The European Union's steel industry is at a critical juncture, with a leaked draft of the **Industrial Accelerator Act (IIA)** revealing bold strategies to unlock demand for green steel and address stalled investments in decarbonization. Published as part of the broader Clean Industrial Deal, the IIA aims to accelerate progress in energy-intensive sectors, positioning steel as a top priority due to persistent challenges like declining production, surging imports, and a widening cost gap with global competitors since 2021[1].

More than half of announced decarbonization projects in sectors including steel remain unimplemented, hampered by high costs, weak demand signals, and protracted permitting processes. The draft warns that without intervention, the EU faces further de-industrialization as global partners ramp up their industrial strategies. To counter this, it calls for manufacturing to constitute at least 20% of EU gross value added by 2030, emphasizing the urgency for steelmakers who saw EU-27 crude steel output reach 129.5 million tonnes in 2024—a modest 2.6% year-on-year increase but still below pre-2022 levels amid high energy costs and economic headwinds[1].

EUROFER data underscores the import pressures: carbon steel imports hit 26.36 million tonnes in 2024, up 6.4% from 2023, capturing around 25% of the EU flat steel market. Projections indicate only modest consumption growth of 3% in 2026, remaining below pre-pandemic levels[1]. The IIA proposes mandatory low-carbon and 'Made in EU' requirements for steel in public procurement projects in construction and transport by 2030, providing demand visibility to nascent green markets. A European mill source noted that without such pushes, green steel risks staying niche[1].

Fastmarkets' green steel assessments highlight premiums: the differential for green flat-rolled steel exw Northern Europe stood at €100-150 per tonne, while reduced carbon emissions differential was €40-50 per tonne. These metrics define green steel via emissions thresholds, such as max 0.8 tonnes CO2 per tonne for Scope 1, 2, or 3[1]. Projects in designated industrial acceleration areas gain perks like prioritized infrastructure and grid connections[1].

Scrap and raw materials security feature prominently, vital as over 50% of EU blast furnaces near end-of-life by 2035. Steelmakers grapple with replacing BF-BOF with EAFs and hydrogen DRI, but face constraints in DR-grade pellets, high-quality scrap, and renewables. The IIA stresses secondary raw materials to enable this shift, aligning with strategies from majors like ArcelorMittal[1].

This initiative intersects with CBAM enforcement in 2026, phasing out free ETS allowances and tightening import safeguards, reshaping competitiveness. While short-term pressures mount, the IIA could catalyze investment if paired with supportive policies, fostering a resilient, low-carbon steel ecosystem[1][2]. Industry leaders urge swift adoption to preempt import stockpiling and ensure watertight mechanisms[3]. The full impact hinges on finalization, expected post-February 25, but signals a proactive EU stance on industrial competitiveness and sustainability.

In parallel, public procurement evolves with national implementations like discounts in the Netherlands or minimum standards in Austria and Italy, backed by €9.3 billion in state aid for EAF transitions. These measures, combined with rising ETS costs post-2026, pressure high-emission producers toward cleaner tech[6]. Europe's green steel trajectory demands balanced execution to mitigate risks while seizing long-term opportunities in a decarbonizing global market.