrolysers come into operation, cost reduction rates of the order of 18-20% per doubling of output are possible.

This non-linear “S-curve” dynamic is a hallmark of positive tipping points – from solar power to electric vehicles – and steel appears poised to follow the same trajectory.

Today, clean primary steel accounts for only 0.1% of global production. To align with international climate goals, output must scale from under 1 million tonnes today to more than 100 million tonnes per year by 2030.

Achieving this requires an acceleration in demand. Until recently, the absence of a market for clean steel kept investment trapped in a “chicken and egg” problem. But this is beginning to change through a combination of public and corporate procurement and international cooperation.

Public procurement can be a powerful catalyst for a clean steel market because governments typically account for 25-35% of total steel demand through infrastructure, transport and other public projects.

Modelling studies show that as little as a 10% public procurement mandate for clean steel, combined with early subsidies, has an outsized impact on accelerating clean-tech deployment and closing cost gaps with conventional steelmaking.

Major companies across the automotive, shipping, construction and consumer goods industries are also signalling an increase in demand for clean steel to meet their Scope 3 emissions reduction targets.

This corporate “pull” towards a tipping point for clean steel – combined with emerging product and material standards and interoperability rules (globally agreed measurement of greenhouse gas emissions embedded in steel) as discussed at COP30 – creates clarity and a level playing field for investors, producers and consumers.

For many governments, faced with the hard commercial reality that clean steel technology remains considerably more expensive than traditional steel production based on coal or coke, the transition may appear to be a distant aspiration.

However, recent analysis suggests that the tipping point for clean steel could be brought forward through targeted international trade cooperation, such as a tariff exemption for near-zero-emissions steel.

Unlike carbon border adjustments, which are contentious, tariff exemptions create a positive-sum-gain dynamic: countries cooperate to grow demand and compete to supply it. Because almost no near-zero steel is currently traded, such a measure would be easy to agree and would not impose short-term competitive pressures.

And it could unlock long-term investment by guaranteeing tariff-free access to major markets. This reframes the logic of industrial diplomacy: rather than starting by penalizing the old, start by de-risking and rewarding the new.

The steel sector sits at the intersection of climate, trade, geopolitics and industrial competitiveness.

As Jean-Marie Paugam of the World Trade Organization emphasized at COP30, interoperability in carbon measurement and fair competition rules will be essential for ensuring that low-emissions producers are rewarded, not disadvantaged, in global markets.

The good news is that the tipping point dynamics needed for transformation – declining clean-tech costs, growing demand signals, supportive policies and international cooperation – are now visible for the first time.

Countries that align national strategies around these dynamics stand to gain new industrial opportunities, supply-chain resilience, green jobs and competitive advantage.

The next five years will determine whether clean steel moves from early demonstration to global diffusion.

If governments and industry leaders embrace the lessons emerging from COP30 and the latest modelling, the world could witness one of the most consequential clean-technology tipping points of the decade, one that fundamentally reshapes the foundations of the global economy.

This is the second blog in our series "Positive Tipping Points: informed optimism for nature- and climate-positive transformations." The series complements the Positive Tipping Points transformation maps on the Forum’s Strategic Intelligence platform.

While “tipping points” often evoke abrupt, harmful shifts such as coral reef die-off or ocean-circulation collapse, they can also drive rapid positive change. Some are already emerging, such as the accelerating adoption of renewables, electric vehicles and heat pumps; others must be activated quickly to support a safe, just and sustainable future.