Electric Arc Furnace vs Blast Furnace: CO2 Emissions, Costs, and the Future of Steelmaking

Electric arc furnace vs blast furnace defined A blast furnace (BF) uses iron ore and coking coal to produce molten iron, which is then converted to steel in a basic oxygen furnace (BOF). An electric arc furnace (EAF) uses high-voltage electrical arcs to melt steel scrap into liquid steel. The blast furnace route emits approximately 2.33 tonnes of CO2 per tonne of steel; the electric arc route emits approximately 0.77 tonnes. Global steelmaking is split roughly 70% BF-BOF and 30% EAF, but that balance is shifting as decarbonisation pressure grows.

Table of Contents

1. The Blast Furnace Route: Iron Ore to Steel
2. The Electric Arc Furnace Route: Scrap to Steel
3. CO2 Emissions Comparison
4. Cost Comparison: Capital and Operating Costs
5. What EAF Cannot Make: Steel Grade Limitations
6. Global Share: Why the 70/30 Split Exists
7. Green Hydrogen DRI: The Third Route
8. What This Means for Commodity Trade
9. Frequently Asked Questions
10. Key Takeaways

The Blast Furnace Route: Iron Ore to Steel

The blast furnace has been the dominant steelmaking technology for over 150 years. It is a massive, continuous process that runs 24 hours a day, every day, for up to 20 years between major rebuilds.

Iron ore — typically iron ore pellets or sinter (a baked agglomeration of fine ore) with iron content of 62-65% Fe — is charged into the top of the blast furnace along with coke (a porous carbon material produced by baking coking coal in ovens without oxygen) and limestone (a flux that removes impurities).

Hot air (sometimes enriched with oxygen) is blasted in at the bottom through nozzles called tuyeres. The coke burns and generates temperatures exceeding 1,500°C. Carbon monoxide from the burning coke reduces iron oxide in the ore to molten iron. Limestone reacts with impurities (silica, alumina) to form slag — a lighter liquid that floats on top of the iron and is tapped off separately.

The molten iron — called pig iron or hot metal — is tapped from the bottom of the furnace into torpedo cars and transported to the basic oxygen furnace (BOF). In the BOF, pure oxygen is blown through the hot metal at high speed. This burns off excess carbon and other impurities rapidly (in about 20 minutes), converting pig iron into molten steel.

The steel is then cast into slabs, billets, or blooms for downstream rolling and fabrication.

A single large blast furnace might produce 10,000-12,000 tonnes of hot metal per day. Major integrated steelworks (blast furnace + BOF) include ArcelorMittal’s plants in Belgium and Germany, Tata Steel’s Port Talbot works (UK), and the massive POSCO and NSSMC facilities in South Korea and Japan.

The Electric Arc Furnace Route: Scrap to Steel

An electric arc furnace (EAF) is fundamentally simpler than a blast furnace. It is essentially a large bucket lined with refractory brick, fitted with three large graphite electrodes. When high-voltage electricity passes through the electrodes, electric arcs strike between them and the metallic charge — temperatures near the arc exceed 3,500°C.

The primary charge material is steel scrap — cut, shredded, and sorted by type:

• Heavy melt scrap (HMS 1&2): Large structural steel, demolished industrial equipment
• Shredded scrap: Shredded cars and white goods
• Prompt industrial scrap: New scrap from stamping operations, construction offcuts
• Direct reduced iron (DRI) / hot briquetted iron (HBI): Used to dilute tramp elements (see limitations section below)

Scrap is loaded (“charged”) into the furnace, the electrodes are lowered, and the arc heats and melts the material in 40-60 minutes. Oxygen is injected to burn off carbon and impurities. Lime is added to form slag. Alloys (manganese, silicon, chromium) are added to achieve the target steel chemistry.

The result is liquid steel tapped into a ladle and processed further in a ladle furnace for temperature and chemistry adjustment before continuous casting.

EAFs are smaller and more flexible than blast furnaces. A typical EAF produces 200-400 tonnes of steel per heat (melt cycle), with multiple heats per day. EAF plants can be shut down during high electricity price periods and restarted — something impossible with a continuously running blast furnace.

CO2 Emissions Comparison

This is where the two routes diverge most dramatically.

Route	CO2 Intensity	Sources of Emissions
BF-BOF (integrated)	~2.33 t CO2 per tonne of steel	Coking coal combustion, iron ore reduction, energy use
EAF (scrap-based)	~0.77 t CO2 per tonne of steel	Electricity generation (grid), electrode consumption, flux
DRI-EAF (gas-based)	~1.0-1.4 t CO2 per tonne of steel	Natural gas for DRI reduction, electricity
H2-DRI-EAF (green hydrogen)	<0.1 t CO2 per tonne of steel	Renewable electricity only

The BF-BOF route emits approximately 2.33 tonnes of CO2 per tonne of crude steel, according to the World Steel Association data. The vast majority of these emissions come from coking coal — carbon is chemically necessary in the blast furnace process as both a fuel and a reducing agent. You cannot remove coal from a blast furnace and still produce iron.

The EAF route emits approximately 0.77 tonnes of CO2 per tonne of steel, primarily through the electricity used to power the arc. This number depends critically on the electricity grid’s carbon intensity. An EAF running on 100% renewable electricity emits close to zero direct CO2. An EAF running on coal-fired electricity emits more.

In the EU context: EU ETS carbon pricing (currently €50-70/tonne of CO2) means that integrated BF-BOF steel production now carries an embedded carbon cost of approximately €115-165 per tonne of steel. This is a significant competitive disadvantage versus EAF producers or imports from countries without carbon pricing — which is precisely why the EU CBAM (Carbon Border Adjustment Mechanism) was designed.

Cost Comparison: Capital and Operating Costs

The two routes have opposite cost structures.

Capital costs (building the plant):

Route	Typical Capital Cost	Notes
Integrated BF-BOF (new build, 3-4 Mtpa)	$2-4 billion	Includes blast furnace, coke ovens, BOF, rolling mills
EAF mini-mill (new build, 1-2 Mtpa)	$300-600 million	Far lower per tonne of capacity

A blast furnace requires a full integrated complex: coking plant, sinter plant, blast furnace, hot strip mill or plate mill, and all the associated infrastructure. The capital cost per tonne of annual capacity runs $600-$1,000 per tonne.

An EAF mini-mill can be built for $300-400 per tonne of annual capacity. This is why EAF technology has enabled “mini-mills” — companies like Nucor, Steel Dynamics, and Commercial Metals in the US — to build regional steel plants at far lower cost than integrated steelworks.

Operating costs:

BF-BOF plants have high raw material costs (iron ore + coking coal) but relatively predictable unit economics once the furnace is running. Coking coal typically represents 30-40% of BF-BOF operating costs. The blast furnace cannot be shut down and restarted cheaply — it runs continuously or not at all.

EAF plants have lower raw material costs (scrap is cheaper than virgin iron units per tonne of contained iron) but are highly sensitive to electricity prices. Electricity can represent 25-35% of EAF operating costs. When electricity prices spike — as in Europe in 2022 — EAF plants either absorb the cost or curtail production. Several European EAF steelmakers cut output in 2022 specifically because electricity prices made steelmaking uneconomical.

EAF also provides operational flexibility: plants can be idled during high electricity price periods and restarted. This is a meaningful advantage in electricity markets with high price volatility.

What EAF Cannot Make: Steel Grade Limitations

The EAF route has a fundamental metallurgical limitation: tramp element contamination from scrap.

Steel scrap is not pure iron. It contains residual alloying elements from the original steel’s composition: copper, tin, nickel, molybdenum, chromium. These elements survive the melting process and cannot be removed by oxidation (unlike carbon, silicon, and sulphur, which can be burned out). They accumulate in the melt.

The key culprit is copper. Copper in steel above certain threshold levels (typically 0.1-0.2%) degrades hot workability — the steel surface cracks during hot rolling. This is called hot shortness. For commodity steel grades (rebar, structural sections, wire rod), the copper tolerances are loose and EAF scrap-based production works well. For flat steel products like automotive body panels, electrical steel, and tin-coated packaging steel, copper must be very low — often below 0.04%.

No economically practical method exists to remove copper from liquid steel once it’s in the melt. The only solution is dilution — adding virgin iron units (pig iron, DRI, or HBI) that are copper-free. EAF plants that produce quality flat steel (like Nucor’s Crawfordsville sheet mill) do exactly this, blending purchased pig iron or DRI with scrap.

The practical consequence: the automotive steel, electrical steel, and high-quality flat-rolled steel markets remain largely served by integrated BF-BOF producers because they use virgin ore with no tramp element contamination. EAF excels in long products (rebar, sections, wire rod) and lower-grade flat products.

This limitation will become increasingly important as scrap recycling rates rise and scrap quality degrades further with accumulated tramp elements.

Global Share: Why the 70/30 Split Exists

Global crude steel production is approximately 1,900 million tonnes per year (2023 data). The split:

• BF-BOF: approximately 70% (~1,330 million tonnes)
• EAF: approximately 29% (~550 million tonnes)
• Other (open hearth, induction furnaces): ~1%

The reason for BF-BOF dominance is China. China produces over 50% of the world’s steel — approximately 1,000 million tonnes per year — and roughly 90% of Chinese production uses the BF-BOF route. China has built an enormous base of integrated steelworks over the past 30 years, and scrap supply has been limited by China’s relatively young industrial stock (most infrastructure and buildings were built recently and haven’t yet reached end-of-life scrap availability).

Outside China, the EAF share is much higher:

• United States: ~70% EAF, 30% BF-BOF. Nucor, Steel Dynamics, and Commercial Metals are major EAF producers.
• EU: ~40% EAF (varies by country — Italy near 70% EAF; Germany still BF-heavy due to automotive demand)
• Turkey: ~70% EAF (large scrap importer using Mediterranean scrap flows)

As China’s industrial base ages and scrap availability grows, China’s EAF share is expected to rise from ~10% toward 20-25% by 2035, a significant shift in global market dynamics.

Green Hydrogen DRI: The Third Route

The most significant development in steelmaking technology for the next decade is hydrogen-based direct reduction of iron (H2-DRI), combined with EAF steelmaking.

Direct Reduced Iron (DRI) is iron produced by reducing iron ore pellets with a reducing gas (traditionally natural gas — mostly methane) at temperatures below the melting point (~800-1,100°C). The ore remains solid but is chemically reduced from iron oxide to metallic iron. The result is a spongy metallic material that can be fed directly into an EAF as a scrap substitute.

The conventional DRI process (using natural gas) produces approximately 1.0-1.4 tonnes of CO2 per tonne of DRI — better than the blast furnace but not zero-carbon.

The breakthrough is replacing natural gas with green hydrogen — hydrogen produced by electrolysis of water using renewable electricity. When hydrogen reduces iron ore, the only by-product is water (H₂O), not CO2. Combined with renewable-powered EAF steelmaking, the full H2-DRI-EAF route can produce steel with less than 0.1 tonnes of CO2 per tonne — a ~95% reduction from BF-BOF.

Two major projects are leading this technology:

HYBRIT (Hydrogen Breakthrough Ironmaking Technology): A joint venture between SSAB (Sweden), LKAB (Sweden’s largest iron ore producer), and Vattenfall (Swedish energy company). HYBRIT produced the world’s first hydrogen-reduced steel delivered to a customer (Volvo AB) in 2021. Commercial scale production is targeted at SSAB’s Luleå plant by 2026-2030.

H2 Green Steel (now Stegra): A new greenfield facility under construction in Boden, Sweden. Targeting 5 million tonnes per year of green steel by 2030, powered by Swedish hydroelectric and wind energy and using H2-DRI-EAF technology.

Other companies pursuing similar routes include ArcelorMittal (MIDREX-based DRI plants with hydrogen transition), thyssenkrupp (tkH2Steel project in Duisburg), and Salzgitter (SALCOS programme).

The commercial challenge: green hydrogen currently costs $4-8/kg, versus natural gas at an energy-equivalent of $1-2/kg. Green steel produced via H2-DRI carries a cost premium of $100-300/tonne versus conventional BF-BOF steel. Whether that premium can be passed on to buyers through “green premiums” or absorbed through carbon pricing is the central commercial question of the steel industry’s decarbonisation.

What This Means for Commodity Trade

The EAF/BF-BOF split has direct implications for the commodity trade flows that support each route.

BF-BOF demands: Iron ore (shipped from Australia, Brazil) and coking coal (shipped from Australia, USA, Canada, Russia). These are two of the highest-volume seaborne dry bulk trades in the world. A shift away from BF-BOF directly reduces demand for coking coal and premium iron ore pellets — a long-term headwind for those commodity markets.

EAF demands: Electricity and steel scrap. The global scrap trade is significant — Turkey is the world’s largest steel scrap importer, sourcing from the US, EU, and UK. Rising EAF production globally means rising scrap demand, which pushes scrap prices higher and makes scrap sourcing more competitive.

H2-DRI demands: High-grade iron ore pellets (DRI requires higher iron content — 67%+ Fe — than standard BF-BOF blast furnace ore). This creates a premium market for high-grade iron ore pellets from LKAB (Sweden), CVRD/Vale (Brazil), and Bahrain Steel. The H2-DRI transition is bullish for high-grade iron ore and bearish for medium-grade blast furnace ore.

Frequently Asked Questions

Which is cheaper to operate, a blast furnace or an EAF?

It depends on the cost of raw materials in each location. Where scrap is cheap and electricity is affordable, EAF is cheaper to operate. Where scrap is scarce and electricity is expensive, BF-BOF has the advantage. EAF mini-mills in the US have consistently lower costs than US integrated BF-BOF producers because US scrap is abundant and relatively cheap. European EAF producers were squeezed in 2022 when electricity prices spiked due to the gas crisis.

Can an electric arc furnace make automotive steel?

Some can, with important caveats. High-quality flat-rolled steel for automotive applications requires very low copper levels (below 0.04%) to avoid hot shortness during rolling. EAF plants that produce auto-grade steel must dilute scrap with copper-free virgin iron units — pig iron, DRI, or HBI. Nucor’s Gallatin and Crawfordsville sheet mills do exactly this. But the quality ceiling for EAF flat steel is lower than for integrated BF-BOF plants without significant DRI addition.

What is green steel and how much more does it cost?

Green steel is steel produced with significantly lower CO2 emissions than conventional steelmaking — typically defined as below 0.5 tonnes of CO2 per tonne of steel. The leading pathway is H2-DRI-EAF using renewable-powered green hydrogen. Current green steel carries a cost premium of $100-300/tonne versus conventional steel, depending on green hydrogen cost. As renewable energy costs fall, this premium is expected to narrow.

Why does China dominate the BF-BOF route?

China built most of its steel capacity over the past 30 years using BF-BOF technology because it was the cheapest way to rapidly scale production, because coking coal was available, and because scrap was scarce in a rapidly industrialising economy. China produces over 1 billion tonnes of steel per year, ~90% via BF-BOF. As China’s industrial base ages and scrap availability rises, its EAF share is gradually increasing from the current ~10%.

What is HYBRIT and why does it matter?

HYBRIT is a joint venture between SSAB, LKAB, and Vattenfall aimed at producing fossil-free steel using hydrogen direct reduction. In 2021 it delivered the world’s first fossil-free steel — produced without coking coal or natural gas — to Volvo AB. HYBRIT matters because it demonstrates that the H2-DRI-EAF route can work commercially. If scaled, it could eliminate approximately 2.33 tonnes of CO2 per tonne of steel across the BF-BOF industry.

Key Takeaways

• The blast furnace-BOF route (BF-BOF) uses iron ore and coking coal; the electric arc furnace (EAF) uses steel scrap and electricity. These are fundamentally different raw material supply chains.
• BF-BOF emits approximately 2.33 tonnes of CO2 per tonne of steel; EAF emits approximately 0.77 tonnes — a 67% reduction.
• EAF has much lower capital costs than BF-BOF (~$300-400 per tonne of capacity versus $600-1,000) and greater operational flexibility, but is sensitive to electricity prices.
• EAF cannot easily produce high-purity flat steel grades for automotive applications without adding virgin iron units to dilute tramp elements — particularly copper — that accumulate from scrap.
• Global steelmaking is approximately 70% BF-BOF and 30% EAF; the EAF share is rising as scrap availability grows and decarbonisation pressure intensifies.
• The EU ETS carbon price (~€50-70/tonne CO2) adds €115-165/tonne of embedded carbon cost to BF-BOF steel, creating competitive pressure that EAF and imports without carbon pricing do not face equally.
• Green hydrogen DRI (H2-DRI-EAF) is the lowest-carbon steelmaking route, reducing CO2 by up to 95% versus BF-BOF; HYBRIT and Stegra in Sweden are the leading commercial-scale projects.
• The shift from BF-BOF to EAF/DRI-EAF is long-term bearish for coking coal and standard iron ore, and bullish for high-grade iron ore pellets and steel scrap.

Related Reading

To deepen your understanding of the topics covered in this article, explore these related guides: the full ferrous chain from iron ore to finished steel, the scrap grades and pricing mechanisms that feed electric furnaces and how carbon pricing policies affect the cost gap between the two routes.