Carbon capture and storage’s prospects in the steel industry look increasingly bleak, according to US-based energy think tank Institute for Energy Economic and Financial Analysis (IEEFA).

Despite major steelmakers and iron ore miners such as Nippon Steel, ArcelorMittal, and BHP batting for the technology, it is unlikely to play a significant role in meeting their decarbonisation targets, IEEFA analysts Simon Nicholas and Soroush Basirat said in a briefing note.

“CCUS is predisposed to major financial, technological and environmental risks,” the authors said. “Low capture rates are a key ongoing issue that is often underappreciated.”

Of the six CCS projects in the global pipeline according to the Global CCS Institute, fundamental details remain undisclosed, unknown or “under evaluation.”

The authors noted that steelmakers are moving away from coal-based production to direct reduce iron (DRI) steelmaking to reduce their emissions.

“There are still no commercial-scale CCUS plants for blast furnace-based steelmaking in operation anywhere in the world,” the authors said. “The cost involved means capturing sufficient carbon at coal-based steelmaking sites will likely never be financially viable.

“Virtually all steelmakers planning or constructing commercial-scale low-carbon steelmaking capacity have turned to hydrogen-based or hydrogen-ready DRI plants, not CCUS.”

The 2030 project pipeline capacity of DRI plants has reached 96 million tonnes a year (Mtpa) while commercial-scale CCUS for blast furnace-based operations remains stuck on just 1Mtpa.

“The cost of green hydrogen – a key enabler of truly low-carbon iron and steel production – is also high but has a much better chance of declining through economies of scale and renewables cost reduction,” the authors said.

“CCUS for blast furnace-based steelmaking is being left behind by a better alternative that can outcompete it on both cost and emissions reductions,” the authors said.

(Editing by Anoop Menon) (anoop.menon@lseg.com)

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