This article presents the Iron and Steel Industry Model (ISIM). This is a world simulation model able to analyze the evolution of the industry from 1997 to 2030, focusing on steel production, demand. trade, energy consumption. CO2 emissions, technology dynamics, and retrofitting options. In the context of the Kyoto Protocol on climate change, the potential impacts of a CO2 emission market (e.g. the gains in terms of compliance costs, the country trading position, the evolution of the technology and the energy mixes) are also addressed. In particular. three emission trading scenarios are considered: an EU15 market. an enlarged EU market. and an Annex B market. (C) 2004 Elsevier Ltd. All rights reserved.