Green steel: Europe's recycling challenge in a world of tariffs and cheap imports

It forms the buildings and bridges in our infrastructure; the cars, trains and planes we travel in, and domestic appliances right down to our cookware and cutlery. Steel is used to make so many familiar items—and developing cleaner recycling technologies is key to cutting the sector's large carbon footprint in line with climate goals. But are Europe's decarbonisation efforts in danger of being blown apart by the current economic and geopolitical tempest?

"Steel is everywhere in our lives," says Javier Real Salas of the Spanish technology centre CIRCE. "Almost everything that we can see around us either contains steel or was produced using a process that required steel." Producing it leaves a large carbon footprint: iron and steel rank as one of the highest emitting industries, responsible for nearly 8% of global emissions from the energy sector, according to the OECD. "Decarbonising the steel sector is key to achieve climate goals," it said in a December 2024 policy paper. Although progress has been made, the International Energy Agency (IEA) says "efforts in the iron and steel sector need to accelerate significantly to get on track" with net zero emissions targets.

But rising to the challenge of the green transition comes as the steel industry is being buffeted on multiple fronts. Even before Donald Trump raised U.S. tariffs to 50% on aluminium and steel imports in June 2025, the OECD warned that "surging excess capacity" in steelmaking was threatening market stability, employment, and decarbonisation plans. Europe's steelmakers have warned of potential collapse in the face of cheap Chinese imports and high American duties. In November 2024, before the U.S. president had taken office, EUROFER—which represents steel companies and federations throughout Europe—said the European industry was "on the brink", highlighting plummeting production, mass layoffs, and stalled decarbonisation projects. "In the current economic and geopolitical climate, circularity is more important than ever," said one speaker at the opening of the European Recycling Conference (ERC) in October 2025.

To meet the EU's target of climate neutrality by 2050, the steel industry needs to reduce carbon dioxide emissions by 35%. Yet recycling steelmaking by-products is a complex challenge that still relies on fossil fuels, with current techniques emitting around 49 million tons of CO₂ a year. "Most of the by-products which are generated in the iron and steel industry have very small particle sizes and their treatment requires specific physical, mechanical and chemical properties," explains Salas. "Some of them contain metals that are environmentally hazardous and difficult to process. Others such as slag do not usually have a consistent quality, limiting their use in high-value markets. What's more, processing by-products for reuse is often energy-intensive and expensive."

Javier Real Salas is project coordinator of the EU-funded ZHyRON project, which aims to develop an innovative process for recycling steel residues and by-products. These are often treated using conventional methods based on carbon (coke) or, in the worst cases, disposed of in landfills. The project is developing a process that combines advanced metallurgical steps with the use of hydrogen as a carbon-free agent, enabling the recovery of valuable metals such as iron and zinc in an environmentally friendly way.

"We specialise in recovering zinc and tin from steel by-products and wastes, such as zinc-bearing dusts, dross and tin sludges, along with recovering base, precious, minor, and strategic metals from various secondary materials" says Philippe Henry, Director of JGI-HYDROMETAL. The Belgium-based group, founded in 1960 and now operating four recycling sites with global commercial activities, is a key member of the project. "The ZHyRON process, currently under development, holds significant potential, not only to expand zinc recovery for downstream applications in the smelting and chemical industries, but also to reduce the environmental impact of steel industry through the use of hydrogen, potentially derived from renewable energy sources."

Amid the drive to develop new technologies, there are fears that global pressures—and the EU's response to them—could jeopardise the green transition. Following repeated industry calls for intervention to secure its future, the European Commission announced new measures in October 2025 to protect the EU steel sector, acknowledging that "global overcapacity is damaging our industry". It proposed doubling tariffs on steel imports above a certain quota to 50%, while cutting the duty-free quota by nearly half. EUROFER hailed the proposals—which must be approved by the European Parliament and EU member states—as a "major leap forward", while a pan-European trade union body called them "overdue but essential".

But in other circles the move has been criticised as protectionist and potentially harmful to environmental efforts. "It is questionable whether… high tariffs on all steel imports (regardless of carbon content) are consistent with the objective of promoting the sector's decarbonisation," trade policy specialist Ignacio García Bercero said in an article for the Bruegel think tank. The recycling industry has warned that any restrictions on metal scrap exports—although not imposed at this stage—would put at risk the EU's circularity objectives. An alliance of European industrial manufacturers including some steelmakers has written to EU institutions and the German government urging a delay to the EU's climate framework—warning that current rules pose "a practically insurmountable challenge for many companies", and that high CO₂ costs threaten competitiveness and the transformation itself. The alliance also said that important factors in the transition, such as green hydrogen and affordable electricity, were behind schedule.

Recyclers and policy experts have identified high energy prices as among the major obstacles to the steel industry's viability and investment in greener practices. "Decarbonisation pathways often require even greater amounts of electricity than traditional methods. For instance, the production of green steel requires three to four times more electricity than traditional blast furnaces," Anna Crawford, Policy Analyst and a specialist in the green transition at the European Policy Centre (EPC), commented in response to the European Commission's plan. She also identified access to capital for investment in cleaner technologies as a major problem, citing the EU's "fragmented financial system".

The ZHyRON project, which runs until December 2026, has reported that "all milestones" have been achieved, following meetings with the European Commission and independent reviewers. Javier Real Salas sums up the importance of such projects within the global context: "Steel can be infinitely recycled and is 100% recyclable without loss of quality," he says. "Recycling in the steelmaking sector is one of the most impactful levers for advancing the green transition globally. Recycling plays a critical role in the steelmaking sector's contribution to the green transition, with significant implications for reducing carbon emissions, improving resource efficiency, and enabling circular economy models."

"Steel is an indispensable material for a growing society, and its use cannot be avoided. However, R&D efforts must prioritise reducing the environmental footprint of this vital industry and maximising the recycling of valuable components. Its production via electric routes generates electric arc furnace (EAF) dust, a residue rich in zinc and iron. Currently, this material is recycled through a carbon-based process that primarily recovers and valorises zinc. We aim to evolve this process to enable the recovery of both metals," emphasises Philippe Henry of JGI-HYDROMETAL.

Anna Crawford has suggested that Europe should look to the defence industry as a vehicle to boost demand for green steel, and that security and decarbonisation should be interconnected in the EU's industrial strategy rather than treated as separate entities. She argues that the EU will need more than protectionist measures to safeguard steel, and that its "true industrial challenge" lies in resolving "deep structural problems": "Future competitiveness hinges on drastically lowering energy costs and ensuring robust financing for the costly shift to green production. Without decisive action on energy and finance, the EU risks sacrificing industrial inputs vital for both the green transition and continental security."

Contacts:

Project coordinator:

Francisco Javier Real Salas, CIRCE

Communication Manager:

Claudia Galal, Communication and Dissemination officer, ICONS, claudia.galal@icons.it

Project website: zhyron.eu/

Linkedin: www.linkedin.com/company/zhyron-eu/

Bluesky: bsky.app/profile/zhyron.bsky.social

Provided by iCube Programme