Steel has long been recognized as the backbone of modern societies, but also as one of the most carbon-intensive industries , responsible for about 7–8% of global CO₂ emissions (World Steel Association, 2024). If the world is to meet its climate targets, steelmaking must transform.
That is where the concept of green steel comes in. Once used as a buzzword pointing to a possible future, it has now evolved into a global shift. Steel is no longer measured only in tonnes and grades, but increasingly by its carbon intensity
A market split in two
The demand for low-CO₂ steel is rising, with requests from European automakers to construction giants. At the same time, policies such as the EU’s Carbon Border Adjustment Mechanism (CBAM) are reshaping trade, penalizing carbon-intensive imports while rewarding cleaner operations (European Commission, 2023).
Through that lens, the market can be seen as divided into two tiers. On one side is conventional steel, still cost-competitive but increasingly constrained by trade barriers. On the other is green steel, often carrying a price premium but quickly becoming a prerequisite for global access.
Financing is driving the shift
In practice, this shift is already visible. Recent industry reports project demand for green steel in India could reach 4.5 million tonnes by 2030, as exporters and eco-conscious end users push the sector toward cleaner production (EY Parthenon, 2025 Investments in renewables and scrap-based production by major firms such as JSW and Tata are a strong indicator of how manufacturers are responding to that market shift — but they also leave smaller mills at risk of being excluded from higher-value markets (gmk.center, 2025).
As in most industries, the reasoning behind this shift can be summed up in one word: economics. Companies that can prove sustainability are favored by investors and banks alike. Green steel is no longer a side story, it is becoming a core requirement for growth, trade, and investment. A great example is Fortescue Metals in Australia, which recently secured a multibillion-dollar green loan to fund decarbonization and new-energy projects (gmk.center, 2025).
In Abu Dhabi, Arabian Gulf Steel Industries (AGSI) illustrates how green steel is already shaping global economics. With a verified footprint of just 0.2 tonnes of CO₂ per tonne of steel, compared to an industry average of around 1.8, AGSI proves that low-carbon steelmaking is not only technically possible, but commercially viable. This was highlighted by Mashreq Bank’s decision to extend AED 126 million in sustainable financing to AGSI, confirming investor confidence in green steel as a growth opportunity. This financing validates the market shift in which banks and buyers are rewarding producers able to deliver carbon accountability.
Sustainable steel is not about waiting for distant breakthroughs it is about applying solutions that already work. With policies like CBAM, the global industry is being nudged into a new era where carbon intensity defines competitiveness. AGSI offers proof that the shift to sustainable steel is not a discussion about the future, but a condition shaping the market today. As more companies follow suit, green steel will shift from a premium option to a baseline expectation. The message is clear: adapt, or risk being left behind.
References
- European Commission (2023). Carbon Border Adjustment Mechanism (CBAM). Available at: https://ec.europa.eu
- EY Parthenon (2025). Unlocking Green Steel Demand. Available at: https://ey.com
- center (2025). Green Steel Demand in India May Reach 4.5 Mt by 2030. Available at: https://gmk.center
- Mashreq (2025). Mashreq announces AED 126 million sustainable financing for AGSI. Available at: https://mashreq.com
- World Steel Association (2024). Sustainable Steel: Pathways to Net Zero. Brussels.