How Biomass Is Decarbonizing Steel: Biocarbon, Bio-Oil, and the Path to Green Iron

From solid biocarbon replacing coal in blast furnaces to bio-oil syngas producing carbon-negative iron—a comprehensive look at how biomass is reshaping steelmaking.

Steel is everywhere. It holds up our buildings, moves our cars, and forms the skeleton of modern infrastructure. It's also responsible for roughly 7-8% of global CO₂ emissions—more than aviation and shipping combined. Every tonne of steel produced generates about two tonnes of carbon dioxide, mostly from burning coal and coke in blast furnaces.

The industry knows it has a problem. Hydrogen-based steelmaking dominates the headlines as the long-term solution, but those technologies require massive infrastructure investments and won't scale for years. Meanwhile, there's a simpler question that doesn't get asked enough: what if we just replaced fossil carbon with renewable carbon from biomass?

That's exactly what a growing number of steel producers and technology companies are doing—through two distinct but complementary pathways.

Solid biocarbon (also called biocoal or metallurgical biochar) can directly replace coal and coke in blast furnaces and electric arc furnaces. Companies like Steel Dynamics, Aperam, SSAB, and ArcelorMittal are already using it at industrial scale.

Bio-oil from fast pyrolysis can be gasified into syngas—a mixture of carbon monoxide and hydrogen—to produce Direct Reduced Iron (DRI) without fossil fuels. Charm Industrial recently won the Association for Iron and Steel Technology's Best Paper Award for demonstrating this pathway, which could enable not just carbon-neutral but carbon-negative ironmaking.

Both approaches leverage the same fundamental insight: carbon from recently-grown biomass is treated as carbon-neutral under most emissions accounting frameworks, including the EU Emissions Trading System. Replace fossil carbon with biogenic carbon, and you eliminate those emissions from your inventory.

Why Steel's Carbon Problem Is Hard to Solve

Steel is made through two main routes, and carbon plays different roles in each.

Blast Furnace / Basic Oxygen Furnace (BF-BOF) is the traditional method, responsible for about 70% of global steel production. It uses roughly 700 kg of coal and coke per tonne of steel—both as fuel to generate heat and as a chemical reductant to strip oxygen from iron ore. The chemistry is unavoidable: carbon reacts with iron oxide to produce metallic iron and CO₂.

Electric Arc Furnace (EAF) melts recycled scrap using electricity and accounts for about 30% of global production. It's already much lower-carbon than blast furnaces, but still requires about 15-21 kg of carbon per tonne for steel carburization and slag foaming.

Direct Reduced Iron (DRI) is a third pathway that's growing rapidly. Instead of melting iron ore, DRI processes use reducing gases (typically from natural gas) to chemically convert iron ore pellets to metallic iron at lower temperatures. The iron is then melted in an EAF. Natural gas-based DRI produces significantly less CO₂ than blast furnaces, but still relies on fossil fuels.

The long-term vision for all three routes involves hydrogen—either as a direct reductant (replacing carbon) or as a clean energy source. But hydrogen infrastructure is years away from scale, and the steel industry faces pressure to decarbonize now. That's where biomass comes in.

Two Pathways from Biomass to Steel

When biomass undergoes pyrolysis—heating in a low-oxygen environment—it produces three outputs: a solid (biochar/biocarbon), a liquid (bio-oil), and gases (syngas). Both the solid and liquid fractions can be used in steelmaking, but through different mechanisms.

Characteristic	Solid Biocarbon	Bio-Oil (Gasified)
Form	Solid granules or briquettes	Liquid → gasified to syngas
Primary Use	BF coal/coke replacement; EAF injection carbon	DRI reducing gas (syngas)
Bulk Density	250-600 kg/m³	~1,200 kg/m³
Carbon Content	62-92% (fixed carbon)	50-66%
Ash Content	Variable (feedstock dependent)	Very low (<0.2% typical)
Maturity	Commercial (multiple producers)	Pilot scale (scaling up)
Carbon Impact	Carbon-neutral	Carbon-negative (with CCS)

Bio-oil has a key logistics advantage: its high density (roughly double that of biochar) makes it far more economical to transport. A truckload of bio-oil carries significantly more carbon than a truckload of solid biochar. This matters when you're trying to supply a steel plant that needs hundreds of thousands of tonnes per year.

Part 1: Solid Biocarbon in Steelmaking

Solid biocarbon is the more mature of the two pathways, with several major steel producers already deploying it at commercial scale.

Where Biocarbon Gets Used

Pulverized Coal Injection (PCI): Fine biocarbon granules can replace 10-20% of the pulverized coal injected into blast furnaces using existing equipment. SSAB's trials in Finland demonstrated 10% replacement with potential for 20%.
Coke Replacement: Biocarbon briquettes can partially substitute for charged coke, though replacement rates are limited to 5-10% by biocarbon's lower mechanical strength.
EAF Injection Carbon: Electric arc furnaces can achieve 100% replacement of anthracite coal with biocarbon—no modifications required. Steel Dynamics is building dedicated facilities for this purpose.
Sintering: The coke breeze used to agglomerate iron ore fines can be 40-60% replaced with biocarbon.

Who's Doing It: Biocarbon Case Studies

Steel Dynamics (USA)

Steel Dynamics formed a joint venture with biocarbon producer Aymium in 2022 to build a $125-150 million facility in Columbus, Mississippi. The plant will produce 160,000 metric tons of biocarbon annually (scaling to 480,000 tons), replacing anthracite coal in SDI's EAF operations with no equipment modifications. Projected impact: 20-25% reduction in Scope 1 emissions, over 500,000 tonnes CO₂ avoided annually.

Aperam (Brazil)

Aperam has operated a fully integrated forestry-to-steel model in Brazil for over a decade. The company manages 100,000+ hectares of FSC-certified eucalyptus forest on 6-7 year rotation cycles, producing all the charcoal for their steelmaking operations. Result: 0.34 tonnes CO₂ per tonne of crude steel (vs. industry average of ~2 tonnes)—carbon neutrality in Scopes 1 and 2. In 2025, the IFC committed €250 million to expand operations.

SSAB (Sweden/Finland)

Multi-year trials at SSAB's Brahestad blast furnace proved 10% biocoal PCI replacement using existing equipment, with laboratory tests suggesting 20% is achievable. The 2019 trial processed 820 tonnes of biocoal over nine days. At 10% continuous replacement, the facility would reduce fossil CO₂ by 100,000 tonnes annually. The limiting factor: supply availability (35,000 tonnes/year needed).

ArcelorMittal (Global)

ArcelorMittal is pursuing biocarbon through multiple projects. Their TORERO plant in Ghent converts 88,000 tonnes of waste wood into 37,500 tonnes of biocoal annually (€55 million investment). Trials at Dofasco in Canada confirmed 10% biocarbon injection is feasible, projecting ~110,000 tonnes CO₂ reduction annually. Brazilian operations at Monlevade are co-injecting charcoal with pulverized coal in production.

Part 2: Bio-Oil and Carbon-Negative Ironmaking

While solid biocarbon works within existing blast furnace and EAF infrastructure, bio-oil opens a different pathway: gasification to syngas for Direct Reduced Ironmaking. This approach is less mature but potentially more transformative—it could enable not just carbon-neutral but carbon-negative iron production.

How It Works: Bio-Oil to Syngas to Iron

Fast pyrolysis of biomass (agricultural residues, forestry waste) produces a dense, carbon-rich liquid called bio-oil. Unlike biochar, which is a solid byproduct, bio-oil is the primary output of fast pyrolysis—typically 50-60% of the biomass by weight.

Bio-oil can be gasified using an entrained flow gasifier to produce syngas: a mixture of carbon monoxide (CO) and hydrogen (H₂). This syngas can then serve as the reducing agent in a DRI shaft furnace, stripping oxygen from iron ore pellets to produce metallic iron—the same chemistry as natural gas-based DRI, but using biogenic carbon instead of fossil carbon.

The process is compatible with established DRI technologies like Tenova HYL/ENERGIRON and Midrex MxCoL, which already support syngas-based operation. The key innovation is substituting bio-oil syngas for coal or natural gas-derived syngas.

Why Bio-Oil Could Be Carbon-Negative

Here's where it gets interesting. DRI processes with top gas recycling already include CO₂ removal as part of the process loop—the captured CO₂ is typically vented or used elsewhere. If that CO₂ is biogenic (from bio-oil) and is captured and sequestered rather than released, the ironmaking process becomes a net remover of atmospheric carbon.

This is fundamentally different from carbon-neutral biocarbon. Solid biocarbon in a blast furnace releases biogenic CO₂ to the atmosphere—it's carbon-neutral because that carbon was recently absorbed by plants. Bio-oil-based DRI with carbon capture actually removes CO₂ from the atmosphere and locks it underground, while simultaneously producing iron.

The resulting product could be marketed as "fossil-free iron" or even "carbon-negative iron"—addressing not just Scope 1 process emissions but potentially offsetting Scope 2 and Scope 3 emissions from electricity and iron ore production.

Charm Industrial: Award-Winning Research

Charm Industrial, a carbon dioxide removal company based in San Francisco, has emerged as the leading developer of bio-oil-based ironmaking. In 2024, their paper "Carbon-Negative Ironmaking Using Fast Pyrolysis Bio-Oil Gasification" won the Association for Iron and Steel Technology's Direct Reduced Iron Technology Committee Best Paper Award—recognition from the industry that this pathway has serious potential.

What they've demonstrated:

Built and operated a mini-pilot gasifier (~7 kg/hr bio-oil) that converts bio-oil to syngas with high reducing power
Achieved ~78% metallization of iron ore pellets using bio-oil syngas in a tube furnace test (90-minute reduction)
Produced syngas with 40-60% CO and 22-35% H₂ from dry bio-oil fractions
Developed process models estimating ~0.76 tonnes bio-oil per tonne of DRI
Completed technoeconomic assessment showing ~15% IRR for a 2 million tonne/year plant—without any green iron premium

Charm's approach is called "Steam Bio-Oil Reforming" (SBR). The company is developing a decentralized model where mobile pyrolyzers travel to biomass sources (corn stalks, forestry residues) rather than shipping bulky biomass to a central facility. The dense bio-oil is then transported to the ironmaking plant—a logistics model that improves economics significantly.

Bio-Oil's Metallurgical Advantages

Charm's research highlights several advantages of bio-oil over solid biochar for metallurgical applications:

Lower contaminants: Pyrolysis acts as a purification step. Most alkalis (Na, K), alkaline earth metals (Ca, Mg), and phosphorus segregate to the solid biochar during pyrolysis, with only 1-5% transferring to the bio-oil. This means bio-oil can be used more extensively before contamination becomes an issue.

Very low ash: Bio-oil ash content averages <0.2%, compared to potentially higher levels in biochar (which concentrates ash from the feedstock). Low ash simplifies gasifier design and reduces slag management issues.

Higher energy density: Dry bio-oil approaches 30 MJ/kg—comparable to some coals. Combined with its high bulk density (~1,200 kg/m³ vs. 250-600 for biochar), bio-oil packs far more energy per truckload.

Challenges and Future Work

Bio-oil-based ironmaking is less mature than solid biocarbon, and several challenges remain:

H₂:CO ratio management: Bio-oil syngas has lower H₂:CO ratios than typical for DRI processes, impacting productivity and shaft heat balance. Gas conditioning or steam injection may be needed.
Tar and particulate control: Gasification of heavy bio-oil fractions can produce tars that may cause pore clogging in DRI pellets. Ongoing work is optimizing gasifier conditions to minimize these.
Bio-oil consistency: Composition varies with biomass feedstock and pyrolysis conditions. Standardization and possibly upgrading may be required for stable operations.
Scale-up: Charm is working on pilot plant development to scale from laboratory equipment to >100 kg/hr DRI production.

The Economics Are Changing Fast

For both pathways, regulatory pressure and market demand are reshaping the economics.

CBAM and Carbon Pricing

The EU's Carbon Border Adjustment Mechanism (CBAM) entered its definitive phase on January 1, 2026. Steel imported to Europe now carries a carbon price tied to embedded emissions—currently €70-100 per tonne CO₂. Biogenic CO₂ from sustainably-sourced biomass is zero-rated.

For a blast furnace producing 2 tonnes CO₂ per tonne of steel, biocarbon that cuts emissions by 20-40% provides direct, quantifiable savings on CBAM certificates. For bio-oil-based DRI with carbon capture, the economics could be even more favorable—not just avoiding carbon costs but potentially generating carbon removal credits.

The CBAM phase-in schedule means only 2.5% of carbon costs apply in 2026, rising to 100% by 2034. Steel producers who don't decarbonize will face increasingly severe cost penalties.

Green Steel Premiums

Major buyers are paying 5-20% premiums for low-carbon steel. Automotive manufacturers, appliance makers, and construction companies with Scope 3 targets are signing long-term offtake agreements with verified low-carbon producers.

Biomass-based steel—whether from biocarbon or bio-oil—can access these premium markets without waiting for hydrogen technology to mature. For producers facing years of waiting for green hydrogen infrastructure, that's a compelling bridge strategy.

The Carbon Removal Market

For bio-oil-based ironmaking specifically, there's an additional revenue stream: carbon dioxide removal (CDR) credits. Charm Industrial's core business is currently carbon removal—sequestering bio-oil underground for permanent storage. Early CDR buyers are paying hundreds of dollars per tonne of CO₂ removed.

Charm's technoeconomic model assumes CDR prices approaching $100/tonne by 2050—which effectively becomes a price floor, as carbon capture costs prevent selling CDR for less. But by coupling ironmaking with carbon removal, Charm can produce fossil-free iron near market prices while selling CDR credits separately. The iron and the carbon removal become complementary revenue streams.

The Supply Chain Bottleneck

Both pathways face the same fundamental constraint: building the biomass-to-steel supply chain at sufficient scale.

Global biocarbon production is roughly 75,000 tonnes per year—mostly for agricultural applications. To fully decarbonize global steel production would require hundreds of millions of tonnes annually. Even modest adoption requires order-of-magnitude increases in production capacity.

This explains why steel companies like SDI and Aperam are investing in their own production facilities rather than relying on merchant markets. And it explains why Charm is developing a decentralized pyrolysis model—mobile equipment that can scale incrementally without the capital risk of a single large plant.

The technology works. The economics are increasingly favorable. The constraint is building the infrastructure to supply biomass-derived carbon at steel-industry scale.

The Bottom Line

Biomass won't single-handedly decarbonize the steel industry. But it offers something hydrogen and other long-term solutions don't: pathways that work today, with existing or near-commercial technology.

Solid biocarbon is already commercial. Steel Dynamics, Aperam, SSAB, and ArcelorMittal have proven it works in blast furnaces and EAFs. The constraint is scaling supply to meet demand.

Bio-oil-based DRI is less mature but potentially more transformative. Charm Industrial's AIST award-winning research demonstrates that bio-oil syngas can reduce iron ore to metallic iron—and with carbon capture, the process could be carbon-negative. If successful at scale, this could fundamentally change how we think about industrial decarbonization: not just reducing emissions, but removing CO₂ from the atmosphere while producing essential materials.

For blast furnace operators facing CBAM costs and green steel demand, biocarbon offers a meaningful bridge: 20-40% emission reductions without betting the company on unproven technology. For DRI producers and new plant developers, bio-oil offers a pathway to fossil-free ironmaking that could be economically competitive even before green hydrogen reaches scale.

The companies building biomass-to-steel capacity today—whether through solid biocarbon or bio-oil—are positioning themselves for a market that barely exists now but will be substantial within the decade. As carbon prices rise and green steel premiums expand, the question isn't whether biomass has a role in steel decarbonization. It's who builds the supply chain fast enough to capture the opportunity.

By Tristan Springer, Co-Founder and CEO at Valorize