Carbon dioxide emissions from the world's steel sector will fall 30% by 2050 compared with last year as more mills turns to less-polluting electric arc furnaces (EAF), consultancy Wood Mackenzie (WoodMac) said in a study on Tuesday.

Around 48% of global crude steel will be made via EAF by 2050, according to WoodMac, increasing from 30% in 2021 and almost on a par with traditional blast furnace steelmaking.

"Together with green hydrogen-based direct reduced iron (used in EAF), scrap use and adoption of carbon capture, utilisation and storage, steel industry's carbon emissions can decline 30% from current levels by mid-century," Malan Wu, research director with WoodMac said in a release.

The steel sector discharged more than 3.3 billion tonnes of the greenhouse gas last year, the consultancy said, with more than 2 billion tonnes contributed by China, the world's top producer of the metal.

It expects China to lead the cut, halving its carbon emissions in the coming three decades, though most of the reduction will be due to falling steel output.

China slashed some 30 million tonnes of crude steel production in 2021 from a year earlier in an effort to meet its carbon commitments, and pledged another annual decline this year. Read full story

Tight scrap supply could pose a threat to China's decarbonisation, as hiking scrap prices will pressure steel margins in coming years, WoodMac's Malan Wu told Reuters.

Mills in mature economies, such as Japan, South Korea, the European Union and the United States, will face more of an onus since they need to slash almost 50% of emissions while seeing their output no lower than current levels.

Steel emissions in India and southeast Asia, however, are anticipated to double, as their production will triple but mainly through traditional, more polluting technologies, said WoodMac.

The consultancy also sees the ferrous sector launching hydrogen use as early as 2027, led by the European Union, and 10% of total steel output to be based on hydrogen by 2025.