The Steel Scrap Paradox
Everyone needs more scrap for the green transition, but fragmented rules still treat it through categories designed for another industrial era. A commentary by Ilaria Colombo
This commentary builds on the author’s remarks at an Italo-German roundtable on the future of the European steel industry, co-organised by IEP Bocconi and the Europa-Institut at Saarland University on June 15, 2026. Held in the framework of the January 2026 Protocol on a German-Italian Plan of Action for Strategic Bilateral and EU Cooperation, the event brought together representatives from government, industry and academia to discuss decarbonisation, energy costs, scrap markets, defence-related steel demand and the EU’s shift towards stronger trade protection.
Steel scrap is increasingly recognized as a critical resource for circularity, decarbonization, and industrial competitiveness. The use of scrap as a primary input in steel-making enables the shift from coal-based blast furnaces to electricity-based electric arc furnaces (EAFs), yielding several environmental and economic benefits.
EAFs are generally less energy intensive, do not use coal as a reducing agent thus lowering carbon emissions and, more generally, diminish the demand for the extraction of virgin ores. At the same time, steel scrap has the potential to contribute to economic security objectives, as it allows non-resource-rich states to diversify their sources of raw materials.
Notwithstanding its increasing importance, the rules governing the transboundary movement of steel scrap remain particularly complex, sitting at the intersection of environmental and trade law regimes. Such complexity derives from the “double nature” of steel scrap, as it may simultaneously be treated as both “waste” and a “good”, and from regulatory concepts developed before steel scrap acquired its current strategic significance.
From both a production and a legal perspective, a first challenge is that steel scrap is not a homogeneous category.
Different types of scrap vary significantly in terms of origin (pre-consumer vs post-consumer), quality (unsorted vs mixed) and hazardous characteristics (e.g.: toxicity, flammability, especially when contaminated with other materials). These distinctions are not merely technical, as they often determine the regulatory framework applicable to a given shipment and influence the conditions under which steel scrap may be traded across borders.
International environmental law has approached scrap primarily through the lens of waste management and environmental protection. The Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal seeks to ensure that waste is managed in an environmentally sound manner and that potentially hazardous waste streams are subject to appropriate controls and, where necessary, restrictions.
This regulatory approach has shaped subsequent regional instruments such as the OECD Council Decision on the Control of Transboundary Movements of Waste destined for Recovery Operations and the EU Waste Shipment Regulation.
For instance, the Basel Convention contains a broad definition of waste, covering substances or objects that are disposed of, intended to be disposed of, or required to be disposed of under national law.
Importantly, the notion of disposal is itself broad and includes not only final disposal operations, but also recovery, recycling, reclamation and reuse activities, including the recycling of metals and metal compounds.
For steel scrap, the key question is whether the material qualifies as hazardous waste. While clean and homogeneous scrap intended for direct remelting generally falls outside the scope of the Convention, mixed, contaminated or unsorted scrap may be classified as hazardous waste where its composition or level of contamination gives rise to hazardous characteristics. Where the Convention applies, transboundary movements are subject to several restrictions and procedural requirements.
Exports require the Prior Informed Consent (PIC) of the importing country and any transit countries. Importing states retain the right to prohibit imports altogether or to authorize them subject to specific environmental or technical conditions.
Moreover, the Basel regime was further strengthened by the entry into force of the Basel Ban Amendment in 2019. The Amendment prohibits exports of hazardous wastes from OECD countries, the European Union and Liechtenstein (the so-called Annex VII Parties) to non-Annex VII countries, irrespective of whether the waste is intended for final disposal or for recovery and recycling operations.
As a result, depending on its quality and level of contamination, steel scrap may move from being treated as a tradable commodity under international trade rules to becoming subject to a much stricter environmental regime governing its cross-border movement.
International trade law, by contrast, starts from a different premise, as its primary objective is to facilitate international trade through rules on market access and non-discrimination. Within this regime, steel scrap is generally treated as any other traded good, as World Trade Organization (WTO) law does not provide for commodity-specific agreements.
In principle, restrictions affecting trade flows should remain limited and justified under the available exceptions: while restrictions based on environmental grounds might be justified, restrictions justified solely on industrial policy or economic development grounds are generally not permitted under WTO law.
Today, however, the context is changing. Across the world, governments are increasingly adopting export restrictions and other trade measures on goods perceived as strategic for industrial competitiveness, the green transition and economic security.
Trade measures affecting steel scrap reflect changes in countries’ recycling capacity, domestic demand for secondary raw materials and broader economic security objectives.
On the import side, major economies such as the EU, China, the United States and Russia generally maintain zero import duties on steel scrap, thereby facilitating access to this valuable input.
The export side presents a much more fragmented picture. China imposes a 40% export tax on steel scrap, while Russia relies on export tariff quotas to retain materials for domestic use. The United States has not introduced specific export restrictions, although the recent increase in import duties on primary steel products indirectly affects scrap trade by increasing demand for secondary materials.
The EU has not yet adopted trade-restrictive measures explicitly aimed at securing scrap availability for industrial policy purposes: export restrictions primarily stem from waste management instruments, notably the Basel Convention and the EU Waste Shipment Regulation. The latter strengthens controls on exports of non-hazardous waste streams to non-OECD countries and seeks to ensure environmentally sound management outside the Union.
Can instruments developed to manage waste effectively achieve objectives relating to competitiveness, strategic autonomy, and supply security?
Or does the growing economic significance of steel scrap require a distinct regulatory approach that better reflects its role as a strategic secondary raw material?
If steel scrap is increasingly regarded as a strategic resource for the green transition, relying primarily on waste-management instruments to achieve industrial policy objectives may not be the most effective approach.
Environmental safeguards remain essential, but they also entail significant administrative procedures and compliance costs.
At a time when improving competitiveness and reducing regulatory burdens have become central objectives of EU industrial policy, the question is whether a framework originally designed for waste management is fully suited to govern what is increasingly being treated as a strategic secondary raw material.
IEP@BU does not express opinions of its own. The opinions expressed in this publication are those of the authors. Any errors or omissions are the responsibility of the authors.
