Steel is essential in today’s economy. It’s in everything from cars and buildings to medical equipment and wind turbines.

But making steel from scratch is not great for the climate. At least not the way it’s been manufactured since the Industrial Revolution, in a process involving coal. The steel sector is responsible for roughly 8% of carbon dioxide emissions worldwide.

The Global Steel Climate Council just released a framework to change that. Some environmental groups are pushing for “green hydrogen” to replace coal in steel manufacturing. 

If ever there was a moment for U.S. steel companies to invest in the transition to green power, it would be now, argues Nick Messenger, an economist and senior research fellow with the Ohio River Valley Institute, a policy think tank.

“The Inflation Reduction Act and the infrastructure bills passed by Congress and the Biden administration have really put an incredible amount of money on the table” toward meeting the administration’s climate goals, he said. Messenger recently co-authored a report on decarbonizing steel production in western Pennsylvania using green hydrogen.

“So it’s really an effective way to still reduce iron ore down to make steel,” Messenger said.

The idea is if you use renewable energy to make hydrogen and you use the hydrogen to manufacture steel, the process is greener from start to finish. This so-called green steel is pretty new.

“I think that hydrogen has an enormous potential to help lower the carbon footprint of steel manufacturing,” said Philip Bell, president of the Steel Manufacturers Association, part of the Global Steel Climate Council. Bell said he appreciates Biden administration incentives. 

“But what can’t get lost in the translation is that we have an existing and proven way that’s fully commercialized and done on a large scale to make lower-carbon steel,” Bell added.

He was referring to steel made by recycling scraps of ferrous material, like other bits of steel. Bell said this process accounts for over 70% of U.S. steel production — and doesn’t require coal.  

“So in some ways, the U.S. steel market is relatively clean compared to the rest of the world,” said Aaron Bergman, a fellow at the think tank Resources for the Future. 

Green hydrogen could be a way to wean raw steel production off coal, he said. “The question is, particularly to decarbonize what is a very large industry, is the scale of hydrogen — green, clean hydrogen — really available?”

Perhaps not yet, he admitted. And even with government incentives, it’s a slow process, said Bell with the Steel Manufacturers Association. 

“It’s like moving a battleship. It’s going to take time,” he said. “There’s a lot of capital already invested in traditional steelmaking technology.”

And, he added, there are a lot of jobs at stake.