Background: Iran's steel industry produced 32 million tonnes in 2025, ranking tenth globally and first in the Middle East. However, the gap between official targets (55 million tonnes) and actual output, along with the carbon impact of future growth, has rarely been assessed quantitatively and probabilistically. This study aims to evaluate whether production targets can coexist with climate constraints by 2035 and to identify optimal decarbonization pathways, considering Iran's unusual direct reduction-dominated starting point.
Methods: The study uses a mixed-methods approach: describing the 2021–2025 performance with World Steel Association data, and building three production scenarios (Status Quo, Policy Target based on the Vision Document, and Optimistic based on the five-percent growth of the 7th Development Plan) for 2026–2035. CO₂ emissions under three technology pathways (current mix, full gas-based direct reduction, and hydrogen-based direct reduction) were modeled using Monte Carlo simulation with 10,000 iterations and a gate-to-gate system boundary. Iran was also benchmarked against the world's ten largest producers.
Results: Iran's steel production reached 32 million tonnes at a compound annual growth rate of 3.1%. Achieving the 55 million tonne target requires 11.5% annual growth, four times the observed rate. Under the Policy Target scenario, the current technology mix raises emissions to about 82 million tonnes by 2035, nearly doubling them. Completing the shift to full gas-based direct reduction yields only a 14.5% reduction, since its low-carbon advantage has already been captured. In contrast, hydrogen-based direct reduction cuts emissions by 80.6% and is the only pathway aligned with Paris-compatible reduction targets (a 25% cut by 2030).
Conclusion: Iran's production targets are compatible with climate constraints only if adjusted to a realistic growth of three to five percent. Early investment in green hydrogen infrastructure, learning from shared challenges with India rather than Europe, and reporting probabilistic ranges instead of single figures in policy documents are the key practical contributions of this study for policymakers.