Australian mining company BHP has reported that global investment and funding commitments for steel industry decarbonization totaled $24 billion in the 12 months to April 2026, although high capital costs, limited access to competitively priced energy and hydrogen, and insufficient demand for low-emission steel continue to delay investment decisions.
According to BHP's latest assessment of steel decarbonization developments, steelmakers are continuing to advance demonstration projects, research and technology development despite a slowdown in new commercial projects. The company emphasized that multiple technological pathways will be necessary to achieve near-zero-emission steelmaking, depending on regional conditions, raw material availability and existing production infrastructure.
Steel decarbonization policies and technologies advance across major producing regions
BHP highlighted developments in several major steel-producing regions, including China, India, Japan, South Korea and Europe.
In China, the expansion of the national emissions trading system to include steel and the transition toward a dual carbon control framework are supporting decarbonization efforts. China Baowu is advancing its HyCROF blast furnace technology and hydrogen-based direct reduced iron (DRI) production, while HBIS Group is developing carbon capture technologies. Shougang Group also commissioned an industrial-scale blast furnace gas carbon capture trial facility in September 2026.
In India, the Green Steel Roadmap, planned inclusion of steel in the Carbon Credit Trading Scheme and development of a national carbon capture, utilization and storage (CCUS) roadmap are strengthening the regulatory framework. Meanwhile, Tata Steel is developing its EASyMelt modified blast furnace technology, and JSW Steel is progressing renewable hydrogen use in DRI production at its Vijayanagar facility.
In Japan and South Korea, steelmakers are advancing hydrogen-based ironmaking, electric arc furnaces (EAFs) and carbon capture technologies. Nippon Steel and JFE Steel have announced investments in EAF capacity, while POSCO continues developing its HyREX hydrogen-based ironmaking technology.
In Europe, BHP noted that the EU's Carbon Border Adjustment Mechanism (CBAM) and the gradual phaseout of free allowances under the EU Emissions Trading System (ETS) are influencing investment decisions, while several steelmakers have delayed or revised major decarbonization projects.
Three major technological pathways identified for lower-emission steelmaking
According to BHP, modified blast furnace technologies, DRI-electric smelting furnace (ESF) production and electrochemical reduction represent three important pathways for reducing emissions from ore-based steelmaking. It estimates that efficiency improvements and process optimization at existing blast furnaces could reduce carbon emissions intensity by up to 20 percent. More substantial reductions of approximately 80 percent could be achieved through technologies combining top gas recycling and carbon capture.
Meanwhile, the hydrogen-based DRI-ESF route could reduce carbon emissions by approximately 85 percent compared with conventional blast furnace steelmaking, while offering greater flexibility in the use of different iron ore grades than conventional DRI-EAF production. Electrochemical reduction, which remains at an early development stage, could potentially reduce emissions intensity by up to 95 percent by producing iron without carbon-based reduction.
Blast furnace optimization and carbon capture projects advanced
BHP stated that its steel decarbonization program involves collaboration with 13 major steelmakers that collectively accounted for approximately 25 percent of global steel production in 2025. Under its modified blast furnace program, BHP has been working with China's Zenith Steel on hydrogen-rich gas injection. The technology has so far achieved emissions intensity reductions of two to three percent, while estimates indicate potential reductions exceeding five percent. Further testing is planned during BHP's 2027 financial year.
Carbon capture trials conducted with ArcelorMittal and HBIS have also demonstrated carbon capture rates exceeding 90 percent using amine-based and vacuum pressure swing adsorption technologies. According to BHP, applying these technologies to blast furnace gas at commercial scale could reduce carbon emissions intensity by approximately 20-30 percent.
In addition, the first phase of a CCUS hub study, completed in April 2026, identified five potential locations across India, Indonesia, Malaysia and Australia. The study highlighted carbon storage availability, transportation requirements, regulatory conditions and project economics as key factors for future development.
Pilbara iron ore trials support development of lower-emission steelmaking routes
BHP also reported progress in developing technologies that could enable the use of Pilbara iron ore in lower-emission steelmaking. In December 2025, BHP and Zenith Steel completed commercial-scale pellet trials at Zenith's Nantong facility in China, producing DRI-grade pellets containing 55 percent Pilbara iron ore, exceeding the initial target of 50 percent.
Meanwhile, BHP's ESF research program, involving Baowu Steel and research institutions in Australia and Germany, has conducted more than 100 trials since 2022, producing over two mt of hot metal. The trials demonstrated progress in hot metal quality control, carburization and the production of slag suitable for cement manufacturing.
The company highlighted the NeoSmelt demonstration project in Kwinana, Western Australia, which aims to test shaft DRI-ESF technology. The project's design phase has been completed, and commissioning is targeted for 2029, subject to a final investment decision. The joint venture involves AMB Holdings, BHP, BlueScope, Mitsui Iron Ore Development, Rio Tinto and Woodside.
