Clean Power Transition Triggers Carbon Rebound in Steel Sector via Cost-Driven Technology Regression

Electrification is widely recognized as a critical pathway for the sustainable transformation of global steel production, with policies increasingly promoting scrap-based electric arc furnaces (scrap-EAF) deployment. However, the unintended cross-sector spillovers of power sector transitions—particularly how rising electricity costs may distort steelmakers' technology choices—remain systematically unaccounted for in the industry's sustainable transition. Here, we develop an integrated assessment model that couples granular techno-economic representations of power and steel systems within a macroeconomic framework, quantifying the sectoral emission risks induced by electricity price dynamics. Our analysis reveals that the global clean power transition increases the levelized cost of electricity by 22.5% by 2050, which reduces scrap-EAF adoption rates by 5.1% and elevates the steel sector’s carbon intensity by 21.8%. This cost-driven resurgence of high-carbon steel production, primarily through reliance on coal-based blast furnaces, results in cumulative additional emissions of 6.0 Gt CO₂ from 2020 to 2050—exceeding the annual CO₂ emissions of global road transport in 2022 (5.9 Gt CO₂). The effect intensifies in high-carbon steel economies (China, India, Japan, South Korea), where cumulative incremental emissions are up to 2.8 times their total direct emissions in 2020. Our findings highlight the necessity of co-designing power and industrial decarbonization policies to break the cost-technology regression cycle and ensure sustainable development across energy and industrial sectors.