Steelmakers Cling to Unproven Carbon Capture Tech Despite Better Options, Report Says

Report says direct reduced iron and electric arc furnaces powered by renewables offer a more promising solution.

A new report by the Institute of Energy Economics and Financial Analysis (IEEFA) throws cold water on the idea that carbon capture technology (CCUS) will be a major player in cleaning up the steel industry. This comes despite support for the technology at the recent COP28 climate conference.

The report argues that steelmakers should focus instead on direct reduced iron (DRI) production powered by green hydrogen, along with electric arc furnaces (EAFs) fueled by renewable electricity. These technologies, according to IEEFA, offer a much clearer path to reducing emissions.

“Many major steelmakers are still clinging to the idea that CCUS will be a part of the solution,” said Simon Nicholas, IEEFA’s Lead Steel Financial Analyst. “But their plans lack specifics and push large-scale implementation decades down the road. The problem is, CCUS has a nearly 50-year history of underperformance.”

The report highlights the financial, technological, and environmental risks associated with CCUS. The long-term effectiveness of storing captured carbon dioxide underground remains uncertain, and the unique nature of each CCUS project makes it difficult to learn from past successes and failures, hindering cost reductions.

In contrast, the cost of renewable energy and battery storage has plummeted in recent years, with further reductions expected. IEEFA argues that these established technologies offer a more reliable and cost-effective path for steelmakers looking to decarbonize.