Japan Promotes Major Project for Climate-Friendly Steel Production

Japan’s largest steel producer Nippon Steel plans to produce steel using electric arc furnaces (EAF). For this purpose, the Japanese company plans to invest approximately 5.7 billion US dollars in three steel plants in Japan by 2029. Steel scrap can be melted down in such furnaces. Since they are also powered by electricity rather than coal, they are considered more environmentally friendly compared to conventional facilities.

With this investment, the corporation aims to create a new annual production capacity of 2.9 million tons of steel. The Japanese government subsidizes up to 30 percent of the investment amount under the Green Transformation (GX) Promotion Act to make the steel industry more climate-friendly.

Nippon Steel was the world’s fourth-largest steel producer in 2023. According to plans from 2021 to achieve climate neutrality, Nippon Steel intends to use the technology long-term also for direct reduction of steel with hydrogen and for hydrogen injection in blast furnaces.

In April 2025, the government had already announced subsidies for a major project by JFE Steel, Japan’s second-largest steel producer. JFE Steel plans to build an electric arc furnace with a production capacity of 2 million tons of steel per year.