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    CCUS faces growing doubts as steelmakers shift to hydrogen – IEEFA

    Carbon capture and storage (CCUS), once hailed as a key solution for reducing greenhouse gas emissions in steelmaking, is facing growing skepticism, according to a report by the Institute for Energy Economics and Financial Analysis (IEEFA). Despite assurances from major steelmakers and iron ore miners like Nippon Steel, ArcelorMittal, and BHP, who insist that CCUS will help them meet decarbonization targets, evidence suggests the technology is unlikely to deliver on its promises.

    CCUS faces significant financial, technological, and environmental challenges. Low capture rates remain a persistent issue, with many projects capturing only a fraction of total emissions. For example, the Al Reyadah CCUS project in the UAE, the only operational commercial-scale steelmaking CCUS plant, captured just 26.6pct of emissions from its gas-based steel plant in 2023.

    The IEEFA report, “Carbon Capture for Steel?”, highlights the poor track record of CCUS projects globally. Since the report’s release, a major CCUS project in Canada was cancelled due to financial viability concerns, and it was revealed that the Sleipner CCUS project off Norway had been overstating its carbon capture rates for years due to faulty monitoring equipment.

    Despite over 50 years of attempts, the high cost of CCUS remains a major barrier. Steelmakers are increasingly turning to proven technologies like direct reduced iron (DRI) steelmaking, which can be powered by green hydrogen. DRI offers a more promising and cost-effective alternative, with a significant pipeline of projects in development. Meanwhile, CCUS for blast furnace-based steelmaking remains stuck at just 1 mln tons of capture per year, with no commercial-scale plants in operation. While green hydrogen remains expensive, it has greater potential for cost reductions through economies of scale and cheaper renewable energy. As a result, CCUS is being outpaced by hydrogen-based solutions, which offer better prospects for both emissions reduction and cost efficiency.

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