European steel giant ArcelorMittal, which has a carbon footprint of a similar size to Belgium, is falling behind in the race to decarbonize and is jeopardizing its position as an industry leader, an environmental watchdog has claimed.
In a report released Tuesday, NGO SteelWatch revealed that the firm, which is the EU’s largest steelmaker, has yet to make final investment decisions on any of five announced, large-scale decarbonization projects in Europe and Canada, despite securing $3.5 billion in government subsidies worldwide.
Luxembourg-headquartered Arcelor, which generated $62.4 billion in turnover in 2024 and has an annual output of 58 million tons of steel, emits more than 100 million tons of CO2 every year. But SteelWatch analysis indicates that while the firm has allocated just $800 million to decarbonization investment, it spent some $12 billion—15 times more—on shareholder dividends and buybacks from 2021 to 2024.
The firm has blamed economic and industry uncertainty for rowing back on its decarbonization plans. But SteelWatch CEO Caroline Ashley said that ArcelorMittal is neglecting its responsibilities as an industry leader.
“Turbulence is difficult if you’re a leader, but it is not an excuse for inaction,” Ashley told me. “It’s bad leadership to say, ‘it’s a turbulent world out there so I’m going to stay still and not do anything.’ It is short-sighted to say the least.”
Green Steel At A Crossroads
Experts say that iron and steel production are responsible for between 8-11% of the world’s total greenhouse gas emissions, the main cause of global warming. A large proportion of the emissions from steelmaking take place in a process called direct reduction of iron, or DRI, which has traditionally used natural gas or coal to remove oxygen from iron ore. New DRI approaches use green hydrogen, which produces no greenhouse gas emissions when burned, or carbon capture and storage (CCS), which captures the CO2 emitted by the process.
But steel firms, struggling to compete with low-cost steel imports from China, are finding low-carbon approaches costly to implement, and green hydrogen limited in supply. Arcelor’s competitors have recently announced slowdowns in their green steelmaking ambitions, with Germany’s Thyssenkrupp making bearish pronouncements on its development of the tech, and Sweden’s SSAB dropping plans for a green steel facility in Mississippi.
For its part, Arcelor says its slowdown has been caused by a range of challenges. In a Financial Times article published in November, the firm’s executive chairman, Lakshmi Mittal, noted that the EU is “the only major market with a cost on carbon,” and said that inadequate policy support, Chinese overcapacity and questions around the viability of green hydrogen for steel production meant that his company was “not able to take final investment decisions on projects to replace blast furnaces with lower-carbon technology at this point in time.”
But in its report, SteelWatch said that, rather than simply being a market participant, ArcelorMittal’s size and scope made it a “market shaper,” and that “with that comes the responsibility to lead the transformation to a zero-emissions economy, not wait for ideal conditions.”
Moreover, the NGO alleges that ArcelorMittal is being less ambitious in its decarbonization plans than many of its smaller competitors. While Thyssenkrupp is in the doldrums, having announced 11,000 redundancies at the end of last year, SteelWatch points to firms such as Germany’s SHS and Salzgitter already having low-carbon DRIs under contract or construction. In Sweden, Stegra is building a new plant that is expected to produce at commercial scale in 2026, while similar projects have been announced in Spain by Hydnum, and in Finland by Blastr.
With Great Power …
SteelWatch emphasized that ArcelorMittal has a broad spread of operations throughout the globe, with facilities in 16 countries and an industrial presence in 59, from Europe to the Americas, Africa and Asia.
“That makes them absolutely unique, and it makes them incredibly influential,” said Caroline Ashley. “If there’s any company in the steel world that should be articulating the future and using its industrial power, its production power, but also its financial and political power, to say ‘we are going to drive this transition,’ it should be ArcelorMittal.”
In a written response to the SteelWatch report, ArcelorMittal reiterated concerns around market conditions, citing “broader challenges the sector faces to decarbonize operations and value chains.” The statement went on: “We remain committed to working with policymakers and stakeholders to create the necessary conditions for making decarbonization economically viable, ensuring its long-term sustainability.”
Against a backdrop of increasing global instability that has been turbocharged by an erratic U.S. administration, 2025 could prove a pivotal year for European steel. Calls both from the industry and from analysts continue to emphasize the need for stronger, sector-specific policies that support decarbonization. To this end, the European Commission in March released a Steel and Metals Action Plan, intended to lower energy costs, improve scrap recycling, and de-risk decarbonization with additional funding from a range of sources, including €100 billion ($113 billion) through the Industrial Decarbonisation Bank in support of clean industry scale-ups.
But it remains to be seen whether the plan will give steel’s nervous giants the confidence they need to forge a new future.
