Europe Laid the Foundation for a Low-Carbon Steel Market. Now Comes the Hard Part.
The Industrial Accelerator Act passed. The definition of “low-carbon” did not. Here is what that means for the sector.
“The atmosphere does not grade on a curve. Neither should a low-carbon steel label.”
Europe Laid the Foundation for a Low-Carbon Steel Market. Now Comes the Hard Part.
Global Steel Climate Council | March 2026
Every steel producer that has invested in decarbonisation has faced the same frustrating reality: the market does not yet consistently reward lower emissions. Buyers cannot always see the difference. Procurement systems do not always ask for it. And without a credible, recognized definition of what “low-carbon steel” actually means, that gap persists.
Last week, the European Commission took a significant step toward closing it.
On March 4th, the Commission published its proposal for the Industrial Accelerator Act (IAA), a centerpiece of the Clean Industrial Deal and one of the most consequential pieces of industrial policy the EU has introduced in years. For the steel sector, the IAA requires public procurement and public support schemes to incorporate mandatory quotas for low-carbon steel, also based on emissions-performance criteria. This is meaningful progress.
But the IAA left one critical question open: what exactly qualifies as “low-carbon”?
That question will be answered in the months ahead. And how it gets answered will shape investment decisions, procurement requirements, and decarbonisation progress for steel producers across Europe for years to come.
What the IAA Establishes
The IAA was designed to accomplish three things at once: halt industrial decline, accelerate decarbonisation, and strengthen EU economic security. For energy-intensive industries, including steel, it creates a framework for applying low-carbon requirements to products used in public procurement and strategic supply chains.
It also establishes something the sector has needed for years: a legislative signal that low-carbon steel commands a different market position than conventional production. That signal, backed by EU law, is genuinely significant. It creates the demand pull that justifies continued investment in decarbonisation.
What the IAA does not do is define the methodology for classifying which steel earns that designation. In its final proposal, the Commission chose to delegate that work to future delegated acts under the Ecodesign for Sustainable Products Regulation (ESPR) and the Construction Products Regulation (CPR). The voluntary low-carbon steel label, which had been in development and for which the Commission’s own impact assessment identified a preferred approach, was deliberately set aside pending broader consensus.
This was not an oversight. It was an acknowledgment that the sector has not yet converged on a fair, transparent, and durable way to measure and classify emissions performance. That work still needs to happen.
Why the Definition Question Is the Whole Game
This matters because Europe’s steel sector is nearly evenly split between the two major production routes. In 2024, approximately 56% of EU steel was produced via the blast furnace/basic oxygen furnace (BF/BOF) route, with electric arc furnaces accounting for the remaining 44% (Eurofer, European Steel in Figures 2025). That ratio is projected to shift toward 57% EAF by 2050 as decarbonisation accelerates. How a low-carbon label treats half of the steel industry determines whether it becomes a tool for decarbonisation, or a document that reflects who built Europe’s mills a century ago.
The Commission’s impact assessment explored multiple classification approaches and identified an adapted sliding scale as its preferred option. The sliding scale concept adjusts emissions thresholds based on scrap content in production, an attempt to account for the structural differences between the blast furnace/basic oxygen furnace (BF/BOF) route (which starts primarily from iron ore) and the electric arc furnace route (which primarily starts from recycled raw materials).
The underlying intent is reasonable: different production routes have different starting points, and a workable classification system needs to reflect that reality.
But the Commission also acknowledged openly that there was no consensus within the industry on this approach. The debate is real, and the concerns on multiple sides are legitimate. Some producers see a sliding scale as a necessary bridge that rewards progress across all technology routes. Others raise questions about whether adjusting thresholds by input composition could make it harder for buyers and regulators to compare actual emissions outcomes across producers, and whether it fully rewards the sector’s most ambitious decarbonisation investments.
Representatives of Member States raised serious concerns about the sliding scale in recent Council of the EU meetings. Voices across the European Parliament - especially from Italy - and multiple Member State delegations have signaled similar questions. The Commission’s decision to defer the methodology reflects how lively this debate remains.
The core challenge is straightforward: a classification system built primarily around how steel is made, rather than the emissions it actually produces, may struggle to deliver the market transparency that buyers, investors, and regulators ultimately seek. The atmosphere responds to actual emissions, regardless of which route produced them.
“The atmosphere responds to actual emissions, regardless of which route produced them.”
What a Credible Standard Needs to Do
GSCC’s position on this has been consistent throughout our engagement with European institutions over the past year: a low-carbon steel label that works, for producers, for buyers, and for the policy goals underlying the IAA, needs to be built on measured, verified emissions outcomes.
Technology-neutral. Outcomes-based. Third-party verified.
Technology-neutral means the standard does not advantage one production route over another based on process inputs. It creates equal conditions for every producer to demonstrate their actual performance. Outcomes-based means the classification reflects real greenhouse gas emissions, not inferred from what goes into the furnace, but measured from what comes out of the facility. Third-party verified means the data behind every certification has been independently reviewed, giving buyers and regulators the confidence to act on it.
The Steel Climate Standard was built on exactly these principles. GSCC members represent operational facilities producing steel across multiple technology routes, all measured and certified against the same methodology. That breadth is not incidental; it is proof that a technology-neutral, outcomes-based approach is practical at scale, not just theoretical.
This aligns directly with what the Commission articulated as its goal: a classification system capable of comparing all production routes and accounting for the long-term transformation of the sector as primary and secondary production become increasingly intertwined.
The Window Is Open Now
The IAA will now move through the European Parliament and the Council, where both co-legislators will develop their negotiating positions before trilogue. In parallel, the Commission will begin preparing the delegated acts under ESPR and CPR that will establish the actual low-carbon methodology for steel.
The instinct to wait for final text before engaging is understandable, but it is the wrong call. The foundational decisions about how emissions are calculated, how performance classes are structured, and whether the system rewards outcomes or inputs will be shaped in the months immediately ahead. Waiting for finalized regulation means arriving after the design choices have already been made.
GSCC will continue its engagement with the Commission, the Parliament, and Member State representatives throughout this process. We are committed to presenting the Steel Climate Standard as a practical, proven reference point for the methodology discussions to come, not as a finished answer, but as a working model for what credible classification looks like in practice.
Europe has built the framework. The definition of low-carbon steel is the next frontier. The sector deserves a definition it can genuinely build on.
The Global Steel Climate Council operates the Steel Climate Standard, an independent, outcomes-based certification for low-emission steel production. Learn more and connect with our team at globalsteelclimatecouncil.org.