According to a document prepared by the Turkey Steel Transformation Network under the Istanbul Policy Center (IPC), Turkey's Sectoral Thematic Transformation Investment Plan for the iron and steel industry provides a positive framework for evaluating short-, medium- and long-term technology pathways, but requires significant improvements in areas including emissions data, financing, scrap management, low-carbon steel demand and regulatory policy.
The document, which draws on four years of IPC field research and discussions held at a workshop on August 19, 2026, challenges the 1.8 mt of CO₂ equivalent per mt of crude steel carbon intensity figure used in the investment plan. Based on installation-level sustainability reports, IPC estimates average carbon intensity at 2.2-2.5 mt of CO₂ equivalent per mt of crude steel for integrated plants and 0.4-0.6 mt equivalent per mt of crude steel for electric arc furnace-based plants. Given that EAF-based production accounts for 72-75 percent of Turkey's crude steel output, the document proposes a national weighted average of 1.0-1.2 mt of CO₂ equivalent per mt of crude steel.
Steel decarbonization should extend beyond CBAM compliance
The document argues that the rationale for decarbonizing the steel sector should not be based predominantly on compliance with the EU's Carbon Border Adjustment Mechanism (CBAM). It recommends taking into account potential carbon border mechanisms in other countries and a possible Turkish mechanism, while placing greater emphasis on net-zero targets, the phase-out of fossil fuels and resource efficiency.
Regarding technology pathways, the investment plan envisages a progression from efficiency improvements and EAF upgrades toward natural gas-based direct reduced iron, hydrogen-based DRI and carbon capture, utilization and storage. While broadly supporting this framework, IPC challenges the treatment of hydrogen-based DRI as an immature technology. According to the document, the principal barriers are instead access to abundant and affordable renewable electricity and reducing hydrogen costs to below $1.20/kg.
Prioritizing proven efficiency investments recommended
The document recommends prioritizing limited concessional financing for proven energy and material efficiency and circularity investments rather than pilot and demonstration projects. It also proposes defining a “decarbonization investment” as an investment that delivers a measurable reduction in emissions from the existing level without increasing production capacity. Electrification of high-temperature industrial process heat should also be included as a specific investment area.
IPC also questions the investment plan's treatment of imported DRI and HBI as a source of low-carbon raw materials. According to the life cycle assessment data cited, natural gas-based DRI production can have embedded emissions approaching those of integrated iron and steel production, while the emissions intensity of existing DRI plants in the Gulf region and North Africa is approximately twice that of scrap-based EAF production. Accordingly, imported DRI and HBI should not automatically be classified as low-carbon materials. Instead, supplier-specific and verified monitoring, reporting and verification data should be required.
The document argues that DRI and HBI will become genuinely low-carbon alternatives when combined with hydrogen produced using renewable electricity. Until then, imports should be regarded as a strategic initial step or testing platform rather than a substitute for domestic investment.
Dedicated scrap transformation program proposed
Scrap management is identified as another major weakness in the investment plan. Turkey imports around 70-75 percent of the scrap consumed by its steel industry, exposing producers to global supply-chain risks and variations in scrap quality. Domestic challenges include insufficient separation at source, mixing of clean and contaminated scrap, inadequate quality control and traceability and widespread informal activity.
The document therefore proposes establishing a dedicated Scrap Ecosystem Transformation Program. This would include a national scrap inventory, standards for different scrap grades, a nationwide monitoring system, measures to reduce informal activity and the transition of unregistered operators toward organized industrial zones or licensed facilities. Financing mechanisms should also cover ore and scrap suppliers, while inputs should have their own technology pathway within the investment plan.
Calls for policies to stimulate low-carbon steel demand
IPC argues that the investment plan concentrates predominantly on production and supply while paying insufficient attention to steel demand. The document calls for detailed data on steel consumption in construction, infrastructure, automotive, white goods, machinery and other manufacturing sectors, together with projections for Turkey's steel requirements over the coming decade.
According to IPC's research, low-carbon steel has not yet become a significant priority for steel-consuming sectors in Turkey. The document recommends establishing a national definition and technical standards for low-carbon steel and supporting demand through green public procurement, product-based carbon labels and systematic Scope 3 emissions requirements, particularly in the automotive and white goods sectors.
Binding 2030 emissions target and Turkey ETS timetable needed
The document also raises questions over the approximately $250 million in concessional financing envisaged for six priority sectors, stating that the criteria for distributing the funding among sectors and individual companies remain unclear. It calls for disclosure of the amount earmarked specifically for the steel industry and its allocation among different technology pathways. Financial institutions participating in the consultation process reportedly indicated that steelmakers show limited demand for bank financing for investments other than renewable energy, including waste heat recovery, material efficiency and digitalization. IPC recommends determining whether this reflects financing costs or companies' investment priorities. The document also calls for legislation governing hydrogen transportation and storage and major industrial accident risks, in alignment with relevant EU legislation.
The absence of a binding and measurable national industrial emissions reduction target and the fact that the Turkey Emissions Trading System has not yet been implemented are identified as major shortcomings. IPC calls for a binding 2030 CO₂ reduction target for the steel sector, a timetable for implementing the Turkey ETS and an annual sectoral carbon budget. It also recommends establishing a legally grounded Industrial Decarbonization Policy and Roadmap defining the year in which steel sector greenhouse gas emissions should peak and setting targets for 2030 and 2050.
Installation-level emissions data should become more transparent
The document highlights deficiencies in integrated environmental permitting and access to installation-level emissions, production and capacity data. It recommends making access to financing conditional on disclosure and independent verification of greenhouse gas and other pollutant emissions and strengthening Turkey's Pollutant Release and Transfer Register.
Other findings include slow technological transformation, insufficient institutional capacity and public-private cooperation, weak domestic demand for low-carbon steel, dependence on fossil fuels in electricity generation, reliance on imported scrap and insufficient engagement between steel producers and local communities. In particular, the document calls for the transformation of coal- and natural gas-fired power plants associated with steel producers to be considered in the investment plan and recommends establishing a national target for reducing the emissions factor of electricity generation, expressed in kilograms of CO₂ equivalent per kWh.
In conclusion, IPC recommends preparing a comprehensive national restructuring and modernization plan for the steel sector and establishing an Industrial Decarbonization Platform involving public authorities, companies, trade unions and civil society organizations. Investment and technology support should be linked to concrete emissions reduction commitments. The document also calls for all crude steel producers to calculate and disclose their Scope 1 and Scope 2 emissions using a common methodology. These data should be made available through a publicly accessible, traceable and verifiable national greenhouse gas information system integrated with the Pollutant Release and Transfer Register and Environmental Product Declaration infrastructure.
