According to a new report from the think tank Institute of Energy Economics and Financial Analysis (IEEFA), carbon capture utilisation and storage (CCUS) is unlikely to play a major role in decarbonising the global steel sector, despite support for the technology at the 2023 COP28 climate conference.
The report notes that over several decades of implementation in a range of sectors, CCUS has accumulated a track record of underperformance and failure.
Indeed, the report outlines that the rates at the world’s only commercial-scale CCUS plant for gas-based steel production are very low. Meanwhile, there are no commercial-scale CCUS plants for coal-based steelmaking anywhere in the world, with almost nothing in the pipeline.
“Due to the poor performance of CCUS, it seems increasingly likely steel consumers will not want coal in their supply chains at all going forward,” says the report.
Instead, the report outlines that uptake of direct reduced iron (DRI)-based steelmaking, which can run on green hydrogen with “very low emissions,” is accelerating.
This, alongside electric arc furnaces (EAFs) associated with renewable energy, offers steelmakers a “far more promising pathway” to reduce their emissions than CCUS, it says.
Yet, the IEEFA report outlines that many major steelmakers and iron ore producers have CCUS as part of their long-term decarbonisation plans.
The report warns that investors should question steel company decarbonisation plans that maintain that CCUS will play a significant role.
Read the full report here.