A quiet revolution has been brewing in one of the world's dirtiest industries—and last week, it collided with political reality.

Producing steel generates as much as 9% of global CO2 emissions—exceeding the footprints of entire countries, such as Russia or even the whole EU. However, in labs from Sweden to Massachusetts, engineers have been perfecting technologies that could completely flip this script.

One such effort was underway in Middleton, Ohio, before America's largest steel producer quietly distanced itself from what was supposed to be the U.S.'s grand entry into the global race for green steel. Cleveland-Cliffs' $1.6 billion plan to transform its Middletown, Ohio, plant into a hydrogen-ready facility was backed by $500 million in federal funding and projected to create thousands of jobs while slashing carbon emissions.

Instead, the company abandoned its green ambitions after the 2024 election, citing alignment with the new administration's "energy priorities" and a lack of existing hydrogen infrastructure, a combination that is becoming all too familiar to nascent climate tech projects in the United States.

While Europe plans 20 million tons of hydrogen-based steel capacity by 2030 and China builds the world's largest direct reduction plants, the U.S. is settling for yesterday's technology and missing what could be the next great industrial transformation.

While the U.S. has primarily focused efforts to stem climate change on EVs and solar panels, some of the most significant climate innovations have been happening in one of the world's dirtiest industries.

Traditional steelmaking uses coal (specifically coke) to strip oxygen from iron ore in blast furnaces, creating pure iron and massive CO2 emissions—about 2 tons of carbon dioxide for every ton of steel. Scientists have been working on a cleaner technique for steel production called hydrogen-based direct reduction, or H-DR for short. The new hydrogen-based process does the same job but uses hydrogen gas instead of coal to remove the oxygen from iron ore in direct reduction furnaces, producing water vapor instead of CO2. If that hydrogen is produced with renewable electricity, it's possible to get to nearly zero-carbon steel.

Researchers are also working on a technique called molten oxide electrolysis. Molten oxide electrolysis produces high-purity liquid iron by passing a current between two electrodes in a reactor, essentially using electricity to break apart iron ore instead of coal or hydrogen. The process requires heating iron ore until it becomes liquid, then running a powerful electric current through the liquid to separate the iron and oxygen atoms. When powered by renewables, this process could have an extremely small carbon footprint. This production process isn’t that far off, either. Boston Metal, a company in Massachusetts, is aiming to commercialize a version of this process and hopes to license it in 2026.

In Sweden, HYBRIT’s project has already produced the world's first fossil-free steel in 2021. Stegra (formerly H2 Green Steel) raised nearly $7 billion to build a massive green steel plant in Boden, Sweden. Even China is getting into the green steel game. Baosteel broke ground on the world's largest direct reduced iron plant back in 2024.

To compete in the emerging green steel market, which could reach $89 billion market by 2032,   US steel producer Cleveland-Cliffs planned to get to work on retooling the steel mill in Middletown, Ohio made famous by Vice President JD Vance’s book, "Hillbilly Elegy". Cleveland-Cliffs had big plans, including a $1.6 billion transformation that would replace coal-burning blast furnaces with hydrogen-ready direct reduction technology, backed by a $500 million grant from the Department of Energy.

The economics looked solid at the start. The project would have cut carbon emissions by 50-90% while saving $450 million annually in production costs. It would have created 2,300 jobs and generated $373 million in economic activity. Then, after the 2024 election, Cleveland-Cliffs CEO Lourenco Goncalves dropped a bombshell during an earnings call. The company was "exploring changes to the scope to better align with the administration's energy priorities." Aside from political expediency, Goncalves cited the lack of an existing hydrogen hub near the facility, pointing to the chicken-and-egg paradox facing climate tech projects that rely on major infrastructure upgrades to reach their potential.. "Without hydrogen, the entire thing falls apart," Goncalves admitted at an industry event.

While Cleveland-Cliffs was quietly abandoning its green steel dreams, all eyes were on the Nippon Steel soap opera unfolding on the global stage.

Nippon Steel announced its $14.1 billion bid to acquire U.S. Steel in December 2023. The deal quickly became a political lightning rod due to concerns about foreign ownership of an American company. President Biden blocked the acquisition on January 3, 2025, citing national security concerns, even though Japan is a close U.S. ally. Both companies sued the Biden administration, and when Trump took office, he ordered a fresh review of the deal in April 2025.

The acquisition was completed in June 2025 under a unique and rather alarming arrangement where the U.S. government gained a "golden share" giving it veto power over key decisions like plant closures, production cuts, and board appointments. Under the final terms, Nippon Steel will invest $14 billion total, including $2.4 billion for U.S. Steel's Mon Valley operations, while maintaining an American CEO and U.S. majority board–essentially creating a new model of foreign investment under American government oversight. The deal has wide implications for U.S. government investment in companies and has many concerned as it's essentially a blueprint for nationalizing industry, just under another name, as the CATO institute points out.

The American government essentially gets to run the company thanks to their "golden share."  What's missing from the deal, most notably, is any commitment to breakthrough green steel tech and it's not likely to make any appearance either.

The green steel revolution isn't stopping because Cleveland-Cliffs and the U.S. blinked. The global market forces are too strong, the technology is too promising, and the climate imperative is too urgent. But America will likely miss the boat.

The EU's Carbon Border Adjustment Mechanism comes into full effect in 2026, which means high-carbon steel will face tariffs when entering European markets. Countries and companies are already positioning for this reality. China, India, and others are looking at their own carbon pricing rather than paying Europe's carbon tax.

Meanwhile, American industrial policy is stuck somewhere between nostalgia and nationalism. American political discourse waxes on about bringing back manufacturing, but Americans don't want to fund the innovation that would make it competitive. The U.S. wants energy independence, but Americans are skeptical of the technologies that would deliver it.

The Cleveland-Cliffs reversal might look like a small setback in the grand scheme of climate action. But it's actually a perfect example of America's climate tech dilemma: The U.S. has the innovation, understands the opportunity, and knows what needs to happen, but is caught in a political tug of war, with critical investment and resources in the middle. The question is whether the U.S. lawmakers and leadership recognize the mistake in time to do something about it.