Transition toward a Decarbonized Steel Industry: A Supply Chain Analysis for the United States

Decarbonizing the U.S. steel industry is essential for achieving net-zero emissions, yet planning such a transition is challenging. In this work, we select green hydrogen-based direct reduced iron and electric arc furnace (H-DRI-EAF) as the most promising replacement for the traditional blast furnace-basic oxygen furnace (BF-BOF) process and develop a multiperiod supply chain model to determine a long-term plan for investing in renewable electricity generation, electrolyzers, and direct reduction shaft (DRS) capacities. In our analysis, we identified key transition dynamics, including the phase-out of BF-BOF plants, the expansion of EAF capacities, and the shift from fossil-based to renewable electricity. We further explored the impact of the level of CO2 reduction targets and transportation costs. Our results show that electrolyzer and DRS deployment should be concentrated in Minnesota and Michigan due to iron ore availability, with emission constraints driving the transition, and cost advantages contributing to additional reductions in later time periods.