@misc{9228595,
  abstract     = {{The steel sector accounts for approximately 7-8% of global greenhouse gas (GHG) emissions, and the automotive industry stands for a large part of its customer base. As Original Equipment Manufacturers (OEMs), such as Volvo, Mercedes and Scania etc., face tightening Scope 3 emission targets, evolving EU regulatory frameworks, and growing pressure to decarbonise their supply chains, the question of whether and how to adopt green steel has become strategically significant for the industry. Yet despite genuine demand intent, the green steel transition has stalled.

This study investigates the business case for green steel within the automotive sector, drawing on perspectives from OEM representatives, industry and policy experts, and steel producers. The empirical foundation consists of data from 19 semi-structured interviews across these groups. Two research questions guide the study: how OEMs construct a business case for green steel and what factors influence their willingness to pay a premium, and to what extent emission targets and EU regulatory frameworks drive green steel demand.

The findings show that the OEM business case rests on several distinct but interdependent drivers, including Scope 3 emission reduction aims, internal carbon pricing, risk management in relation to carbon pricing trajectory and supply security, as well as the commercial logic of fleet customer demand. However, the business case does not rely on commercial logic alone. The green premium constitutes a direct margin hit that OEMs in a low-margin competitive environment cannot absorb independently, and end-consumers are perceived as not willing to pay for it, making external mechanisms necessary to stimulate demand. Voluntary emission targets such as the Science Based Targets initiative operate differently depending on the actor: for most OEMs they function primarily as mechanisms for regulatory readiness rather than direct sourcing requirements, while for others they are currently the primary operative driver of green steel work in the absence of mandatory obligations. EU regulatory frameworks including the Industrial Accelerator Act and the Automotive Package signal decarbonisation ambition but fall short of creating the mandatory demand certainty that steel producers require to take final investment decisions. The absence of a standardised EU definition of green steel reinforces this, blocking procurement conversations and market formation simultaneously.

The study concludes that while demand intent is real, a structural coordination failure between actors across the supply chain and a lack of legal pressure prevent the transition from advancing. Neither voluntary commitments nor the current regulatory environment produce the sufficient simultaneous binding signals across the value chain that would allow final investment decisions to be taken and supply to scale. However, the coordination failure framing has limits: even with mandatory commitments, pricing captivity and a fundamental cost gap could persist. Addressing this requires not only stronger regulatory pressure but credible and long-term policy certainty over the investment horizons that green steel infrastructure demands.}},
  author       = {{Aflaki, Lucian and Nordberg, Hannes}},
  issn         = {{1102-3651}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{The Green Steel Market: Evaluating the OEM Business Case and the Role of Decarbonisation Targets as Strategic Drivers in the Automotive Sector}},
  year         = {{2026}},
}