The metallurgical industry finds itself in an unusual situation today. On the one hand, it is one of the most energy-intensive and high-emission sectors of industry. On the other hand, without it, a large-scale energy transition would be impossible. Steel remains the primary material for construction, power grids, industrial infrastructure and components of renewable energy installations. Aluminium is important where the ratio of mass to performance and high conductivity matter. Copper remains crucial for electrification, grid expansion, transformers, cables, motors and energy storage systems. This means that the energy transition does not diminish the importance of metallurgy. On the contrary. It makes us even more dependent on it.
The problem is that the industry itself must undergo its own transformation at the same time. In the steel sector, it is not merely a question of switching energy sources, as a significant proportion of emissions stems from the very nature of the process and the use of coke as a reducing agent. In the aluminium sector, the focus is shifting towards electricity, its cost and its carbon footprint. In the case of copper and other non-ferrous metals, meanwhile, the tension between growing demand and the pace of development in mining, refining and recycling is becoming increasingly apparent. At this stage, it is not only the future of individual smelters that is being decided, but also whether the European and global energy transition will have a stable supply of raw materials.
Metallurgy is not merely an adjunct to the transformation, but its material foundation
In the debate on the decarbonisation of industry, the metallurgy sector is often discussed primarily in terms of emissions. This is too narrow a view. This sector supplies the materials needed to build transmission lines, power stations, transformers, turbines, support structures, equipment housings, cooling systems, energy transport systems and industrial plant equipment. The energy transition is therefore not merely a change in the source of electricity. It is also a massive materials project.
This is most evident in the case of copper. As networks are electrified and expanded, demand is growing for conductors, windings and infrastructure components that cannot easily be replaced by other materials without compromising functionality. Aluminium has its own strong position where, in addition to conductivity, lower weight and good formability are important. Steel, on the other hand, remains the backbone of heavy energy infrastructure, industrial construction and the entire technical environment of installations. This is not a set of secondary materials. It is the core of the physical transformation.
From a technical point of view, this creates a double burden. The metallurgical industry is expected to supply more material, often with increasingly stringent quality requirements, whilst at the same time reducing the carbon footprint of its own production. This is precisely where the difference lies between the simple slogan of ‘green metals’ and the real industrial challenge. At the same time, it is necessary to maintain volume, quality, raw material availability, continuity of energy supply and price competitiveness.
Steel: the biggest challenge of the transition in the metallurgy sector
If one were to identify a single sector where the energy transition comes up against the hard physics of the process, it would be the steel industry. The classic blast furnace process relies on iron ore, coke and high-temperature reduction. This means that emissions do not stem solely from what powers the steelworks. They are also inherent in the very mechanism of pig iron production. That is why steel is much more difficult to decarbonise than sectors where a switch to cleaner energy is sufficient.
The simplest way to reduce emissions is through a greater use of scrap and electric furnaces. Scrap-based production consumes less energy and does not require the most emission-intensive stage of ore reduction. This is precisely why the EAF has become one of the pillars of the low-carbon transformation of the steel industry. However, this path has a hard limit. It is constrained by the quantity of available scrap, its quality and chemical composition. Not every type of steel can be produced from the same feedstock. Not every quality grade can be maintained without proper control of additives and impurities.
The second route involves DRI, or direct iron reduction, followed by electric furnaces. Today, some projects are being developed using a gas-based approach, with the intention of switching to hydrogen at a later stage. On paper, this makes sense, as it allows a move away from the blast furnace. In a real-world installation, however, three conditions arise. Firstly, a suitable ore feed is required, usually more demanding than in the classic BF-BOF route. Secondly, a large amount of electricity is needed for the subsequent smelting stage. And finally, thirdly, low-carbon hydrogen is required at a price that does not undermine the economics of the entire system.
Key pathways to decarbonising steel production – the metallurgical industry
| Path | What is it all about? | The main benefit | The main limitation |
|---|---|---|---|
| BF-BOF with improved efficiency | upgrading existing systems, heat recovery, improved process control | rapid improvement without having to replace the entire plant infrastructure | limited potential for emissions reductions |
| BF-BOF with CCS/CCUS | CO₂ capture from parts of process streams | the potential to reduce emissions whilst maintaining current production levels | high costs, complex infrastructure and limited maturity of implementations |
| EAF made from scrap metal | smelting and refining of secondary feedstock in an electric furnace | significantly lower emissions and lower energy consumption than the ore route | availability and quality of scrap metal |
| Gas-fired DRI-EAF | ore reduction outside the blast furnace, followed by smelting in an EAF | lower emissions than BF-BOF and the possibility of constructing a process bridge | continued dependence on fossil fuels and the quality of the feedstock |
| H₂-DRI-EAF | ore reduction using hydrogen, followed by smelting in an EAF | the greatest potential for deep decarbonisation of primary steel | the cost of hydrogen, energy, infrastructure and the scale of supply |
This table highlights a fundamental point: there is no single technology that will replace the entire existing steel metallurgy sector in the coming years. Scrap-based production will grow, but it will not meet the entire demand for steel. DRI- and hydrogen-based routes will develop, but their pace depends on energy, raw materials and funding. The modernisation of existing facilities will remain important, as for a long time a significant proportion of global production will continue to come from assets already in operation.
This does not yet amount to a simple division between ‘old’ and ‘new’ steelworks. Over the coming years, the market is likely to be hybrid in nature. Some plants will increase their use of scrap, whilst others will switch to DRI as an interim step. Some will defend their competitiveness by improving efficiency and gradually reducing emissions within their existing infrastructure. The success of a particular approach will not be determined by technological level alone, but by the overall set of conditions surrounding the plant.
Aluminium and copper: two different challenges in the same transition
The dynamics of the aluminium industry differ from those of the steel industry. Here, the focus is shifting decisively towards electricity. The production of primary aluminium is highly energy-intensive, so its carbon footprint depends largely on the electricity mix and energy prices. This means that the same process can have a completely different climate and cost profile depending on the location. A smelter relying on stable, low-carbon energy operates in a different environment to a plant running on expensive electricity from a high-carbon system.
This is of particular importance for Europe. Part of the emissions advantage can currently be achieved through a cleaner energy mix than in many other regions, but decarbonising the energy sector alone does not solve the problem of competitiveness. If energy is clean but expensive, the metallurgical industry continues to lose ground to producers in regions with lower costs. In the aluminium sector, it is precisely the cost of energy and the predictability of supply that are becoming just as important as the process technology itself.
Copper, on the other hand, presents a different kind of challenge. It is not just a question of how to reduce emissions during production, but also whether the market will be able to supply sufficient quantities of the material to meet the demands of increasing electrification. The expansion of the grid, the growing importance of transformers, motors, cables, charging systems and industrial infrastructure is driving up demand for copper faster than new mining and refining projects can develop. The problem here is not only energy intensity, but also the time taken to bring investments online, the quality of the ore, geographical concentration and vulnerability to supply chain disruptions.
How does the energy transition affect steel, aluminium and copper differently?
| Metal | A key role in the transformation | The greatest pressure | The main challenge |
|---|---|---|---|
| Steel | structures, industrial infrastructure, networks, energy facilities | reduction in process emissions and energy consumption | moving away from the blast furnace route without compromising production scale |
| Aluminium | conductive elements, lightweight components, housings, special structures | the cost and carbon footprint of electricity | maintaining competitiveness despite high electricity consumption |
| Copper | power grids, transformers, cables, motors, energy storage systems | growing demand linked to electrification | the risk of supply shortages and disruptions in supply chains |
The key takeaway from this comparison is simple. The energy transition does not present the entire metals industry with a single, common challenge. In the steel sector, process emissions and the overhaul of reduction technologies are the dominant factors. In the aluminium sector, cost and the electricity footprint are becoming decisive factors. And in the copper sector, the importance of supply, refining and the resilience of the raw materials system is growing.
This is important because industrial and investment policy cannot be designed as a one-size-fits-all approach. Supporting the development of EAF and DRI requires a different approach to safeguarding the competitiveness of aluminium, and yet another to building the resilience of the supply chain for the metals needed for electrification.
Four real bottlenecks: energy, scrap, hydrogen and feedstock quality
Electricity remains the primary bottleneck. Without a stable and price-predictable power supply, it is difficult to talk about competitive production in EAFs, aluminium or new processes being developed for hydrogen. In Europe, it is precisely energy that is one of the main points of tension between climate ambitions and industrial realities. Clean electricity is essential, but its ‘green’ nature alone is not enough. An industrial plant also needs availability, capacity and a price that allows it to compete globally.
The second constraint is scrap metal. Recycling will become increasingly important, but it will not solve the entire problem of metal supply. The amount of scrap metal depends on how much material was originally put into circulation and how long it takes to return as a secondary raw material. This is not a resource that can be increased from one year to the next by administrative decision. Then there is the issue of quality. The more advanced the end use, the greater the importance of the purity of the feedstock.
The third limitation is hydrogen. In theory, it paves the way for the deep decarbonisation of primary steel. In practice, however, it remains an expensive, limited resource that is heavily dependent on infrastructure. It is not enough to design a ‘hydrogen-ready’ plant. Energy sources for electrolysis, transmission networks or local production, storage, process safety and a predictable cost model are also required. Without these, hydrogen remains more of a direction than a mass-market solution.
The fourth bottleneck is the quality of the raw material. New technological pathways are not always as flexible as traditional blast furnace processes. Some solutions require a more homogeneous and high-quality charge. This means that the transformation of the steel industry does not end with replacing a furnace or modernising a single line. It extends back to ore preparation, pelletisation, logistics and the control of input parameters.
The ETS, CBAM and cost policies are transforming the metals industry just as much as technology
The energy transition in the metallurgy sector does not take place in a technological vacuum. It is equally strongly influenced by the regulatory and cost environment. The ETS increases the significance of emissions in economic calculations. The CBAM is designed to limit the competitive advantage of imports with a higher carbon footprint. Added to this are issues relating to state aid, energy contracts, grid access and the financing of modernisation investments.
For energy-intensive industries, this is no small matter. If energy and emissions costs rise faster than the capacity to modernise, technological advantage is no longer enough. As a result, the decarbonisation of the metallurgical industry is becoming not only a climate project, but also a test for industrial policy. If the support system fails to deliver, some production may lose its competitiveness despite the fact that the technological direction is correct.
This is where the difference between an ambitious goal and effective implementation begins. Today, the metallurgy sector does not simply need stricter requirements. It needs conditions in which investment in low-carbon production can be justified not only from an environmental perspective, but also from an operational and financial one.
What does this mean for the future of the metallurgical industry?
The metallurgical industry will not undergo a single transformation at a uniform pace. Part of the sector will base its development on scrap and electric arc furnaces (EAF). Another part will seek to incorporate direct reduced iron (DRI) and hydrogen. Yet another will focus on improving efficiency and reducing emissions at existing facilities, as a complete overhaul would be too costly or technically difficult to achieve in the short term. In aluminium, competitiveness will increasingly depend on access to clean and cheap energy. In copper, mining projects, refining capacity and the recovery of secondary raw materials will become increasingly important.
The main limitation arises when the transformation is treated as a single technological decision. In reality, it is a system of interconnected factors. One must simultaneously consider energy, raw materials, investment, process technology, feedstock quality, logistics and international trade. Only then can the full picture be seen. Metallurgy remains one of the cornerstones of the energy transition, but it cannot successfully undergo this transition on its own without a profound change to its own production model.
That is precisely why the future of this industry will not be decided solely in laboratories and R&D departments; it will be decided where technology, energy, capital and industrial policy converge. Without metals, there will be no new energy sector. Nor will there be a stable, scalable and competitive energy transition without resolving the challenges facing the metallurgical industry.
Summary – the metallurgical industry
In our experience, the metallurgical industry is currently undergoing a transformation under dual pressure: it must reduce its own emissions whilst continuing to supply the materials essential to the energy sector, infrastructure and industry. In practice, it is no longer declarations alone that matter most, but access to affordable energy, secondary raw materials, new production technologies and a stable cost environment.
Sources:
https://www.iea.org/reports/breakthrough-agenda-report-2025/steel
https://research-and-innovation.ec.europa.eu/document/download/42eff0d1-eae8-4254-857f-e1dbc9e71e37_en?prefLang=sk
