Steel production accounts for about 7 percent of global carbon dioxide emissions, and decarbonization in Asia must address the fact that around 70 percent of current output still comes from blast furnace and basic oxygen furnace routes, which emit roughly 1.85 tonnes of CO₂ per tonne of steel and consume about 19 to 20 gigajoules of mostly coal-based energy per tonne. By contrast, scrap-based electric arc furnace systems and hydrogen-based direct reduction with electric arc furnaces can reduce emissions by approximately 60 to 90 percent and 90 to 95 percent, respectively, when powered by low-carbon electricity and hydrogen.
The current cost and technology maturity landscape suggests a two-track strategy: scaling scrap-based EAF production where grids and recycling infrastructure can support it, given its lower capital and operating costs, while preparing for hydrogen-based DRI combined with EAF in hubs that have access to affordable renewable energy and hydrogen. In the near term, retrofits such as biochar or hydrogen injection into blast furnaces can deliver partial reductions of about 10 to 20 percent and 5 to 60 percent of blast furnace emissions, respectively. Carbon capture, utilization, and storage can capture 50 to 60 percent of blast furnace emissions where geological storage and enabling policies exist, but these solutions are interim rather than endpoints.
In the longer term, direct electrification routes such as molten oxide electrolysis show strong abatement potential but remain at an early technology readiness level. Regionally, India leads in regulatory and market readiness for scrap-based and hydrogen-DRI pathways, while Southeast Asia is at an earlier stage but progressing. Vietnam, Indonesia, Thailand, Malaysia, Singapore, and the Philippines are advancing emissions trading systems, recycling initiatives, and hydrogen roadmaps, while buyers exposed to the European Union Carbon Border Adjustment Mechanism are creating demand for certified low-carbon steel.
