Biocarbon in steelmaking: A natural path to decarbonisation with real challenges

In this blog, authored by Karmanterra, the opportunities and challenges of using biocarbon in steelmaking are explored. Biocarbon offers a natural pathway to reduce emissions and support compliance under frameworks such as the EU ETS, but scaling its use requires reliable biomass supply chains, investment in infrastructure, and careful technical integration. Drawing on developments in regions like the American Southeast, Karmanterra highlights how nature-based solutions can play an important role in the steel industry’s journey to net zero.

As global pressure mounts on industries to decarbonise, the steel sector, one of the world’s largest industrial carbon emitters, faces growing scrutiny. In Europe, regulatory frameworks like the EU Emissions Trading System (EU ETS) are intensifying incentives for companies to find lower-carbon pathways. One promising solution gaining momentum is biogenic carbon, commonly known as biochar or biocarbon, as a substitute for fossil-based coal and coke in steelmaking.

Why biocarbon?

Biocarbon is produced by pyrolyzing or gasifying biomass such as forestry residues, agricultural waste, or other organic matter in the absence of oxygen. The resulting material is rich in carbon and can replicate many of the properties of coal or coke in metallurgical processes. From an environmental standpoint, the carbon in biocarbon is considered biogenic—originating from recently living organisms—rather than geologic sources like coal that release fossil carbon when burned. This distinction is critical under the EU ETS, where biogenic emissions are generally exempt from compliance costs.

By replacing fossil-based reductants with biocarbon, steelmakers can lower their reported emissions and reduce liabilities under carbon pricing mechanisms. This could transform steel’s traditionally high-carbon footprint into a more circular, nature-aligned process.

The challenges of scaling a nature-based solution

Despite its promise, the integration of biocarbon into steelmaking faces significant challenges. The steel industry consumes tens of millions of tonnes of coal and coke annually. Replacing even a fraction of this with biocarbon requires a consistent, large-scale biomass supply chain, which is both a logistical and environmental hurdle.

Forestry residues, agricultural byproducts, and energy crops may seem abundant, but sourcing sustainable biomass on an industrial scale demands a sophisticated supply chain close to pyrolysis sites to limit logistical costs and carbon emissions. Proximity to rail or ports is also essential for delivery to steel mills.

Pyrolysis facilities capable of producing metallurgical-grade biocarbon are still limited in number and capacity. The capital expenditure required to build out this infrastructure is significant, and without long-term offtake agreements, financing remains difficult.

Technical differences also exist between biocarbon and traditional coke. Biocarbon generally has lower mechanical strength, different combustion characteristics, and higher reactivity, affecting furnace operation, energy efficiency, and product quality. Naturally derived biogenic materials often contain higher levels of trace minerals such as silicone, boron, and phosphorus, which can be particularly challenging for stainless steel production. As a result, integrating biocarbon into blast furnace and EAF operations requires careful adjustment of feedstocks and may not be feasible in all plant configurations and furnace types.

The American Southeast as a supply source

The American Southeast offers ample opportunity for global biocarbon development. Often called the American wood basket, the region is dominated by fast-growing Southern yellow loblolly pine. Timber inventories remain high, notably in Mississippi, Alabama, Virginia, and Arkansas, where sawtimber volumes are projected to rise by about 17% over the next 10 years.

This abundance of resources could provide the steel industry with the capacity and cost structure to scale up biocarbon adoption. We at Karmanterra have received accreditation from the Sustainable Biomass Program (SBP) to verify and account for the sustainable nature of our biomass to meet the needs of the EU ETS and other cap and trade programs.

Regulatory incentives and the path forward

Policy support is strengthening. The EU ETS continues to tighten, making low-carbon alternatives more economically attractive. Several countries now offer subsidies or tax incentives for industrial decarbonisation, improving the investment climate for biocarbon.

Hybrid steelmaking routes—such as direct reduced iron (DRI) using hydrogen—could work alongside biocarbon, creating flexible, multi-pathway decarbonisation strategies.

Still, for biocarbon to become a viable solution, it will require cross-sector collaboration: from biomass suppliers and pyrolysis operators to steel producers and policymakers. It will need investment in infrastructure, standardised quality specifications, and robust sustainability criteria to ensure that biocarbon use doesn’t create new problems.

Conclusion

Biocarbon offers a real opportunity to reduce steelmaking’s climate impact while offering a pathway to regulatory relief under cap-and-trade systems like the EU ETS. Realising this potential will mean overcoming a complex mix of scale, supply, and technical challenges. As industries and governments accelerate toward net zero, nature-based solutions like biocarbon must be embraced—not as silver bullets, but as integral components of a diversified decarbonisation strategy.

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