The state of the union is steel

President von der Leyen’s State of the Union speech laid out the challenges of our time and set out a sweeping vision: Europe must defend its values, support Ukraine, strengthen its security, boost its competitiveness, and lead the green and digital transition. Yet amid all the talk of sovereignty and strategy, one critical element was barely developed – steel. Indeed, it was referenced explicitly - most notably a forthcoming long-term trade instrument to replace expiring safeguards – but the speech stopped short of the demand signals, verification architecture and investment certainty needed to actually scale clean, competitive steel.

And that omission matters. Because steel is not just another industrial material. It is the backbone of Europe’s sovereignty, competitiveness, and climate transition. No turbines, no tanks, no data centres, no trains without it. If Europe cannot deliver clean, competitive steel, then every other priority - defence, decarbonisation, resilience - will falter.

This is not an abstract concern. Europe’s steelmakers face a once-in-a-century transformation. Hydrogen-based direct reduced iron, fossil-free electric arc furnaces, CCUS retrofits: these technologies can cut emissions by up to 95%, but they are capital-intensive and fragile without robust policy support. The choice Europe faces is stark: invest now and lead the clean industrial race, or delay and become dependent on imported “green” materials of questionable credibility.

The State of the Union was right to place competitiveness and sustainability side by side. But unless Europe hardwires credibility, demand, and investment into its industrial strategy, clean steel will remain a slogan, not a reality. Europe has the tools - CBAM, trade defence reform, the Industrial Decarbonisation Bank, green public procurement, and the forthcoming low-carbon steel label. The question is whether it has the courage to use them as a coherent strategy.Based on von der Leyen’s remarks, the jury is still open: the ambition is there, but the specifics on industrial resilience - and steel in particular - remain unfledged.

So what does that mean in practice?

It means, first, credibility, or loss of it. Green steel will not be built on ambition alone. It demands trust. That means rigorous measurement of emissions across Scope 1, 2 and upstream Scope 3; transparent accounting of scrap content; and technology-neutral benchmarks that reflects the diversity of production and decarbonisation routes. Certification frameworks - multi-stakeholder, global, interoperable, and independently audited - already exist to deliver this. They prove that embedded carbon can be measured, verified, and audited across value chains, and that sustainability extends beyond carbon into labour rights, governance, and ecosystems. Europe should not reinvent the wheel but anchor its policies in these credible systems.

Second, demand. The EU cannot ask industry to invest billions in breakthrough technologies while leaving markets to reward the cheapest, dirtiest imports. Demand-side measures are essential: an ambitious low-carbon steel label, public procurement that requires verified low-emissions materials in major projects, and product standards that create real differentiation. The pledge to introduce a “made in Europe” criterion in public procurement is welcome. To shape real market, it must be coupled with credible, interoperable verification of embedded emissions and circularity so public buyers can confidently prioritise low-carbon steel – without spawning parallel accounting systems. The forthcoming Industrial Acceleration Act offers a chance to operationalise this. Done right, it can turn Europe’s clean steel into a global benchmark. Done poorly, it risks fragmenting standards and fuelling greenwashing.

Third, investment certainty. Clean steel projects need predictable frameworks: carbon contracts for difference to cover the cost gap with conventional routes, faster permitting for breakthrough plants, and access to clean electricity and hydrogen infrastructure at scale. The planned Industrial Decarbonisation Bank could become a game-changer - but only if access is tied to credible performance data and rigorous monitoring. That is the only way to reassure investors, prevent over-subsidisation, and maintain citizens’ trust. Solving the grid and interconnection bottlenecks as exposed by recent ACER report is an equally essential anchor.

Finally, a level playing field in trade. The Carbon Border Adjustment Mechanism is entering its decisive phase, with consultations now open on its definitive methodology. This is the moment to insist on simplicity and harmonisation: a single, interoperable approach to embedded emissions accounting, consistent across CBAM, ETS, product standards and procurement. If Europe creates parallel accounting systems, it will drown producers in complexity and hand the advantage to competitors. If it builds one robust, auditable core, it can lead the world.

At the same time, the post-2026 steel safeguards must evolve beyond blunt protectionism. The Commission now promises long-term instruments; market access should reward verified low-carbon, responsibly sourced steel – ensuring WTO-compatibility while preventing free riders from undercutting Europe’s and global transition. That means robust origin rules, such as “melted and poured”  - to close loopholes and stop trans-shipment. That is how Europe protects its industry without diluting the Green Deal. This is how Europe forges change across the world.

None of this is easy. But neither is Europe’s ambition to defend its sovereignty, decarbonise its economy, and lead the world in clean industry. Steel is where these goals converge. It is where rhetoric meets reality.

The State of the Union underlined the scale of Europe’s challenges. But if Europe wants to turn vision into strategy, it must start with the basics: demand that is credible, investment that is secure, and trade rules that are fair. Above all, it must recognise that steel is not peripheral to these priorities, it is the test case.

And Europe is not alone in this race. In the United States, efforts to repeal key climate incentives risk unsettling investor confidence - yet the underlying momentum for clean steel is unlikely to vanish, buoyed by industry demand and state-led pilots like Colorado’s Electra clean iron plant funded through tax credits, backed by federal grants for zero-emission steel projects, and the expansion of clean hydrogen hubs. Meanwhile in China, electric-arc furnace (EAF) production remains modest - around 10% of steel output, falling short of the 15% target set for 2025. Yet, Beijing doubles down on capacity for green steel, aiming for 15Mt/y of H2-DRI-EAF by 2030. In an era defined by strategic competition, steel decarbonisation is no longer just industrial policy- it’s a geopolitical imperative. If Europe hesitates, it risks losing its first-mover advantage, importing its future from others -while exporting its credibility.

Steel can either become Europe’s climate and competitiveness benchmark - proving that deep decarbonisation and sovereignty go hand in hand. Or it can become the first casualty of delay, fragmentation, and imported dependency. The choice is now.

The question is not whether Europe needs clean steel. The question is whether Europe is ready to design the policies, standards, and investments that make it happen.

The State of the Union left that question open. The months ahead - CBAM reforms, trade defence, the Industrial Acceleration Act - will decide the answer.

And with it, the credibility of Europe’s entire industrial transition. Europe has a choice: make steel the benchmark of a credible clean transition, or let it become the first casualty of delay and complacency. In a world of tipping points, this is not just about industry - it is about sovereignty, resilience, and trust. And the clock is ticking.

Get this transition right, and Europe sets the global benchmark for clean industry. Get it wrong, and we risk importing our future -and exporting our credibility.

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