Steel production accounts for around 9 per cent of CO2 emissions. Decarbonising the steel sector is an important part of any overall strategy to decarbonise industrial production. One major initiative is investment in fossil-free fuel technologies to produce ‘green steel’. At present, the cost of producing green steel is 20-40 per cent higher than conventional steel. While the cost differential could be compensated through penalties on carbon emissions, or if higher prices could be achieved for green steel, there is very limited understanding of the potential demand for green steel. It stands to reason that green steel will require carbon penalties to be taken up in applications like buildings and infrastructure, but there may be niches for take-up even without strong policy support in some higher-value applications such as car manufacturing. We explore the life cycle emissions, manufacturing costs and other aspects of green steel in cars, and consider consumers’ potential willingness to pay for an emissions-free option.

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