Steel production costs by technology route, with expected policies

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All routes are modeled on a 25-year project timeframe; BF-BOF asset includes a reline in 2035. NG DRI-EAF (US) route assumes sourcing natural gas-based hot-briquetted iron (HBI) from the United States (e.g., Nippon Steel and US Steel’s planned plant in Arkansas), with EAF steelmaking in Japan. H₂ DRI-EAF (Aus) route assumes sourcing green HBI from Australia, with EAF steelmaking in Japan. Ore-based routes assume 20% scrap usage; DRI-EAF routes use 67% Fe DR-grade pellets; H₂ DRI-EAF routes use renewable electricity for both iron and steel production. Costs above include low-carbon steel credit (US$136/ton HRC), Green Innovation Fund capital subsidy (~US$156 million), GX Promotion Act capital subsidy (~US$711 million, based on JFE subsidy), average GX-ETS costs based on the Ministry of Economy, Trade and Industry (METI) floor and cap prices, expected hydrogen CfD impact, potential fossil fuel subsidy removals for coal (US$2.44/ton) and natural gas (US$1.75/GJ), and potential subsidy for electricity (US$10.88/MWh). Excludes impact of CEV tax credit (~US$290/ton ore-based HRC). Low-carbon steel credit applied until 2035. Assumes that steel products made using the BF-BOF and NG DRI-EAF routes are not eligible for any green steel subsidies. See Exhibit 1, B1, and B2 for more details.

Source: RMI analysis.