Europe can cut the steel in its cars by a tenth. Its steel imports would barely notice.
Circular economy measures could take up to 13% of the steel out of Europe's passenger cars. New modelling for the TRANSIENCE project finds this would leave the EU's dependence on imported steel effectively unchanged — because of where in the supply chain the saving lands.
Status: results from Deliverable D8.1, not yet approved by the European Commission and subject to revision.
Europe's industry depends on what it can buy from the rest of the world. Many sectors rely on materials or products sourced internationally, so a disruption far away feeds through into production stability and costs at home. The closure of the Strait of Hormuz in the first half of 2026 is the most recent reminder of how quickly that can happen.
That has made the circular economy interesting to people who do not usually think about waste policy. If Europe used less material, and used the same material more than once, it would need to buy less of it from elsewhere. Lower demand, lower import reliance, greater resilience. It is an appealing chain of reasoning, and most existing studies that test it have focused on recycling.
We tested a different part of it. Rather than recycling, we looked at measures further up the waste hierarchy — using less material in the first place, and reusing components — and asked a specific question: what effect can circularity strategies actually have on EU trade flows and industrial resilience?
This explainer covers the first half of the answer: steel in passenger cars. A companion piece covers plastics packaging. The short version for cars is that circularity works, the trade effect is real, but it is far too small to matter — and the reason why is the interesting part.
What we modelled
We examined four ways of putting less steel into cars, drawn from a review of circular economy measures and selected for their fit with a material efficiency and reuse focus:
- Stronger steel. Replacing conventional steel with high-strength and advanced high-strength grades, so parts can be thinner.
- Smaller cars. A shift in the fleet mix towards smaller vehicle segments.
- Redesign. Optimising component shapes so material sits only where it is structurally needed — worth a 4–6% cut in steel content.
- Remanufacturing. Recovering steel components and body panels at end of life and returning them to service instead of melting them down.
Each measure was run at two ambition levels, conservative and highly ambitious, and all follow the same schedule: starting in 2027, a quarter realised by 2030, fully realised by 2040. A combined scenario stacks smaller cars, stronger steel and remanufacturing together. Redesign is left out of the combination, because it acts on the same parameter as stronger steel and delivers less.
These are what-if scenarios. They describe what would follow if the measures were adopted on that schedule — not what is expected to happen.
What would have to change for this to happen
The scenarios were not invented at a desk. Their narrative came out of a stakeholder workshop in Brussels in December 2025, where participants worked through the technical, economic, policy, cultural and social barriers to material efficiency and reuse.
The highly ambitious case describes a Europe where quite a lot has shifted. Incentives that once rewarded heavier vehicles have been redirected: policy, standards and public procurement now favour material-efficient design, and safety concerns about lighter cars have been settled through regulation and engineering. Cultural norms have moved too — status is no longer tied to vehicle size, and climate-conscious buyers actively choose smaller cars. On the industry side, high-strength steel has become cheaper and the trade-offs between strength, cost and recyclability have been resolved.
Reuse requires a different set of changes: harmonised standards allowing car components to cross borders, digital product passports to make their history legible, and an end-of-life system that keeps vehicles in Europe rather than exporting them. Electric vehicles have been folded into the same system, with new reuse markets emerging for specific components.
Whether that Europe arrives is a political question, not a modelling one. What the model can say is what it would be worth in tonnes.
Circular measures take up to 13% of the steel out of Europe's cars
What each measure can plausibly deliver is bounded by technical reality, and those bounds are tight. Even the strongest single measure — the highly ambitious shift to smaller cars — cuts total automotive steel demand by no more than 5.5% at full effect in 2040. Measured per vehicle rather than across the fleet, the same scenario saves 11.75%.
Stronger steel and smaller cars are consistently the two largest contributors. Downsizing performs well partly because Europe already leans towards smaller, more fuel-efficient segments compared with other regions, so the shift builds on an existing preference. Stronger steel performs well because it is already happening — advanced grades have been progressively displacing mild steel in car manufacturing for years. Redesign delivers less than stronger steel does, for a simple reason: both work by reducing steel intensity, and redesign reduces it by less.
Remanufacturing behaves differently. It does not directly reduce the steel demanded, because it operates on what comes out of the vehicle stock rather than what goes in. Its measured effect on demand is correspondingly modest, held down by the several constraints built into its parameters.
Stacked together, the three combined measures — smaller cars, stronger steel and remanufacturing, with redesign left out — save between 6.6% and 13.3% of total automotive steel demand, sustained from 2040 through 2050. Thus, no single measure moves much, but combining them roughly doubles the best one alone. Prioritising between measures matters — adopting several of them matters more.
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Reuse shows up immediately; efficiency takes fifteen years
A European car lasts about 15 years on average, with a standard deviation of 4 years. So a decision taken in 2027 to build cars with less steel only reaches the scrap yard around 2042. Every reduce scenario therefore shows no visible effect on Europe's supply of recycled steel until after 2035, and the full effect has still not arrived by 2050.
Reuse runs on a shorter loop. Remanufacturing intercepts steel that is reaching end of life now, diverting it out of the scrap stream directly. Its effect on secondary steel availability appears straight away, and it dominates the combined scenario in the near term, with the efficiency measures contributing progressively more as the affected vehicles age out of the fleet.
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Europe's steel dependence sits upstream — and it is growing
At the finished-goods stage — steel already built into cars and other transport goods — the EU is a near-balanced, high-throughput trader. In 2022 it imported around 20.6 Mt and exported around 18.6 Mt, against domestic demand of about 20.0 Mt and domestic supply of 17.9 Mt. Goods flow in and out in roughly equal measure, and demand is projected to stay flat: 20.8 Mt in 2030, a slight dip, then 20.4 Mt in 2050.
At the intermediate stage — the sheets, coils and bars that factories buy — the position is structurally different. The EU has been a persistent net importer since 2014, taking in 47.2 Mt in 2022 against exports of 20.7 Mt. And the gap widens: total EU steel demand rises from 118.7 Mt in 2022 to 150.9 Mt in 2050, driven mainly by construction, machinery and appliances rather than by cars. Imports rise to 56.4 Mt, exports to 29.9 Mt, leaving net imports steady at 24–26 Mt.
So Europe's real exposure is upstream, in the raw material rather than the finished car. That contrast is what makes the trade results turn out the way they do.
The saving is absorbed before it reaches the steel mill
At the finished-goods stage, imports fall and exports do not. Across every circular scenario, exports of steel in transport goods stay essentially flat — 19.4 Mt in 2040 against a baseline 19.6 Mt — while imports drop. With the import-to-demand ratio close to one, a fall in domestic demand is absorbed almost entirely by imports — the same goods carrying less steel, not fewer goods. In the most ambitious combined scenario, imports fall by around 2.2 Mt while exports move by only 0.2 Mt, and the EU flips from small net importer to net exporter of steel in transport goods.
Chart 4 — "At the finished-goods stage, imports fall and exports do not" Net imports for steel products in transport goods, EU27+1, 2022–2050.
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Upstream, the effect nearly vanishes. Because the reduction is absorbed at the finished-goods stage, it barely propagates to intermediate steel. Demand there falls by just 0.4 Mt against a 2040 total of 141 Mt. The import-to-demand ratio at this stage is around 0.4 rather than 1, so the trade response is smaller again by an order of magnitude: in 2040, imports down roughly 0.12 Mt and net imports down roughly 0.03 Mt. EU net-import dependence for intermediate steel stays at about 17% of demand, with or without ambitious circularity in cars. Against normal year-to-year variation in EU steel trade, that is indistinguishable from noise.
Defending domestic production changes who absorbs the cut, not how big it is. We also ran a protective variant in which EU production of intermediate steel is held on its baseline path and the whole demand reduction is pushed onto trade instead. It helps in relative terms: net imports fall by around 0.40 Mt instead of 0.03 Mt. But that is a tenfold improvement on a very small number, and it stays well under 1% of demand. Within that variant, the choice between cutting imports and expanding exports changes the composition of trade but leaves net imports identical.
Put together: circular measures in the car fleet do reduce EU steel import dependence, and they do it almost entirely by cutting imports of steel embodied in transport goods rather than by shifting exports or domestic production. But transport accounts for only about 12% of total EU steel demand, and passenger cars are a fraction of that.
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What this means
Our study illustrates that where a circularity measure sits in the value chain determines whether it reaches the dependency you are trying to reduce.
Resilience assessment conventionally looks upstream, at imports of primary and intermediate materials. Circular economy policy conventionally acts downstream, on products. This study shows the two are not automatically connected. A downstream measure only relieves an upstream dependency if it touches a substantial share of total material demand — and cars do not.
Breadth beats ambition. Doubling the ambition of car circularity changes little. Extending comparable measures across the wider automotive sector, or into construction, machinery and appliances — the sectors actually driving EU steel demand growth to 2050 — is where the leverage would be.
Downstream and upstream measures need pairing. Demand-side circularity has to be combined with interventions on the material itself, principally recycling. This is no free win either, since earlier work found higher recycling rates can simply raise scrap exports instead of displacing primary steel.
Higher-R strategies still earn their place. Reducing material demand directly does contribute to resilience. The finding here is about scale and placement, not about whether the mechanism works.
Limitations
Three constraints matter when reading these numbers.
Scope. The study covers material efficiency and reuse for a narrow set of products, which limits how far conclusions generalise to the EU economy. The method extends to other products and strategies; the results do not.
No economics. The analysis tracks physical material and trade flows only. It contains no energy use, no emissions, and no prices. In this configuration only the two material flow models are coupled, without the macroeconomic and industrial modules of the wider framework, so the chain carries no information on production costs or competitiveness.
Scenario uncertainty. Results depend on assumptions about technology adoption, policy implementation and future demand. Stakeholder validation of the scenarios strengthens their standing but does not remove the uncertainty.
How this was modelled
Two linked models were used.
The EU MFA module is a dynamic material flow analysis model covering steel, plastics and cement across their main end-use sectors, built on the open-source flodym framework. It combines top-down and bottom-up approaches: a bottom-up vehicle sub-module driven by new car registrations, feeding a top-down steel sub-module that tracks 19 steel product types across 7 use sectors. Overlaps are handled by subtracting the detailed bottom-up flows from the broader top-down sectors, so that circular measures can act on each independently without creating imbalances. The vehicle sub-module is linked to the OPEN-PROM energy system model rather than to macroeconomic indicators, since future vehicle demand depends on how the transport sector transforms.
REMIND-MFA is a global dynamic material flow model covering 12 world regions to 2100. Historical in-use stocks are reconstructed from production and trade statistics; future stocks for non-EU regions are projected from the relationship between per-capita material stocks and GDP per capita. Trade is represented at several life-cycle stages, with import and export shares held at recent historical levels and a global market-clearing step ensuring worldwide imports match exports. Population and GDP follow SSP2; steel history runs to 2022.
The two models are harmonised so they describe the same physical Europe: REMIND-MFA does not project EU demand independently but adopts the EU MFA's flows directly, and derives its EU end-of-life parameters as ratios of those flows. EU trade is then computed endogenously within the global model.
For steel, the EU region is defined as EU27+1 (EU27 plus the UK). Note: the plastics companion study uses EU27+3, adding Norway and Switzerland, following that module's regional definition.
Two trade responses were modelled. Under demand-following trade — the primary case — Europe's import share at each stage stays at recent historical levels, so lower demand contracts imports and domestic production in proportion. Under fixed-supply trade, applied at the intermediate-steel stage only, domestic production is held constant and trade absorbs the entire adjustment. Fixed supply is not applied at the finished-goods stage, since "defending domestic production" is not a coherent resilience claim for individual fabricated goods.
Data and citation
- Scenario results are available on IAM PARIS.
- Models: EU MFA · REMIND-MFA · Region: EU27+UK · Years: 2027-2050 · Socioeconomic pathway: SSP2
- Full methodology: TRANSIENCE Deliverable D8.1 (will be soon available on the TRANSIENCE website)
- Licence: CC BY 4.0 — charts and text may be reused with attribution.
This explainer accompanies work carried out under the TRANSIENCE project, funded by the European Union. The underlying deliverable has not yet been approved by the European Commission and its findings may be revised.
The AI assistant Claude (Opus 5, Anthropic) was used to support the writing of this explainer. All findings, figures and interpretations derive from Deliverable D8.1 and have been reviewed and approved by the authors, who take full responsibility for the content.