Turkey's steel sector roadmap to net zero by 2053, prepared by Agora Industry with contributions from the Istanbul Policy Center (IPC) and the Sustainable Economics and Finance Research Association (SEFiA), was presented in Istanbul on November 3. Discussions focused on carbon pricing, financing, raw material security and developing demand for low-emission steel.
In her opening remarks, SEFiA director Bengisu Özenç said the study offers an alternative transition pathway for national policy and could support cooperation between Turkey and the EU on low-carbon industry. Uğur Dalbeler, chairman of the Turkish Steel Exporters' Association, stressed the need to consider economic and technological realities when setting decarbonization targets. With approximately two-thirds of global steel requirements needing to be met through ore-based production, an approach relying solely on scrap and electric arc furnaces would be insufficient, he said. Dalbeler called for greater attention to reducing emissions from ore-based production and strengthening dialogue across global supply chains.
Three scenarios envisage emission reductions of 45-92 percent
Following an introduction by Ysanne Choksey, Agora Industry's global steel transformation program coordinator, the report was presented by techno-economic analyst Emir Çolak. Choksey highlighted Turkey's renewable energy potential, experience in electric steelmaking and strong trade relationships as advantages for the transition.
It was higlighted indicated that global excess capacity, expected to reach approximately 720 million mt by 2027, is putting pressure on prices and margins, limiting the capital available for decarbonization investment. Turkey's reliance on imports for around 70 percent of its scrap requirements was also identified as a significant risk. Growing electric arc furnace investment elsewhere and restrictions on scrap exports could challenge the business model based on inexpensive imported scrap. The study assumes domestic scrap supply rises from approximately 10 million mt to 26 million mt by 2050, while scrap imports decline from 19 million mt to 10 million mt.
Mr. Çolak also stressed that the transition should not be assessed solely through direct steel exports. He highlighted automotive, machinery and home appliance trade with the EU, emphasizing the importance of low-emission steel supply for these industries' competitiveness.
The study envisages emission reductions by 2050, compared with 2025 levels, of 45 percent under the current trends scenario, 74 percent under the gradual transition scenario and 92 percent under the accelerated transition scenario. The calculations cover Scope 1 and Scope 2 emissions, while Scope 3 emissions were assessed only qualitatively because of data limitations. The accelerated transition requires approximately €1.5 billion in annual investment over 20 years. According to the study, a national Emissions Trading System (ETS) and a domestic Carbon Border Adjustment Mechanism (CBAM) could generate approximately €500 million-€1.5 billion annually in 2030, depending on carbon prices and assuming 60 percent free allocation. The report proposes channeling these revenues into investment through a Green Steel Decarbonization Fund.
It was also indicated that steel produced using domestic natural gas-based direct reduced iron (DRI) becomes cost-competitive with coal-based production at a carbon price of approximately €100/mt CO₂. The threshold for green hydrogen-based production is approximately €140/mt CO₂. Carbon contracts for difference, concessional loans and public guarantees are among the proposed support measures. Using green steel could increase the prices of electric cars, washing machines and household air conditioners by approximately 0.8-1.3 percent, according to the report. It recommends supporting demand through green public procurement, minimum green steel quotas and long-term offtake agreements.
Without targeted policy support and with carbon prices remaining low, the transition could rely more heavily on imported hot briquetted iron (HBI). Part of the value added and employment potentially generated by domestic production could consequently remain abroad. Investment in the Middle East and North Africa offers opportunities to source lower-emission metallics, although expanding regional production also poses competitive risks for Turkey's long steel exports.
Financing constraints and limited customer demand highlighted
During the panel moderated by Muammer Bilgiç, Hasan Akbulut, technical affairs director at the Turkish Steel Producers' Association, described a 74 percent emission reduction as a more achievable reference point. He called for a detailed assessment of the assumption that domestic scrap supply could increase from 10 million mt to 26 million mt by 2050. High interest rates hamper investment, he said, stressing that the return of ETS revenues to the sector must be guaranteed. ETS revenues should not be treated as assured funding unless their return to the sector is guaranteed, he stated. He also warned that the advantage offered by electric arc furnace-based production cannot be preserved by postponing investment.
Serkan Ürkmez, management systems director at Borçelik, said demand for low-emission products and willingness to pay a green steel premium remain limited. Copper and other impurities in scrap pose technical obstacles in flat steel applications, he noted. Ürkmez called for purchasing decisions to consider total costs and proposed long-term supply agreements and pre-competitive cooperation between steelmakers and cold rolling and galvanizing companies.
Ms. Özenç said transition financing cannot rely solely on carbon revenues, adding that national budget policies and cooperation with the EU must also be considered. Dursun Baş, coordinator of the Turkey Steel Transformation Network at IPC, highlighted the need for a binding industrial roadmap to guide production technologies and the product mix. He also proposed updating the Turkey-EU free trade agreement covering coal and steel products.
In his closing remarks, IPC climate change studies coordinator Ümit Şahin warned against delaying the transition, saying hydrogen deployment could take longer than expected and carbon capture and storage would play a limited role in the sector. He identified electricity grid decarbonization, energy efficiency investment and improvements in domestic scrap collection and sorting infrastructure as immediate priorities.
