Momentum shifts east in green steel transition in Commodity News 05/02/2026 The first half of this decade saw Europe leading the early phase of the steel technology transition away from coal, as it had done previously in the power sector. But more recently momentum has slowed in Europe and is shifting east. This is a familiar energy transition story – China increasingly dominates in renewable energy capacity and technologies. With steel production considered a strategic industry, Europe needs to do more to ensure it isn’t leapfrogged again. European nations like Germany led the world into the renewable energy age, establishing early leadership in solar and offshore wind capacity. More recently, that leadership has been taken on by China. Not only does it dwarf the rest of the world in renewable energy capacity growth, but it also dominates in clean energy technologies: solar, electric vehicles (EVs), batteries – and the minerals required to make them. It is not far behind in wind power technology. Europe’s failure to catch up and compete with China on battery technology was exemplified by the collapse of Northvolt – the largest bankruptcy in Swedish industrial history. Now Sweden’s Stegra – which has a green steel plant under construction and shares a key investor with Northvolt – is facing a funding crunch. It needs more than US$1 billion to cover additional project costs. Stegra’s difficulties are just one example of a wider slowdown in steelmakers’ shift toward direct reduced iron (DRI) and green hydrogen across Europe. In another similarity with Northvolt, the funding shortfall is also partly due a lack of financial support from the Swedish government, according to Stegra. Stegra intends to make steel using DRI technology and 100% green hydrogen to replace fossil fuels. If completed it would be a global landmark in truly green steel. Meanwhile in China, the world’s biggest steelmaker recently announced the integration of its one million tonne per annum DRI plant, running primarily on hydrogen. Although the source of the hydrogen at Baosteel’s Zhanjiang installation has not been made clear, it has previously been stated that the plant is “leveraging coke oven gas as the process gas, in an industry first”. Baosteel is a subsidiary of China Baowu. Unlike Chinese dominance in solar, EVs and batteries, Baosteel’s plant is using Western technology, at least for now. The facility uses Energiron DRI equipment developed by Tenova and Danieli of Italy. But China’s technology dominance has been based on a deliberate strategy of encouraging Western companies to share their technology in return for access to the Chinese market. As it stands, based on methane and coke oven gas, Baosteel’s DRI plant has lower emissions, but it is not truly green. A key question now is: Will the company leap ahead of Europe and shift the Zhanjiang DRI plant onto green hydrogen? And how quickly will this be replicated around China? There are several other DRI plants in China that could switch to green hydrogen. If exported to the EU, steel produced using green hydrogen in China could avoid high charges under the Carbon Border Adjustment Mechanism (CBAM). In January 2026, another Baowu subsidiary officially launched a green hydrogen project – the first in China to be directly connected to an offshore wind farm. As well as being used for green ammonia production, this will reportedly feed into a hydrogen pipeline in Guangdong province between the city of Yangjiang and