As sustainability targets in construction continue to rise, the push to decarbonize the sector is intensifying, but the industry is still struggling to move away from its heavy reliance on coal. While steel is essential, low-carbon alternatives are not yet commercially widespread. This is creating a massive gap between sustainability expectations and material reality, leaving contractors stuck in the middle.
Steel remains a major material in construction, and its carbon footprint directly affects both project sustainability targets and embodied carbon goals. Environmental watchdog SteelWatch found, in its first assessment of major global steelmakers, that none are ready to transition to near-zero-emissions production. This points to an obvious conundrum—builders can’t go green if materials don’t.
“Embarrassingly, not a single steelmaker has scored above 50 points out of 100, and even those at the head of the pack have big gaps to bridge before they can claim to be acting responsibly on the climate crisis,” said Caroline Ashley, executive director, SteelWatch.
This assessment matters beyond just the score. Low-carbon steel already commands a premium over conventional steel, with an estimated 15% markup required to remain competitive. That cost directly affects project budgets at a time when contractors are already working with slim margins.
Limited supply is increasing costs and uncertainty
The supply of low-carbon steel remains limited, which inevitably leads to higher costs for contractors. This can force them to either raise bid prices or take on more risks when they’re unable to rely on predictable material costs.
The short supply compounds in ways that go beyond the price. Contractors are being forced to lock in orders earlier—sometimes before project scopes are finalized—and once those decisions are made, there’s little room for adjustment. Switching suppliers mid-project can complicate that matter, and if supply falls through, the consequences can ripple through the entire project schedule. According to S&P Global, the current premium for green steel sits around $100 per tonne, depending on market conditions. This kind of volatility makes it extremely difficult to build predictable cost models.
Contractors are expected to maintain a balancing act—staying competitive in a tough market while ensuring they’re accounting for risks. Meanwhile, owners complicate matters by pushing sustainability and budget constraints, which can make it even harder to lock in prices earlier.
Timelines are not keeping up with steel’s transition
Construction generally operates on relatively shorter timelines—from months to years. The steel transition, meanwhile, operates on longer timelines and can take decades to materialize. This creates a timeline misalignment between the two, making it even more challenging for contractors to bridge the gap.
Simply put, projects are moving at a much faster pace than the material supply chain can keep up with, increasing complexity and making the transition to low-carbon steel harder to integrate into systems.
To put the scale of that gap into context: Fastmarket Research forecasts that green steel production in Europe should reach around 15.9 million tonnes by 2035, increasing from less than 1% of flat steel output in 2025 to more than 20% by 2035. Most construction projects aren’t built to wait a decade for the supply chain to catch up
What this means on-site
Real workflows on job sites tend to suffer as contractors deal with increased scrutiny and are expected to justify material choices to clients and owners. The pressure to make low-carbon steel the norm can lead to mid-project spec changes, creating confusion and adding to construction delays. This often results in more rework, multiple conversations, and extended back-and-forth with clients, as approvals or substitutions slow down decision-making and disrupt workflow.
Contractors also need to coordinate more closely with suppliers to ensure everything is on track and proceeding as expected, which increases complexity within each project as the total number of stakeholders grows.
In practical terms, contractors who are tackling this issue now are doing a few things to manage uncertainty:
- Building material escalation clauses directly into their contracts to protect against price volatility
- Locking in supplier relationships earlier
- Specificing recycled steel, which carries a lower carbon footprint, as an alternative material where specs allow
While there’s more pressure now than ever within the industry to switch to green steel, material supply remains constrained. Contractors are stuck navigating that gap as they attempt to tackle numerous challenges and transition to low-carbon steel. This is more than just a supply issue—it’s also a planning and expectation problem.
This gap isn’t temporary and will take time to resolve. The contractors who come out ahead will be the ones who build uncertainty into their planning, pricing, and project procurement from the start.
The pressure to build greener isn’t slowing down, but the materials aren’t keeping up. For more coverage on the sustainability shifts hitting construction budgets and jobsites, subscribe to the Under the Hard Hat newsletter.
