A recent report from the Institute for Energy Economics and Financial Analysis (IEEFA) has cast doubt on the potential of carbon capture, utilisation, and storage (CCUS) to significantly reduce emissions in the global steel industry.
According to the think tank, CCUS is unlikely to play a major role due to low capture rates, high costs, and a track record of underperformance.
The steel sector currently accounts for approximately 8% of global carbon dioxide (CO2) emissions. While many steelmakers and iron ore miners have included CCUS in their long-term green transition plans, progress on commercial-scale CCUS for blast furnaces has been minimal, the report states.
Analysts at IEEFA highlighted that CCUS for blast furnace-based steelmaking is being outpaced by alternative technologies, particularly the shift to direct reduced iron (DRI)-based steelmaking that can utilize green hydrogen.
“DRI is a cleaner way of turning iron ore into iron, which can then be processed into pellets for electric-arc-furnaces (EAF),” the report noted.
The high cost of CCUS has been a point of contention within the industry. Andrew Forrest, executive chairman of Fortescue Metals, one of the world’s leading iron ore suppliers, dismissed CCUS as a viable solution for the energy transition.
A report by Germany-based think tank Agora echoed concerns, stating that retrofitting blast furnaces with carbon capture facilities poses significant economic and environmental risks.
Despite these challenges, some industry voices remain optimistic about the potential of CCUS, according to a report by Reuters. Prabodha Acharya, chief sustainability officer at India’s JSW Group, believes that carbon capture will play a role in achieving net-zero emissions in the steel industry.
“I don’t agree with the theory that carbon capture will not be effective for the steel industry…the solution to go to net zero has to come from carbon capture and storage,” Acharya stated to Reuters. “The question is when the cost of carbon will cover the cost of capture and utilisation.”
With steel demand expected to remain high in the coming decades, especially in Asia, coal-based blast furnaces are unlikely to be entirely replaced by new technologies. However, the debate over the effectiveness and feasibility of CCUS in the steel industry continues as the sector strives to meet ambitious emissions reduction targets.
