China’s ambitious plan to increase its share of electric arc furnace (EAF) steel production to 15 percent by 2025 is in jeopardy, according to a new report from Finland-based Centre for Research on Energy and Clean Air (CREA). If current trends continue, China risks falling short of its green steel transition goals, with serious implications for its national decarbonization targets and industrial transformation efforts.
EAF share stagnates despite policy signals
Despite clear policy directions since 2022, EAF steel production in China remains stuck at around 10 percent of total steel output. Although the government has introduced green steel incentive policies and liberalized scrap imports, these have not been translated into actual EAF adoption. In fact, scrap imports fell by 50 percent in 2024, severely hurting EAF margins. The CREA report highlights key challenges preventing growth in low-emission steelmaking:
- High electricity costs make the EAF route less competitive than blast furnace-basic oxygen furnace (BF-BOF) routes.
- Unreliable scrap availability continues to disrupt production planning.
- Financial pressure on private mills has led to bankruptcies and closures.
Emissions consequences could be severe
Failing to reach the 15 percent target by 2025 could result in an extra 160 million metric tons mt of carbon emissions, nearly equal to the entire annual carbon footprint of the EU steel industry. CREA warns this would severely undermine China's global climate commitments.
Meanwhile, 10 provincial regions reported rising steel output in the first half of 2025, openly defying the central government’s national production control mandate, further eroding trust in green transition enforcement.
CREA recommends reset for green strategy
To reverse the trend, CREA recommends that China needs to urgently realign its green steel strategy in the following ways:
| Strategic pillar | Key action | Expected impact |
| Increase EAF capacity utilization to 70 percent | Cut BF-BOF output by 90 million mt in 2025 | Make room for green steel |
| Boost scrap supply | Treat scrap as a strategic resource, expand imports | Lower input costs for EAF |
| Enforce local compliance | Tie environmental targets to fiscal rewards | Prevent provincial overproduction |