ArcelorMittal has announced plans to invest €1.3 billion, approximately $1.5 billion, in the construction of a new electric arc furnace in Dunkirk, France. The decision marks a significant move in the company’s European decarbonisation pathway after previously delaying low-carbon steel investments in 2024 due to policy uncertainty.

According to company leadership, recent changes in trade and climate policy have improved the financial outlook for domestic steel production. Chief Executive Officer Geert van Poelvoorde pointed to tariffs aimed at curbing unfair imports into the European Union and the implementation of the Carbon Border Adjustment Mechanism, or CBAM, as factors creating a more balanced competitive environment for European producers.

The shift in regulatory and market conditions appears to have tipped the Dunkirk project from strategic ambition to financial viability.

Addressing One of Industry’s Highest-Emitting Sectors

Steelmaking remains one of the most carbon-intensive industrial activities worldwide. The sector accounts for an estimated 7 to 9 percent of direct emissions from global fossil fuel use. Reducing emissions in primary steel production presents complex technological and economic challenges, particularly given the scale of global demand.

The new Dunkirk facility will have a planned capacity of 2 million tonnes per year and is scheduled to begin operations in 2029. The electric arc furnace is expected to produce steel with approximately three times lower carbon dioxide emissions than a conventional blast furnace. Emissions are projected at roughly 0.6 tonnes of CO2 per tonne of steel, based on a feedstock mix including scrap, hot briquetted iron and direct reduced iron.

By shifting from coal-based blast furnace processes to electrically powered melting, the facility will significantly reduce reliance on coke and other fossil fuels traditionally used in steel production.

Read more: Climate Efforts Targeting Carbon Could Also Cut Methane

The Role of Electric Arc and Direct Reduction Technologies

Electric arc furnaces generate the heat required to melt steel through electrical currents rather than combustion. When combined with lower-carbon electricity sources, this technology can materially reduce the carbon intensity of steelmaking.

ArcelorMittal’s pathway also incorporates direct reduced iron, produced by reducing iron ore using natural gas. While not emissions-free, this route lowers carbon intensity compared with traditional blast furnace operations. The company has indicated that further reductions may be achieved over time through increased use of hydrogen as a reductant or integration of carbon capture technologies.

The Dunkirk project will benefit from France’s Energy Efficiency Certificates programme, which incentivises energy savings and CO2 reduction initiatives, providing additional support for industrial decarbonisation investments.

Net Zero Ambitions and Multi-Pathway Strategy

ArcelorMittal has committed to achieving company-wide net zero emissions by 2050. To reach that objective, it is pursuing multiple technology pathways, including hydrogen-based iron reduction, circular carbon approaches, and carbon capture and storage solutions.

The Dunkirk electric arc furnace represents a key step within this broader strategy, focused on scaling commercially viable low-emissions production in Europe. By targeting large-scale output, the company aims to meet growing customer demand for lower-carbon steel while maintaining industrial competitiveness.

Explore OneStop ESG Marketplace: Regulation and Compliance

Industrial Competitiveness in a Changing Trade Landscape

The decision to proceed underscores the interplay between climate policy and industrial economics. European steel producers have argued that uneven global carbon regulation can disadvantage domestic manufacturers when competing with imports produced under less stringent standards.

The introduction of CBAM and related trade measures is designed to address carbon leakage risks by applying carbon costs to certain imported goods. In ArcelorMittal’s assessment, this policy environment now provides a clearer framework to justify long-term capital expenditure in lower-emissions facilities.

The Dunkirk project signals renewed momentum in Europe’s industrial decarbonisation efforts, illustrating how regulatory alignment, market incentives and technological deployment converge to reshape heavy industry. If successfully delivered on schedule, the facility will serve as a benchmark for the next phase of low-carbon steel production across the region.

Explore ESG Solutions on our marketplace - OneStop ESG Marketplace.

Keep abreast of the top ESG Events on OneStop ESG Events.

OneStop ESG Educate: Your go-to source for top ESG courses and training programs tailored to your needs.

Stay informed with the latest insights on OneStop ESG News.

Discover meaningful career opportunities on OneStop ESG Jobs.