CBAM and steel: the EAF advantage, scrap ratio and the precursor chain

By volume, steel is CBAM’s largest line, and Turkey is among the largest exporters of steel to the EU. Those two facts turn CBAM from an abstract regulation into a direct price line for the Turkish steel sector. The good news is that Turkey’s production structure is advantaged under this regulation.

Two routes, two emissions profiles

Steel has two principal routes. The integrated route (BF-BOF) reduces iron ore with coking coal in a blast furnace; because carbon serves as both energy and reductant, the emissions are embedded in the chemistry of the process. The electric arc furnace route (EAF) melts scrap with electricity; most of the emissions come from the source of that electricity.

The gap is not small. The integrated route typically sits at 1.8–2.3 t CO₂e per tonne of crude steel. A high-scrap EAF plant, even on grid electricity, falls to 0.4–0.8 t CO₂e. On renewable electricity it drops further still. CBAM certificate cost is directly proportional to that gap.

Turkey’s structural advantage

The dominant share of Turkish steel production runs the EAF route, largely on imported scrap. For years that structure was seen as a vulnerability because of exposure to scrap price volatility. Under CBAM the same structure becomes a competitive advantage, because it means low embedded emissions.

That advantage is not automatic. Turning it into price requires declaring on actual installation data. An EAF plant using default values does not get credit for its low emissions; it is priced near the integrated-route average. An efficient producer that does not measure ends up subsidising an inefficient one.

Scrap ratio and emissions

The charge in an EAF is not always pure scrap. Quality requirements may call for direct reduced iron (DRI/HBI) or hot metal. Each addition pushes embedded emissions up, because those inputs are themselves precursors carrying their own production emissions. Gas-based DRI carries a markedly lower burden than coal-based DRI.

• The higher the scrap share, the lower embedded emissions per tonne — a near-linear relationship
• DRI/HBI additions shift emissions substantially depending on their production fuel
• On a high-scrap charge, the electricity emission factor is what decides total emissions
• Alloying elements are low in mass but some are high-specific-emission precursors
• Furnace efficiency and charge temperature feed straight through to emissions via kWh per tonne

The precursor chain: billet, slab, coil

Steel is where CBAM’s precursor logic is clearest. The embedded emissions of a plant producing billet or slab carry into the plant that buys and rolls that semi-finished product. The rolling mill adds its own energy consumption, and the finished good’s embedded emissions emerge. One link in the chain failing to supply data drops the whole chain to defaults.

For non-integrated rollers this is a real supply risk. Buying semi-finished product is now a decision not only on price and quality but on whether the supplier can provide verified emissions data. In practice that means adding a new section to supplier pre-qualification forms.