Türkiye's Steel Net-Zero Roadmap Puts a Price on Scrap Dependence, Not Just Carbon

Türkiye already runs one of the world's largest electric-arc-furnace steel fleets, so its decarbonisation problem is not primarily one of switching technology. It is one of financing a transition whose cheapest route — imported scrap — is being progressively closed off by the same global shift towards low-emission steelmaking that Türkiye must join. The roadmap published on 3 November by Agora Industry with the Istanbul Policy Center and SEFiA makes that tension explicit, and it is the most useful thing about the study.

What the roadmap actually says

The study, Transforming Türkiye's steel industry: Roadmap to net zero by 2053, models three pathways on Scope 1 and 2 emissions against a 2025 baseline (Scope 3 is assessed only qualitatively, which is a material caveat given how much of Türkiye's exposure runs through exported manufactured goods):

Only the accelerated pathway is consistent with the 2053 net-zero target. It requires roughly €1.5 billion per year for 20 years — meaning the gap is a financing problem before it is a technology problem.

Two carbon-price thresholds anchor the commercial logic. Domestic natural-gas-based DRI reaches cost parity with coal-based production at around €100/t CO₂; hydrogen-based steel at around €140/t CO₂. If Türkiye's carbon price tracks the EU ETS, the second threshold could plausibly be reached in the late 2030s (the authors' view, not a forecast we endorse).

The carbon revenue is real, but conditional

The study's central policy proposal is a national ETS plus a domestic CBAM, which could raise roughly €500 million–€1.5 billion a year by 2030 depending on carbon price and assuming 60% free allocation, funnelled through a Green Steel Decarbonization Fund and complemented by carbon contracts for difference, concessional loans and public guarantees.

The upper end of that range happens to equal the annual investment requirement. That symmetry is rhetorically convenient but should not be read as full funding. Turkish Steel Producers' Association technical director Hasan Akbulut made the industry's position plain at the launch: ETS revenues cannot be treated as assured project funding unless the money is legally guaranteed to flow back to the sector. That is not obstructionism — it is the standard condition under which free allocation has been accepted elsewhere, and it is the single most important design question in the Turkish ETS.

The more interesting mechanism is the reverse flow. EU CBAM deducts carbon costs already paid at home, so a Turkish ETS priced near the EU level would redirect as much as €1.5bn a year now collected by the EU — according to Agora's own framing — back to the Turkish state instead. That is a powerful argument for pricing carbon domestically and early, and it is one Turkish policymakers have not yet made explicitly.

Scrap import reliance is the binding constraint

Türkiye imports roughly 70% of its scrap requirement, against a base-year scrap consumption of about 27 Mt. The study assumes domestic supply rises from about 10 Mt to 26 Mt by 2050 while imports fall from 19 Mt to 10 Mt. On a simple arithmetic reading (our calculation, not the study's), that implies available scrap of ~36 Mt by 2050 — consistent with a scenario that preserves and grows EAF output, but it is a heroic assumption on collection, sorting and quality.

Two independent forces make the imported-scrap model fragile:

• Global EAF build-out and export restrictions. As more EAF capacity comes online worldwide, competition for scrap intensifies and scrap-export restrictions tighten — a point made at the launch and consistent with SEAISI market data showing Turkish mills already substituting (HBI and DRI intake up 29.4% to 1.13 Mt in Jan–Nov 2025).
• Quality, not just volume. Borçelik's Serkan Ürkmez noted at the launch that copper and other impurities in scrap remain a technical obstacle for flat-steel applications. This is the often-underestimated point: scrap scaling is comfortable for rebar, less so for automotive-grade flat product, and Türkiye's growth ambition is upstream of the flat and galvanised segments.

The roadmap's answer to this is domestic low-emission DRI and imported HBI. That is also its biggest risk: with weak policy support and low carbon prices, the transition leans more heavily on imported HBI, exporting part of the value added and employment that domestic production would create.

Overcapacity is the under-discussed constraint

The launch flagged global steel overcapacity reaching roughly 720 Mt by 2027, pressuring prices and margins and constraining the capital available for decarbonisation. That is a straightforward but underrated point: a €30bn twenty-year programme cannot be financed from margins that are being compressed by surplus capacity. For capital-intensive decarbonisation, overcapacity is a finance constraint, not just a commercial one.

Where the study's demand-side case is weakest

Agora estimates that using green steel would raise the prices of electric cars, washing machines and household air conditioners by about 0.8–1.3% — small in consumer terms, but real for OEMs running thin margins and tighter procurement discipline. Borçelik's Ürkmez said plainly that demand for low-emission products and willingness to pay a premium remain limited.

The study's proposed remedies — green public procurement, minimum green-steel quotas and long-term offtake agreements — are sensible but depend on state action that has not yet materialised. One point the launch made usefully: the transition matters less for direct steel exports than for the automotive, machinery and white goods exports to the EU that buy the steel. That reframes the CBAM exposure from a mill problem to a manufacturing-value-chain problem.

What to watch

• The Turkish ETS design. Whether revenue recycling to the sector is legally ring-fenced, and whether free allocation is set at the 60% the study assumes.
• Scrap collection policy. The 10→26 Mt domestic-scrap assumption is the scenario's weakest link. Investment in collection and sorting infrastructure is the cheapest available lever — and, per IPC's Ümit Şahin, one of the few that needs no new technology.
• HBI/DRI imports. If domestic DRI slips, watch HBI import volumes and their origin. MENA DRI/HBI capacity offers lower-emission metallics but also a competitive threat to Turkish long-steel exports.
• The EU-Türkiye trade framework. IPC's Dursun Baş called for updating the coal-and-steel provisions of the free trade agreement. With COP31 in Antalya as a platform, there is a plausible policy window — but the roadmap remains a study, not a binding plan, and the industry has signalled it wants the 74% pathway treated as the realistic reference point.

Assessment

The roadmap's value is that it puts numbers on the trade-offs Türkiye's steel sector faces rather than on technology choices. The technology is largely known: more scrap, more DRI, hydrogen later, biochar and carbon removal for residuals. What is unknown is whether Türkiye can build a carbon market that raises money and returns it, scale domestic scrap collection fast enough to reduce import dependence, and hold off the temptation to postpone EAF investment on the assumption that cheap imported scrap will remain available. On current evidence, the 74% pathway is the most likely outcome — and it is the one that leans on imports, not domestic industrial capability.