Together, steel and cement are responsible for roughly 15 to 19% of global CO2 emissions. Steel sits at around 7 to 11% on its own. Cement adds another 7 to 8%. For context, those two numbers together exceed the entire global aviation and shipping sector combined. And yet, as of early 2026, neither industry has a full-scale, commercially operating decarbonization pathway running at meaningful scale.
Most industrial decarbonization conversations start with energy — switch to renewables, electrify what you can, reduce Scope 2. That logic works for a lot of sectors. It doesn't work cleanly for steel or cement, and that distinction matters enormously for how operators need to think about their infrastructure investments.
For cement, the problem is chemistry. Roughly 85% of cement's CO2 emissions come from the calcination process itself — the chemical transformation of limestone at extreme heat — which cannot be decarbonized simply by switching to a clean energy source. No matter how green the grid becomes, a significant share of cement's emissions is baked into the production chemistry. The only real lever for those process emissions is carbon capture — and as of 2025, no full-scale cement plant has integrated carbon capture and storage into regular commercial operation.
For steel, the primary pathway to deep decarbonization runs through green hydrogen. The technology — hydrogen-based direct iron reduction — is real, it works, and several projects have proven it at demonstration scale. But the infrastructure required to run it at the scale the industry actually needs doesn't exist yet. The transition of the global steel industry to near-zero emissions production made little progress in 2025, and it wasn't primarily a technology problem. It was a hydrogen availability, energy pricing, and infrastructure readiness problem.
The stall isn't abstract. It's showing up in specific capital decisions that will define these sectors for decades.
Nippon Steel's first major investment after acquiring U.S. Steel was to reline Blast Furnace #14 at Gary Works in Indiana — a $3.1 billion decision that will extend that furnace's operating life well into the 2040s. That is a bet, made in 2025, on coal-based steelmaking lasting another 20 years.
In Europe, the picture isn't much better. Salzgitter postponed the next stages of its large-scale green hydrogen steel project until at least 2028-2029, citing slower-than-expected development of the hydrogen market and absent regulatory support. ArcelorMittal has cancelled or scaled back projects in Germany. Thyssenkrupp postponed a green hydrogen tender indefinitely after bids came in far above projections. These aren't fringe actors — they are the companies that were supposed to be leading the transition.
For cement, the economics of carbon capture are similarly sobering. Capture costs range from $144 per tonne of CO2 to abate 15 % of the U.S. cement sector to $215 per tonne for full abatement. And while decarbonization measures like CCUS could increase cement prices by 20 to 40%, their impact on overall construction costs would be minimal which means the barrier isn't the market, it's the financing structure and the infrastructure for CO2 transport and storage, which barely exists at industrial scale in most regions.
Industrial operators sometimes treat decarbonization timelines as long-range planning problems — something to manage in the next capital cycle. That framing is getting more expensive by the year.
The EU's Carbon Border Adjustment Mechanism (CBAM) moved from reporting-only to full financial implementation in January 2026. CBAM will impose costs of $23 to $92 per tonne on high-carbon steel and cement imports to the EU, creating immediate competitive pressure for any company selling into European markets. That is not a future cost — it is a current one.
Beyond trade exposure, the physical infrastructure decisions being made right now are locking in emissions profiles for 20 to 30 years. Every blast furnace that gets relined, every cement kiln that gets upgraded without carbon capture consideration, and every green hydrogen project that gets deferred is a constraint that will be very difficult to unwind. The cement industry must cut emissions by 75 to 90% by 2050 to align with Paris Agreement targets — reducing from roughly 4.1 billion tonnes of CO2 annually to under 1 billion — while global cement demand is projected to grow 12 to 23% over the same period.
That math does not work if the industry spends the next five years in a holding pattern.
The companies that are moving — and some are — share a common characteristic: they stopped waiting for perfect infrastructure conditions and started making infrastructure investments that create their own conditions. They're securing long-term energy contracts, co-investing in hydrogen supply chains, and designing CCS into capital projects now rather than retrofitting later.
Decarbonizing steel and cement requires coordinated capital deployment, policy alignment, and market-shaping measures that span the entire ecosystem, which is true. But for operations leaders, the practical question is narrower: where in your asset base are you making 10-to-20-year capital commitments right now, and does your decarbonization roadmap actually account for those lock-in effects?
The technology exists. The pathways are documented. What's stalling both sectors is the gap between knowing what needs to happen and building the infrastructure to make it happen — and that gap has a closing date that neither industry is treating with appropriate urgency.
