Track how global companies are responding to major environmental regulations, categorized by framework. Identify stances, strategies, and key implementation hurdles.
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Introducing an EAF of about 2Mt/yr at Kurashiki (¥329.4B, from Q1 FY2028); aims to mass-supply high-grade steel from an EAF.
Impurity control for high-grade steel; stable DRI supply
Nippon Steel
Nippon Steel
JapanSteel
Adapting
⚡ Converting three sites to electric arc furnaces (total investment ¥868.7 billion, selected for government support in May 2025) and developing hydrogen-based ironmaking, while CBAM puts a price on the carbon in its EU-bound steel
With CBAM in its definitive period since January 2026, direct emissions from blast-furnace steelmaking become a carbon cost for Nippon Steel's EU-bound products. On May 30, 2025, after the project was selected for government support under Japan's GX Promotion Act, the company decided to convert from blast furnaces to electric arc furnaces at three sites — Yawata (Kyushu Works), Hirohata (Setouchi Works) and Yamaguchi Works — with a total investment of ¥868.7 billion, including government support of up to ¥251.4 billion. According to the company, converting about 2.9 million tonnes a year of capacity is expected to cut CO₂ emissions by about 3.7 million tonnes a year, with a supply of about 1.6 million tonnes a year of GX steel reflecting that reduction. The company also says that Super COURSE50 trials at its Kimitsu test furnace in November–December 2024 confirmed a 43% reduction in CO₂ emissions from the blast furnace itself, and in June 2025 it agreed to invest in a joint venture to study the development of a new area of the Kami iron ore mine in eastern Canada, a source of high-grade ore suited to direct reduction.
🎯 Key Initiatives
May 30, 2025: decided to convert from blast furnaces to electric arc furnaces at three sites (total investment ¥868.7 billion, government support of up to ¥251.4 billion) — a new furnace at Yawata, an additional furnace at Hirohata and a modified, restarted furnace at Yamaguchi, with production starts planned between the second half of FY2028 and the second half of FY2029 (according to the company's announcement)
Super COURSE50: according to the company, trials at the Kimitsu test furnace in November–December 2024 confirmed a 43% reduction in CO₂ emissions from the blast furnace itself; the target is a reduction of 50% or more (a NEDO Green Innovation Fund project)
Hydrogen-based direct reduction: building a 60-metre test shaft furnace at the Hasaki R&D Center, with tests from FY2025, aiming to establish the technology for commercial use around 2040
June 2025: agreed to invest in a joint venture to study the development of a new area of the Kami iron ore mine in eastern Canada, a source of high-grade ore suited to direct reduction
According to the company (May 2025), it has taken part in and led the issuance of the first edition of worldsteel's guidelines on GX steel and outreach on GX steel to international bodies such as ISO
⚠️ Challenges & Risks
•Securing feedstock for the electric arc furnaces: scrap with low impurities for high-grade steel and a stable supply of direct reduced iron (DRI)
•Building systems to calculate and verify actual embedded emissions per product in line with EU methods, so that EU importers do not have to use default values with mark-ups
•Indirect exposure if the downstream extension (in trilogue) is adopted: automotive customers would weigh the carbon intensity of their steel suppliers
•Uncertain pace of GX steel market creation: if demand grows more slowly than expected, recovering the ¥868.7 billion investment could take longer
📢 May 2025 Announcement🕐 Verified: October 2026 Verified🔍 Last source review: 2026-10-20
GRI Editorial Comment
Nippon Steel's response to CBAM centres on its electric arc furnace conversion (total investment ¥868.7 billion), supported by the government under the GX Promotion Act, and on hydrogen-based ironmaking. The formal decision on the conversion goes beyond regulatory compliance: it is a management decision to turn low-carbon production capacity into a source of competitiveness. The 43% reduction confirmed for Super COURSE50 shows progress on hydrogen-based reduction. The main risk is that, if the GX steel market that the company itself calls its biggest challenge does not take shape, the return on the investment will remain uncertain. CBAM can help reflect the value of GX steel in prices for EU-bound exports, but whether Japanese customers in the automotive, electrical and infrastructure sectors shift their procurement depends heavily on domestic carbon pricing and the pace of market creation. For procurement and legal teams in Japan, the point to watch is the proposed downstream extension of CBAM (107 entries, proposed to apply from 2028, in trilogue): if adopted, low-carbon procurement requirements would extend from steel to automotive parts and machinery.
CBAM implementation, the status of the downstream extension proposal and the creation of a GX steel market may change. Check the European Commission's website and Nippon Steel's investor relations for the latest information.
ArcelorMittal
ArcelorMittal
LuxembourgSteel
Adapting
⚡ Facing the phase-out of EU ETS free allocation and high electricity costs: German DRI-EAF plans dropped in 2025, construction of an electric arc furnace in Dunkirk confirmed in 2026
ArcelorMittal, a steelmaker with large steelmaking sites in the EU, faces three pressures: EU ETS carbon costs, CBAM and customer demand for low-carbon steel. On June 19, 2025, the company announced that it could not proceed with its DRI-EAF plans for Bremen and Eisenhüttenstadt, and formally notified the German government that it could not proceed with the investments under a €1.3 billion support contract that required construction to start by June 2025. The company cited green hydrogen not yet being a viable fuel, natural gas-based DRI not being competitive as an interim solution, weak demand and high imports, and high electricity prices in Germany. In Spain, it plans to raise production at its Sestao plant (two EAFs) to 1.6 million tonnes a year by 2026 and began building a 1.1-million-tonne EAF at Gijón in May 2024 (company statement, November 2024). In Dunkirk, France, it announced its intention to invest €1.2 billion in May 2025 and, on February 10, 2026, confirmed the construction of a 2-million-tonne EAF (investment of €1.3 billion; start-up scheduled for 2029, according to the company's February 2026 announcement). In its first-quarter 2026 results (April 30, 2026), the company described CBAM and the new tariff rate quota (TRQ) as a "structural reset" of the European policy environment. The TRQ has applied since July 1, 2026 under Regulation (EU) 2026/1384.
🎯 Key Initiatives
June 19, 2025: announced that it could not proceed with the DRI-EAF plans for Bremen and Eisenhüttenstadt, Germany, and formally notified the government regarding the €1.3 billion support contract; Geert van Poelvoorde, CEO of ArcelorMittal Europe, said that "even with the financial support, the business case for moving ahead with this transformation is not strong enough"
Dunkirk, France: announced its intention to invest €1.2 billion in May 2025 and, on February 10, 2026, confirmed the construction of a 2-million-tonne EAF (investment of €1.3 billion; start-up scheduled for 2029, according to the company's February 2026 announcement; Energy Efficiency Certificates (CEE) to cover 50% of the investment)
Sestao, Spain (two EAFs, flat products): plans to raise production to 1.6 million tonnes a year by 2026, with much of the output to be XCarb® low-carbon steel (company statement, November 2024)
Gijón, Spain (long products): began building a new EAF in May 2024 (1.1 million tonnes a year, expected to cut CO₂ emissions by 1 million tonnes a year)
XCarb®: carbon footprint as low as 300 kg CO₂ per tonne of steel; in November 2024 the company said it was on track to double sales to about 400,000 tonnes in 2024
⚠️ Challenges & Risks
•High electricity costs in Germany: in Bremen and Eisenhüttenstadt, the company is limited to detailed planning for EAFs, ready for a scenario in which EAF-based production has a strong business case; the company says electricity prices in Germany are high both internationally and compared with neighbouring countries
•Commercialisation of green hydrogen: the company says green hydrogen is not yet a viable fuel and natural gas-based DRI is not competitive as an interim solution; Fastmarkets reported that the company put European hydrogen prices at about €5–8 per kg, while a trade source said about €2.50–3.00 per kg would be needed for steelmaking
•Effectiveness of CBAM and the TRQ: how far the TRQ (applied since July 1, 2026) and CBAM together will curb imports remains to be seen
📢 June 2025 Announcement🕐 Verified: October 2026 Verified🔍 Last source review: 2026-10-20
GRI Editorial Comment
The ArcelorMittal case shows how complex CBAM is as a regulation. In November 2024 the company pointed to "significant weaknesses" in CBAM, while it continued to expand sales of its XCarb® low-carbon steel. Its positive description in the first-quarter 2026 results of a "structural reset" brought by CBAM and the new TRQ shows how its assessment changed once the rules actually began to apply. For Japanese steel and materials companies, the lesson is that an EAF investment that could not go ahead in Germany was confirmed in France. The company says new EAFs will be built in countries that can provide visibility and certainty on low-cost electricity; the way electricity costs and policy certainty condition large decarbonisation investments is also relevant to the design of Japan's GX steel policy.
CBAM and TRQ implementation, European electricity costs and hydrogen prices may change. Check ArcelorMittal's investor relations and the European Commission's website for the latest information.
JFE Steel
JFE Steel
JapanSteel
Adapting
⚡ Investing in a large innovative electric arc furnace at Kurashiki and building systems to provide product-level emissions data under CBAM
On April 10, 2025, JFE Steel announced that it would introduce an innovative electric arc furnace (EAF) at the Kurashiki district of its West Japan Works, following the government's decision the previous day to provide a grant. The total investment is ¥329.4 billion (about USD 2.2 billion), of which up to ¥104.5 billion is expected to be covered by a government grant under the GX Promotion Act; the furnace will have an annual capacity of about 2 million tonnes and is expected to start production in the first quarter of FY2028 (April–June 2028). The company says it aims to become the first in the world to mass-supply high-grade steel such as electrical steel sheets and high-tensile steel sheets — which existing large EAFs cannot produce — by combining its own high-grade, high-efficiency melting technology with low-carbon direct reduced iron (DRI). For DRI, according to an analysis by GMK Center (September 2025), the company has invested with Emirates Steel in a 2.5-million-tonne-a-year DRI plant in the UAE. At the Chiba district of its East Japan Works, it has set up test facilities, including a carbon-recycling blast furnace and a small EAF, where demonstration tests are being conducted (as of April 2025). With CBAM in its definitive period since January 2026, the carbon intensity of EU-bound products is reflected in EU importers' certificate costs.
🎯 Key Initiatives
April 10, 2025: announced the introduction of an innovative electric arc furnace at Kurashiki (total investment ¥329.4 billion, government grant of up to ¥104.5 billion), with an annual capacity of about 2 million tonnes and production expected to start in the first quarter of FY2028 (April–June 2028)
Investment with Emirates Steel (UAE) in a 2.5-million-tonne-a-year DRI plant (according to GMK Center, September 2025), to secure low-carbon direct reduced iron as feedstock for the EAF
Test facilities at the Chiba district of East Japan Works, including a carbon-recycling blast furnace and a small EAF, where demonstration tests under the NEDO Green Innovation Fund project are being conducted (as of April 2025)
⚠️ Challenges & Risks
•Establishing EAF mass production of high-grade steel: the company says it aims to mass-produce electrical and high-tensile steel sheets in an EAF for the first time in the world, which requires solving impurity control, quality stability and yield at scale
•Stable supply and logistics of DRI: part of the feedstock for the Kurashiki EAF (about 2 million tonnes a year) is expected to come from the DRI plant in the UAE (2.5 million tonnes a year, according to GMK Center); timing, transport costs and geopolitical risks affect supply
•Systems to provide actual emissions data: since CBAM's definitive period began in January 2026, systems to calculate, manage and provide actual embedded emissions per product in line with EU methods (verified by an accredited verifier where actual values are used) are needed; the first annual declaration and surrender are due by September 30, 2027
•Parallel capital spending: building the Kurashiki EAF (¥329.4 billion), the DRI investment and the carbon-recycling blast furnace tests at Chiba at the same time adds to the financial burden, especially if steel prices stay weak
📢 April 2025 Announcement🕐 Verified: October 2026 Verified🔍 Last source review: 2026-10-20
GRI Editorial Comment
JFE Steel's response to CBAM is a long-term differentiation strategy built on the technical challenge of producing high-grade steel in an electric arc furnace. The company says it aims to be the first in the world to mass-supply electrical and high-tensile steel sheets that existing large EAFs cannot produce; if it succeeds, it would combine low carbon with high quality. While ArcelorMittal could not proceed with its decarbonisation investment in Germany, JFE decided to invest with government support under the GX Promotion Act. There are two lessons for readers. First, once the Kurashiki EAF starts operating (planned for FY2028), the emission intensity of its products will be reflected in CBAM costs, so buyers of automotive and electrical steel for the EU will compare suppliers' CO₂ intensity data. Second, if the proposed downstream extension of CBAM (107 entries, proposed to apply from 2028, in trilogue) is adopted, pressure to decarbonise will extend from steel to finished products.
CBAM implementation, the status of the downstream extension proposal and progress on the EAF construction may change. Check JFE Steel's investor relations and the European Commission's website for the latest information.
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