As the EU negotiates its next climate commitment ahead of the UN’s September deadline, German think tank Agora Industry has published a landmark report arguing that green iron trade could become a strategic pillar of Europe’s Clean Industrial Deal.
The report finds that integrating green hot briquetted iron (HBI) imports into production in Europe could reduce steelmaking costs by 12-15 percent by 2040, safeguard industrial jobs, and strengthen global climate cooperation.
Why green iron trade matters
Green iron is the most energy-intensive stage of production. By importing green iron, Europe can keep value creation and jobs in domestic downstream steelmaking, lower production costs while building resilient international supply chains that accelerate the green transition.
“Green iron trade can become a strategic pillar of Europe’s industrial policy… Anchoring lead markets for green steel at home and building partnerships abroad are an essential part of this strategy,” Julia Metz, director of Agora Industry, stressed.
Cost savings from global partnerships
Agora’s techno-economic modelling shows clear cost advantages:
Middle East & North Africa: importing green iron could cut German steelmaking costs by around 12 percent.
Australia, Brazil, South Africa: imports could lower costs by up to 15 percent.
Three-phase EU strategy
Agora proposes a phased pathway for revealing the potential of green iron trade:
Phase 1 - domestic transition: replace blast furnaces with hydrogen-based DRI plants, expand renewables and hydrogen infrastructure.
Phase 2 - intra-EU value chains: build EU-wide green iron supply chains, supported by harmonized standards, labeling, and demand from automotive and construction.
Phase 3 - global partnerships: forge strategic trade deals to diversify supply chains, reduce costs, and mitigate hydrogen availability risks.
Germany’s central role
The steel industry contributes about five percent of EU emissions. Steelmakers have announced 34 million mt of hydrogen-based DRI capacity, with 12 million mt under construction or at the final investment decision stage. If realized, this could meet half of Europe’s green iron demand.
As the EU’s largest steel producer, Germany’s success depends on competitive hydrogen pricing, investment support for new plants, tools to de-risk hydrogen ramp-up, and intra-EU value chain development and strategic imports.
Global outlook and recommendations
Globally, over 70 percent of steel is still coal-based, with many blast furnaces approaching end of life. Agora argues that decisions this decade will shape the sector for generations.
The report highlights Clean Trade and Investment Partnerships (CTIPs) as a vital tool, combining industrial and climate policies, offtake agreements and concessional finance, and guarantees to mobilize private investment.
The EU-South Africa green partnership and the broader Clean Industrial Deal are cited as important first steps.
