Although the modern electric arc furnace is a highly efficient recycler of steel scrap, operation of an arc furnace shop can have adverse environmental effects.  Much of the capital cost of a new installation will be devoted to systems intended to reduce these effects, which include:
* Enclosures to reduce high sound levels
* Dust collector for furnace off-gas
* Slag production
* Cooling water demand
* Heavy truck traffic for scrap, materials handling, and product
* Environmental effects of electricity generation
Since EAF steelmaking mainly use recycled materials like scrap iron and scrap steel, as their composition varies the resulting EAF slag and EAF dust can be toxic.  EAF dust is collected by air pollution control equipment. It is called collected dust and usually contains heavy metals, such as zinc, lead and dioxins, etc. It is categorized as hazardous industrial waste and disposal is regulated.
Because of the very dynamic quality of the arc furnace load, power systems may require technical measures to maintain the quality of power for other customers; flicker and harmonic distortion are common power system side-effects of arc furnace operation.