Low-Carbon Production in China’s Iron and Steel Industry: Technology Choices, Economic Assessment, and Policy

Abstract

The iron and steel industry (ISI) plays a significant role in carbon emissions, contributing approximately 15% of the nation’s total emissions in China. Transitioning to low-carbon practices is crucial for achieving the country’s carbon neutrality goals. This paper reviews the current state of China’s ISI and assesses the feasibility of various decarbonization technologies, including hydrogen utilization, biomass substitution, zero-carbon electricity, Carbon Capture, Utilization, and Storage (CCUS), as well as their combinations. The blast furnace–basic oxygen furnace (BF-BOF) process currently dominates the industry with an overwhelming share of around 90%, presenting significant challenges for decarbonization. In contrast, the Direct Reduced Iron–Electric Arc Furnace (DRI-EAF) process is still at the demonstration project stage, but it is rapidly growing and shows great potential for achieving net-zero emissions. Electric arc furnaces (EAFs) that use scrap steel account for about 9% of production and have the lowest energy consumption. However, their production capacity is limited by the availability of scrap steel. Among numerous options, blue hydrogen, carbon-neutral biomass, and CCUS technologies have relatively low costs and high technological maturity. Nevertheless, no single technology can currently achieve deep decarbonization while significantly reducing costs. The nation needs to select the most suitable decarbonization strategies based on geographical location, infrastructure, and economic conditions. The government should enact corresponding policies, provide economic incentives, and ensure mitigation of the environmental and social impacts during the decarbonization transition.

1. Introduction

Greenhouse gas (GHG) emissions are a global concern, particularly carbon dioxide (CO₂) emissions, which have been found to contribute to worsening climate impacts, including disappearing sea ice, accelerated sea level rise, and increasingly severe heat waves, droughts, and forest fires [1]. At the 75th United Nations General Assembly convened on 22 September 2020, the Chinese government announced its commitment to enhance its nationally determined contributions to carbon emissions by implementing stronger policies and measures. China aims to peak carbon emissions before 2030 and achieve carbon neutrality before 2060 [2]. In 2023, global steel production reached 1.892 billion tons, with an average emission of 1.91 tons of CO₂ per ton of steel produced. This resulted in direct carbon emissions from the ISI amounting to approximately 3.6 billion tons, accounting for 7–9% of global emissions. China alone produced 1.012 billion tons of crude steel, representing 53.86% of global crude steel production [3]. Due to China’s ISI predominantly relying on coal as its primary energy source, carbon emissions remain high, accounting for approximately 60% of global carbon emissions from the ISI [4]. Currently, CO₂ emissions from China’s ISI account for approximately 15% of the country’s total carbon emissions, making it the second-largest carbon emitting sector in the industrial field, just behind the power industry. Whether it can achieve low-carbon sustainable development will have a significant impact on China’s dual carbon goals [5]. Carbon reduction in the ISI is crucial for China to achieve its peak carbon emissions and carbon neutrality targets.

Over the past 20 years, China’s crude steel production has increased nearly eightfold. Despite a 40% reduction in CO₂ emissions intensity in the ISI in recent years due to continuous improvements in industrial energy efficiency and emission-reduction technologies [6], the total carbon emissions have still increased nearly fivefold. Due to its massive production scale, carbon emissions from the ISI are an urgent issue that needs to be addressed. In fact, there are four main steelmaking processes in China: the blast furnace–basic oxygen furnace (BF-BOF) process, using coke and coal as energy and reducing agents; the electric arc furnace (EAF) process, using melted scrap steel (EAF–scrap); a hybrid route, combining the BF-BOF and EAF–scrap processes; and the emerging Direct Reduced Iron–Electric Arc Furnace (DRI-EAF) technology [7]. In China, 90% of steel production utilizes the BF-BOF [8], which relies heavily on coke and coal. In contrast, the electric arc furnace process primarily uses electricity as a fuel, resulting in significantly lower emission intensity compared with BF-BOF, but it has a lower share of production. Among these technologies and their hybrids, the DRI-EAF technology has a broader potential for expansion. It can be combined with technologies such as Carbon Capture, Utilization, and Storage (CCUS) and hydrogen production technologies [9].

This paper investigates the near- and long-term decarbonization strategies to rapidly reduce CO₂ emissions in steel production in China using different technologies. The research establishes a multidimensional evaluation framework to assess actionable pathways for CO₂ mitigation, analyzing critical factors including technological readiness, economic feasibility, and scalability potential. The research examines technological solutions from the perspectives of cost, feasibility, readiness, and scalability. Additionally, potential policy options in China are assessed to accelerate the transition of steel production toward low-carbon emissions. To address the above issues, this paper first organizes and synthesizes a variety of abatement technologies. Subsequently, the economics and market factors of these abatement technologies are evaluated. Finally, policy recommendations are given on the path of emission reduction in the ISI.

2. Overview of Steel Production in China

According to the China Statistical Yearbook, China’s steel production capacity has been increasing annually since 2005, reaching 1 billion tons in 2020. As the issue of steel overcapacity in China became increasingly severe, national policy interventions led to the first-ever negative growth in China’s steel production capacity in 2021. Despite a gradual decline in the rate of growth of China’s crude steel production over the past 5 years, China’s crude steel output surpassed 1 billion tons in 2023, marking a 3% increase compared with pre-pandemic levels in 2019. This achievement accounts for 54% of the world’s total steel production [3]. Based on the China Statistical Yearbook 2005–2023, the annual production capacity and growth rate of China’s steel production over the years are shown in Figure 1.

Currently, the following three major production processes account for over 95% of China’s hot metal production in the ISI:

(1)

Blast furnace–basic oxygen furnace (BF-BOF): The process constitutes the primary steel production method in China’s ISI, involving the reduction of iron ore to pig iron in a blast furnace. The operation of BF-BOF is predominantly reliant on coal products and emits approximately 70% of the CO₂ in an integrated plant (BF ironmaking). The BF-BOF process entails the introduction of iron ore, coke, and limestone into the blast furnace (BF), where hot air is introduced from the bottom to the top of the furnace. This process ignites the coke, leading to the generation of additional heat and carbon monoxide (CO) gas. Subsequently, the CO gas reacts with oxygen present in the iron ore, resulting in the production of CO₂. The integrated production plant of BF-BOF comprises coke ovens and pelletizing, sintering, refining, and related electricity-generation facilities. It is noteworthy that nearly 90% of China’s crude steel is produced using the BF-BOF process [10].

(2)

Electric arc furnace (EAF) using scrap steel: The process involves electric arc heating of charged materials such as pig iron, scrap steel, and Direct Reduced Iron (DRI) products (also known as sponge iron), with electricity being the sole energy source. Today, electric arc furnaces are the primary method for steel recycling (secondary steel production) while also contributing to primary steel production by upgrading or refining Direct Reduced Iron. A notable distinction between electric arc furnaces utilized for steelmaking and those employed for ironmaking, specifically for pig iron production, is their mode of operation. While electric arc furnaces function in an intermittent mode, ironmaking equipment used for pig iron production operates in a continuous mode [10].

(3)

DRI-EAF: This ironmaking process involves the direct reduction of solid iron ore with reaction temperatures below the melting point of iron. The reducing gas, known as syngas, is produced from natural gas (gas-based DRI) or coal (coal-based DRI), and consists of a mixture of H₂ and CO. While DRI production is more energy-efficient compared with producing pig iron from a blast furnace, additional processing (typically in an EAF) is required to refine the DRI sponge iron before it can be marketed and sold [10].

The most widely used process currently is still the BF-BOF process, accounting for 90% of production in China, while the EAF process accounts for a mere 10%. These processes utilize different raw materials. The BF-BOF process converts iron ore into pig iron, which is then further processed into high-carbon steel. In contrast, the EAF process converts scrap steel and sponge iron into high-carbon steel. The DRI process converts raw iron ore into sponge iron, which is a porous, highly permeable, and highly reactive product. However, before being sold on the market, sponge iron must undergo processing through the EAF process. As a well-known difficult-to-decarbonize industry, achieving significant decarbonization in the ISI would substantially increase production costs (over USD 120 per ton). The transition to a low-carbon economy will benefit from a range of steelmaking technologies [11]. Short-term emission reduction strategies include improving energy efficiency, increasing scrap steel recycling, and substituting natural gas for coal in the DRI process [12]. Recycled scrap steel can be used as 100% of the raw material in electric arc furnaces or in lower proportions (15–25%) in basic oxygen furnaces as a coolant and metal input. The use of scrap steel typically reduces the energy demand and CO₂ emissions of these processes [13]. However, currently, the existing supply of scrap steel is insufficient to meet the demand for steel. In 2019, approximately one-third of the total metallic inputs utilized in steelmaking originated from scrap steel, with the remainder sourced from iron ore [13]. Moreover, while the forecast predicts an increase in the supply of scrap steel, the demand for steel is also expected to rise [13]. This makes it very challenging to increase the proportion of scrap steel usage, indicating that primary steel production methods will still be necessary. In the long term, several viable technologies are under consideration, including advanced low-carbon processes utilizing CCUS [13], which have the potential to reduce emissions and are attractive for the development of CCUS technology. Other approaches include using hydrogen for high-temperature heating and/or as a reducing agent for DRI, further increasing the use of scrap steel, and enhancing resource efficiency (such as improving durability and substituting construction materials) [9]. Some studies provide detailed descriptions of the challenges and opportunities associated with low-emission steelmaking solutions [14,15], particularly early analyses of the pathways to achieve carbon neutrality in the Chinese ISI [8,15,16].

The objective of this study is to examine the comprehensive decarbonization of steelmaking processes, encompassing the three primary or secondary procedures previously outlined, in addition to any requisite pretreatment for the production of HM steel (e.g., sintering and coking in BF-BOF production). Post-treatment processes such as refining and alloying are excluded from this analysis. Specific integrated decarbonization methods involve recovering some energy inputs, such as the reuse of quenching gas, recycling top gas, and utilizing waste heat for CCUS or hydrogen production. These methods will be examined in relation to their applicability under distinct circumstances.

3. Assessment of Decarbonization Technologies

In the journey to achieve the emission reduction targets in the ISI, a multi-faceted and comprehensive deployment of decarbonization technologies is crucial. Existing research indicates that hydrogen injection technology provides a new, clean-energy pathway for steelmaking, significantly reducing carbon emissions. Solid biomass substitution technology effectively replaces fossil fuels by using renewable resources, reducing the carbon footprint while promoting resource recycling. The widespread adoption of zero-carbon power, especially the integration of renewable energy sources such as wind and solar power, provides low-carbon energy options for steel production, propelling the industry’s green transformation. Additionally, the implementation of CCUS technology not only effectively reduces CO₂ emissions but also enables the conversion of CO₂ into valuable resources. This recycling of carbon injects new momentum into the sustainable development of the ISI. The integrated application of these technologies is indicative of the ISI’s commitment to green, low-carbon transformation. This is of great significance for achieving global emission reduction targets and addressing climate change.

3.1. Hydrogen Injection Technology

Hydrogen injection technology refers to the technique of injecting hydrogen gas as a fuel or reducing agent into a reaction furnace for steelmaking, known as hydrogen metallurgy. Traditional metallurgical processes often rely on carbon-based materials such as coke and coal as heat sources and reducing agents, leading to inevitable emissions of large amounts of CO₂. In contrast, hydrogen metallurgy technology, by using hydrogen gas as a reducing agent, effectively mitigates greenhouse gas emissions while concurrently enhancing metal extraction efficiency. This approach holds significant environmental and economic potential. Currently, hydrogen metallurgy comprises two primary processes: hydrogen-rich blast furnace smelting and direct hydrogen reduction smelting.

Different steelmaking processes have varying requirements for hydrogen purity: the BF-BOF process does not necessitate high-purity hydrogen and typically involves the use of hydrogen-rich mixed gases, while the DRI process typically utilizes higher hydrogen concentrations and a broader range of hydrogen concentrations compared with BF-BOF processes. The ISI faces two main challenges regarding hydrogen: low-cost hydrogen production and large-scale hydrogen production. Currently, hydrogen production materials are mainly divided into two categories: fossil fuels and renewable energy sources [17]. The produced hydrogen can be classified into gray hydrogen (high CO₂ emissions), blue hydrogen (low CO₂ emissions), and green hydrogen (no CO₂ emissions), depending on whether carbon dioxide is emitted.

Table 1. ISI’s hydrogen production technologies and their pros and cons.

ISI’s Hydrogen Production Technologies and Their Pros and Cons
Technologies	Cost of Hydrogen Production (CNY/m3)	Advantages	Constraints
COG reforming	2.46~2.69	1. Abundant sources, low cost, and promising potential. 2. Capable of producing high-purity hydrogen (90–99%). 3. Easy to couple with CCUS technology.	1. High investment and long payback period. 2. Components other than hydrogen cannot be fully utilized, resulting in a low hydrogen yield per unit of COG. 3. Limited coke production capacity makes large-scale implementation difficult. 4. Significantly affected by environmental policies.
Steam methane reforming	1.81~3.42	1. Commercially mature technology. 2. Steam-reforming hydrogen production efficiency is 65–75%, making it the cheapest and most commonly used method. 3. Easy to couple with CCUS technology.	1. Requires high temperatures (around 850 °C). 2. High demands on catalysts and reactors. 3. High dependency on imported raw materials, with significant regional differences in raw material costs.
Coal gasification	1.08~1.21	1. In terms of large-scale hydrogen production, it has advantages in economic performance and technological maturity. 2. Commercially mature technology. 3. Matches China’s abundant coal resources, with mature technological development and clean utilization achieved in some areas [13].	1. Equipment capital costs are high, and efficiency is low. 2. The process generates a large amount of CO2, constrained by carbon emissions.
Electrolysis of water	No demonstration projects.	1. Commercially mature and promising. 2. Capable of producing ultra-pure hydrogen with purity up to 99.99%.	1. Current applications are limited to small-scale hydrogen production. 2. High cost and energy demand. 3. Current costs are high, with significant regional differences in electricity prices.
Hydrogen production using biomass	No demonstration projects.	1. Wood, forestry, and agricultural residues contain a significant amount of hydrogen and have diverse sources. 2. Energy from household and agricultural waste can be recovered through clean methods.	1. Unable to produce hydrogen on a large scale and at competitive prices. 2. Stability and recyclability of catalysts still face challenges.
Producing hydrogen via nuclear energy	No demonstration projects.	1. Nuclear energy is abundant and suitable for large-scale hydrogen production. 2. Requires low temperatures and has high efficiency. 3. The process requires little to no electrical energy to operate.	1. Commercial application is still in progress. 2. Technology development is not yet mature. 3. Safety requires special attention.

presents the current hot technologies for hydrogen production in the ISI and their advantages and disadvantages [14,18,19,20,21,22,23,24,25,26,27,28,29].

3.1.1. Application of Hydrogen Injection Technology in the BF-BOF Process

The primary carbon emissions in the BF-BOF process come from fuels and reductants. Hydrogen, which is sourced diversely, has high calorific value, good thermal conductivity, and a high reaction rate, presenting significant potential as a superior substitute for the fuels and reductants in the ISI. Yilmaz et al. [30] found that using H₂ as an auxiliary reducing gas in the BF can reduce CO emissions by 21.4% when partially replacing coal or coke. The tuyeres inject pure H₂ into the blast furnace through the runner at the bottom, replacing 120 kg/t of pulverized coal (PC) with H₂ injected at 27.5 kg/t, offering significant potential for emissions reduction. The main advantages of hydrogen injection summarized in the ISI include the following: the reduction product is H₂O instead of CO₂, resulting in zero CO₂ emissions; hydrogen has a higher calorific value than CO, lower density, greater permeability, and faster reduction rates, making it a superior reducing agent compared with CO. Additionally, hydrogen production materials are abundant, ensuring a secure supply of hydrogen gas. The use of hydrogen can help the steel-production process reduce its dependence on fossil fuels such as coal, coke, and natural gas.

3.1.2. The Use of Hydrogen Injection in the DRI Process

Hydrogen direct-reduction technology uses a gas-based shaft furnace as the reduction reactor, obviating the necessity for coking and sintering processes. The reducing gas is pure hydrogen produced from renewable electricity, and the reduction product is water, significantly reducing carbon emissions in the ironmaking process. Based on the varying hydrogen contents in the reducing agents, gas-based shaft furnaces can be further classified as hydrogen-rich shaft furnaces and pure hydrogen shaft furnaces. The carbon emission reduction potential of the hydrogen-rich shaft furnaces can reach 50–95%, while pure hydrogen shaft furnaces, due to the almost complete absence of carbon input during the iron smelting process, can achieve a carbon emission reduction capability of up to 98% [31]. In 2023, China successfully applied pure hydrogen shaft furnace technology for the first time. The demonstration project of the multi-steady-state pure hydrogen shaft furnace, developed and constructed by China Steel Research Technology Group, officially commenced operation in Linyi City, Linyi Economic and Technological Development Zone, Shandong Province. This project uses green electricity to produce green hydrogen, with 99.5% hydrogen gas as the reducing agent. The furnace has a steel production capacity of 50,000 tons and achieved complete localization of equipment.

3.2. Solid Biomass Substitution Technologies

Biomass resources are a renewable clean energy source and include a wide range of materials, such as crop residues (e.g., corn stalks, rice straw, and rice husks), forestry residues (e.g., forest growth residuals and forestry production residuals), animal manure products, plants with high concentrations of hydrocarbons, and the biodegradable portions of industrial and urban waste [32,33,34].

3.2.1. The Application of Solid Biomass Substitution Technologies in the BF-BOF Process

In blast furnaces, the carbon required for iron ore reduction is predominantly derived from coal and coke. However, biochar, as the most widely commercialized wood biomass technology, has a high carbon content ranging from 85% to 98% [35], making it suitable for iron smelting, chemical reduction, and as a substitute for coke. Research findings indicate that completely replacing fossil fuels with biofuels in steelmaking can reduce greenhouse gas emissions by up to 25% [36]. In addition to playing a role in replacing fossil fuels in the steel-production process, biomass can also be used to produce activated carbon materials to act as ion adsorbents, gas adsorbents, and catalyst carriers. These materials are employed for removing heavy-metal ions (such as Pb²⁺, Zn²⁺, Cu²⁺, Cd²⁺, etc.) from steel plant wastewater [37] as well as for eliminating air pollutants (such as CO₂, SO₂, and NO_x) from steel plant flue gas [34]. Illingworth et al. [38] utilized waste fiber biomass from flax to prepare a series of activated carbons with varying specific surface areas and pore volumes. Compared with commercial activated carbons, these biomass-based activated carbons exhibited a higher adsorption capacity for SO₂. Li et al. [39] used rice husks to prepare dual-pore-structure activated carbon and studied its CO₂ capture capacity, kinetics, and regeneration performance.

Table 2. The pros and cons of using biomass in ironmaking.

The Pros and Cons of Using Biomass in Ironmaking [40,41]
Pros:	Cons:
Reduced dependence on fossil fuels, leading to lower greenhouse gas emissions. Increased sintering rate of sintered ore. Improved ore metallization rate. Reduced residual carbon in the tuyere raceway area. Increased reactivity of coke. Stable reduction in the thermal reserve zone. Reduced limestone loading.	Reduced strength of sintered ore and pellet ore. Decreased post-reaction strength of coke. Deterioration of permeability and liquid flow in the blast furnace. Increased processing and storage costs. Introduction of harmful elements (such as Na, K). Increased production costs (currently, the price of biochar is about twice that of coke, making it less competitive in the market).

illustrates the advantages and disadvantages of biomass ironmaking.

The BF-BOF process is responsible for approximately 90% of the total emissions in the entire process, with the emissions from the four steps of ironmaking, sintering, coking, and the blast furnace contributing to this significant figure. Figure 2 provides a visual representation of the CO₂ emissions during the BF-BOF process. As illustrated, the production of 1 ton of hot-rolled coil via the BF-BOF process results in approximately 1.8 tons of CO₂ emissions [42]. Among these, the energy consumption and CO₂ emissions in the blast furnace are the highest in the entire BF-BOF process. Since biomass energy is derived from plants, which capture solar energy through photosynthesis on Earth, it has a low nitrogen and phosphorus content when burned as fuel. Additionally, biomass absorbs CO₂ during its growth process, which can partially offset the CO₂ emitted during combustion. Consequently, the integration of biomass into the pulverized coal introduced into blast furnaces can effectively reduce the reliance on fossil fuels for ironmaking, decrease coal extraction, and substantially reduce carbon emissions in the blast furnace ironmaking process. This approach is of considerable significance for the environmentally sustainable development of the ISI36. Additionally, biomass can partially substitute for fossil fuels during the coking stage, the sintering process, and directly in the blast furnace [43,44]. Mathieson et al. [45] found that when the biomass used meets carbon neutrality requirements, it can reduce net CO₂ emissions by up to 58% overall from the conventional BF-BOF route. In Brazil, wood charcoal is utilized to substitute for pulverized coal in the blast furnace injection process, resulting in injection rates ranging from 100 to 150 kg per ton of hot metal (tHM). This practice significantly reduces coal consumption and lowers CO₂ emissions by at least 30% in blast furnace ironmaking. Brazil has thus become a leading country in the ironmaking industry in terms of biomass energy utilization.

3.2.2. The Application of Solid Biomass Substitution Technology in the EAF Process

Although the EAF process uses electricity as its primary energy source, it still heavily relies on coal resources for the carburizers and foaming agents used in steelmaking [47]. In China, there is a substantial number of straw resources such as corn and rice straw, forestry waste, and scrap tire resources, which can provide abundant alternative carbon sources for electric arc furnace steelmaking [48]. But untreated biomass typically has a high moisture content, low energy density, and poor grindability [49]. Therefore, when using biomass as a carbon source for electric arc furnace steelmaking, preprocessing is often required to convert the biomass into biochar, making its physical and chemical properties closer to those of coal [50].

3.3. Zero-Carbon Electricity Substitution

The EAF steelmaking process utilizes scrap steel as its primary raw material, which conserves resources and protects the environment [28]. Its energy consumption and carbon emissions are significantly lower compared with the blast furnace–basic oxygen furnace (BF-BOF) route, which primarily uses mineral fuels (mainly coal and coke) to extract iron from ores [51]. In developed countries, electric arc furnace steelmaking accounts for over 50% of steel production [52]. Increasing the proportion of EAF steelmaking and further promoting energy conservation and emission reduction efforts is crucial and feasible for achieving sustainable development in the ISI. Traditional steel production relies primarily on fossil fuels such as coal, whose combustion generates significant greenhouse gas emissions such as CO₂, contributing to serious impacts on the global climate. Conversely, zero-carbon electricity, such as solar, wind, hydropower, and nuclear energy, emits almost no greenhouse gases during the generation process. Technologies that substitute zero-carbon electricity involve replacing conventional “gray” electricity sources with zero-carbon sources, thereby achieving substantial carbon emissions reductions.

3.3.1. Application of Zero-Carbon Electricity Substitution Technology in the EAF Process

The EAF process is primarily used globally for secondary steel production. If all the electricity supply in the EAF process can be completely replaced with zero-carbon electricity, global carbon emissions from steel production could be reduced by 13.3% [50].

The following discussion is divided into three scenarios: (1) Replacing the existing power supply in the production mode with zero-carbon electricity. (2) Fully replacing the BF-BOF process with the DRI-EAF process in primary steelmaking. (3) Adopting revolutionary new technologies such as Molten Oxide Electrolysis (MOE) to replace current steel-production processes completely using zero-carbon electricity supplies.

In scenario (1), the electricity consumption in steel production is significant: 356 kWh/t for blast furnace–basic oxygen furnace production and 918 kWh/t for electric arc furnace production [50]. Based on coal and natural gas direct-reduction iron production, electricity accounts for 8% of the total energy consumption (17.9 GJ/t and 14.1 GJ/t, respectively), coal-based direct-reduction iron production consumes 380 kWh/t, and natural gas-based direct-reduction iron production consumes 313 kWh/t. Most steel mills require a continuous electricity supply, sourced either from the grid or from on-site power plants. In most steel mills with on-site power plants, electricity is almost entirely provided by fossil fuels, which provide the high-capacity conditions necessary for low-carbon transformations.

However, according to 2018 global steel production statistics and the benchmark electricity carbon emission intensity (460 kg/MWh), carbon emissions from electricity production account for only 13.3% of the total carbon emissions in steel production. Considering that China’s electricity carbon emission intensity is higher (711 kg/MWh in 2013) [53], under the current production conditions, the potential for the zero-carbon electricity supply to reduce carbon emissions in the ISI is limited. Achieving deep carbon emission reductions in steel production must involve replacing BF-BOF with DRI-EAF or incorporating other low-carbon process pathways.

3.3.2. The Multiple Emission Reduction Benefits of Zero-Carbon Electricity in EAF Technology

In order to optimize the emission reduction rate of EAF technology, it is imperative to enhance the electrification of the production process as much as possible. In scenario (2), increasing the proportion of DRI-EAF technology in primary steelmaking not only shifts from fossil fuel combustion to electricity consumption, making the steelmaking process more low-carbon, but it also increases the share of electricity in the total energy consumption, thus amplifying the emission reduction contribution of zero-carbon electricity. In comparison with the traditional BF-BOF process, DRI-EAF plants have lower carbon emission intensities. Achieving deep electrification through DRI-EAF substitution can significantly reduce carbon emissions in steel production through the following two mechanisms:

A.

Lower carbon intensity: Even if the baseline carbon intensity of electricity remains unchanged, if DRI-EAF were to account for 25% of global steel production by replacing BF-BOF, global carbon emissions from steel production would decrease by 8%. If the replacement rate reached 50%, it would directly reduce carbon emissions by 17%.

B.

Higher contribution to electricity emission reduction: Considering the share of electricity emissions in total emissions, if DRI replaced 25% of the production, the proportion of electricity emissions in total emissions would increase from 13.5% to 19.1%. If the replacement rate reached 50%, this proportion would increase to 28%. If all electricity used were from zero-carbon sources, in the 25% replacement scenario, it could reduce total carbon emissions from steel production by 25%, while in the 50% replacement scenario, it could reduce emissions by 40% [3].

The DRI-EAF technology has reached a state of maturation, positioning it to assume a pivotal function in the pursuit of carbon reduction within the steel manufacturing sector. However, the successful implementation of this technology is predicated on the availability of a substantial new supply of zero-carbon electricity. To illustrate this point, consider a scenario in which 25% of DRI supplants conventional methods. Such a transition would necessitate an additional 450 TWh of annual zero-carbon electricity to power the new DRI-EAF systems, amounting to approximately the total electricity capacity of France. A high DRI replacement scenario would require an additional 1010 TWh of electricity generation capacity, roughly equivalent to Japan’s total electricity production [48]. In advancing process electrification, a more stable supply of zero-carbon electricity is needed.

The first two scenarios are technically mature and can be deployed immediately. Although the MOE technology in scenario (3) has not yet reached commercial scale, it remains highly attractive considering the ISI’s long-term goal of achieving zero-carbon production.

3.4. Carbon Capture, Utilization, and Storage (CCUS)

CCUS technology refers to the industrial process of separating CO₂ from emission sources and then storing or utilizing it. As an important part of the technological mix to achieve carbon neutrality, it is an end-of-pipe reduction technology for achieving low carbon emissions and serves as the final safeguard for reaching the carbon neutrality goal. In the ISI, it is a technological option for the low-carbon use of fossil fuels, which is a feasible solution to support deep decarbonization [52]. The ISI is a typical resource- and energy-intensive industry, with not only significant carbon emissions in the industrial sector but also great difficulty in developing entirely new ironmaking processes with low CO₂ emissions [53,54]. Currently, the mainstream steelmaking process is the long-route steelmaking method of the BF-BOF process. The coking, sintering/pelletizing, and blast furnace ironmaking processes involve combustion reactions using fuels like coal gas, the reduction of iron oxides in the blast furnace, and the oxidation of carbon in molten iron during basic oxygen furnace steelmaking, all of which produce large amounts of CO₂ [55]. The global ISI accounts for 7% of global energy system emissions. Additionally, a significant proportion of the world’s major steel production facilities are strategically situated in proximity to viable CO₂ storage sites, such as the Great Lakes region in the United States, eastern China, the North Sea region, Eastern Europe, and some large plants in Brazil and India. Although there is currently no precise estimation of the effective carbon sequestration potential of CCUS technology in the ISI, the global estimated storage capacity ranges between 10 and 20 trillion tons [56], so there is sufficient capacity to store the CO₂ generated by global steel production. Therefore, CCUS technology has enormous emission reduction potential in the ISI.

3.4.1. Application of CCUS Technology in the BF-BOF Process

In traditional steel-production facilities, the majority of emissions come from the BF-BOF process, while coking and sintering units also contribute to a smaller portion of emissions. To capture all emissions, combustion and capture systems need to be installed for these emission sources.

For BF-BOF technology, CCUS retrofitting in steel plants primarily focuses on installing capture equipment, specifically, retrofitting the blast furnaces. The blast furnace retrofit primarily involves the process of separating CO₂ from the blast furnace exhaust gases to enhance the capture rate of the carbon-capture facilities and reduce the cost per ton of CO₂ emissions avoided. The composition of typical blast furnace exhaust gas is a mixture of several gases, with CO₂ comprising 17% to 25%, CO comprising 20% to 28%, H₂ comprising 1% to 5%, and N₂ comprising 50% to 55% [57]. Therefore, efficiently separating CO₂ is key to implementing CCUS retrofitting. Currently, there are various feasible methods for CO₂ capture.

(1)

Chemical absorption method, as shown in Figure 3: Chemical absorption, as the name suggests, involves chemical solvents reacting with the gas mixture to achieve CO₂ separation. The absorbent that captures CO₂ can be regenerated through desorption, releasing CO₂ for reuse, thereby conserving resources. In CO₂ capture technologies for steel plants, the most mature chemical absorption methods currently include the MEA (Monoethanolamine) method, potassium carbonate method, ionic liquid method, and ammonia-based method.

(2)

Physical absorption method, as shown in Figure 4: This method involves pressurizing the gas mixture and then regenerating the absorbent through depressurization. The key to this method is identifying an effective absorbent. The absorbent chosen for the physical absorption method needs to have high CO₂ solubility, excellent CO₂ selectivity, a high boiling point, non-corrosiveness, non-toxicity, and stable performance. Typically, it can operate at room temperature.

3.4.2. The Application Differences of CCUS Technology in Different Blast Furnace Systems

The carbon dioxide emission reduction potential of blast furnaces with CCUS (BF-CCUS) is relatively low (0.33 to 0.36 tons of CO₂ per ton of hot metal produced, equivalent to a capture rate of 15% to 17%). The estimated cost of reducing 1 ton of CO₂ emissions ranges from USD 45 to 71 per ton of CO₂. Compared with CCUS retrofitting based on oxygen blast furnaces (OBFs), CCUS retrofitting for blast furnaces with blast air (BF-CCUS) is more technically mature and has a lower capital intensity. However, in terms of the cost per ton of CO₂ emissions reduction, BF-CCUS has not demonstrated cost advantages over OBF-CCUS. For this study, the cost per ton of CO₂ for CCS retrofit based on the Top Gas Recycling for Blast Furnace (TGR-BF) technology is USD 60, while the cost per ton of CO₂ for CCUS retrofit based on blast furnace is USD 58 [59,60].

The CCUS approach, underpinned by the oxygen blast furnace process, involves the substitution of industrial oxygen for traditional hot air during iron smelting in an oxygen blast furnace (OBF). This results in the generation of top gas with a high CO₂ concentration, which contrasts with the CO₂ concentration in the top gas of traditional blast furnaces, which typically reaches 20%. The higher CO₂ concentration in the top gas of an oxygen blast furnace facilitates more effective capture. The remaining top gas, rich in carbon monoxide, is easily recovered to reduce the consumption of coke and pulverized coal, thereby further reducing plant emissions. Oxygen enrichment and CCUS retrofitting are prerequisites for recovering top gas, thus requiring additional infrastructure costs. Technical–economic comparisons indicate that capital and energy costs constitute over 80% of the CO₂ capture costs, making the cost per ton of CO₂ highly sensitive to fuel prices and interest rates [46]. If the entire process is coupled with zero-carbon electricity substitution technology, it can reduce approximately 57% of the overall process’s carbon emissions [60].

In an oxygen blast furnace, the Top Gas Recycling for Blast Furnace (TGR-BF) technology is employed to capture and process the lower-concentration CO₂ in the furnace top gas. However, it requires additional costs, with the cost per ton of CO₂ reaching up to USD 56. According to the PAL.P’s study, CO₂ capture using methyl diethanolamine (MDEA) and piperazine (Pz) solvents is also a feasible option, reducing emissions by 47% for integrated steel plants using the OBF process [61].

3.4.3. Direct Reduced Iron (DRI) Systems’ CCUS Retrofit

For DRI plants, most of the CO₂ emissions come from the DRI unit, which also requires combustion and capture afterward. Additionally, steel plants can opt to apply pre-combustion capture technology either at the front end of the DRI system or during the production of the blue hydrogen used in the BF-BOF process.

The retrofitting of CCUS technology into DRI systems bears a notable similarity to that in BF-BOF systems, where high concentrations of CO₂ can enhance the efficiency of CO₂ capture. Due to the gas rich in hydrogen and water vapor emitted from the DRI reactor, the separation of CO₂ becomes easier. Water vapor can be separated easily from the exhaust gas emitted by the DRI process. Furthermore, gas-based DRI technologies offer an additional decarbonization pathway related to CCUS, involving the capture of CO2 from the production process of blue hydrogen utilized in DRI technology.

3.5. Summary of Decarbonization Technology Assessment

The reduction in emissions in the BF-BOF process is primarily addressed by strategies that seek to produce clean fuel and substitute reducing agents. Currently, hydrogen injection technology and solid biomass substitution are considered mature and theoretically feasible technologies. By deploying these two technologies effectively, they can meet the emission reduction requirements of the BF-BOF process. Zero-carbon electricity substitution technologies are primarily used in EAF and DRI processes, with lower compatibility with the BF-BOF process. Zero-carbon electricity substitution achieves high emission reduction rates, but it requires significant electricity consumption. As the ISI continues to electrify, the demand for electricity supply may continue to increase. Therefore, seeking broader, more economical, and sustainable sources of zero-carbon electricity will be crucial for this technology. CCUS technology, through various methods of capturing and either storing or utilizing CO₂, is an essential key technology for achieving carbon neutrality. It addresses carbon emissions that other mitigation technologies may not reach. However, CCUS technology currently faces challenges such as high capture costs and limited CO₂ utilization scenarios. These issues still need to be addressed through the development of new technologies and business scenarios. By coupling and deploying four technologies effectively, theoretically, the ISI can achieve carbon neutrality goals.

4. Economic and Market Considerations

Economic evaluations and market considerations for different emission-reduction technologies help businesses clarify mitigation costs and strategically plan emissions reduction. The economic feasibility of emissions reduction primarily focuses on two aspects: the deployment costs of the mitigation technologies themselves and the carbon price costs once carbon market mechanisms mature. Lower deployment costs of technologies and higher carbon prices both incentivize businesses to accelerate the deployment of emission-reduction technologies [62]. Additionally, government funding and policy support play a crucial role in driving the deployment of emission-reduction technologies.

4.1. Economic Analysis of Hydrogen Injection Technology

The cost of hydrogen injection technology primarily depends on the price of hydrogen or the cost of DRI technology. Currently, hydrogen prices are generally high, with the production cost of hydrogen-rich smelting around USD 431 to USD 444 per ton (USD 180 to USD 193 per ton for fuel costs). This is approximately 12% higher than the USD 384 per ton cost of traditional blast-furnace ironmaking [63]. Additionally, companies may also bear potential costs for equipment upgrades and maintenance. In the future, these costs could potentially decrease to USD 180 per ton [64]. In DRI processes, production costs vary due to different gas compositions; the direct reduction of iron using hydrogen costs approximately USD 635 to USD 945 per ton, and natural gas-based DRI-EAF process production costs range from USD 265 to USD 590 per ton [65]. Due to the lack of demonstration projects, existing studies are based on assumptions and predictions for the cost analysis of hydrogen injection. In the cost structure, about 70% of the cost comes from equipment investment, and the operation and maintenance costs are mainly used for hydrogen preparation or purchase.

4.2. Economic Analysis of Solid Biomass Substitution Technology

The technical costs of solid biomass substitution mainly stem from fuel expenses. Traditional fuel prices for coke and coal are approximately USD 182 per ton [66], while wood-based biochar costs about USD 483 per ton, and straw-based biochar costs about USD 523 per ton [67].

Although solid biomass substitution technology shows some economic advantages compared with hydrogen injection technology, despite the higher increase in fuel prices, its emission reduction benefits may be comparatively lower. This advantage could potentially be diluted by higher carbon prices. Similarly, solid biomass substitution technology also involves potential costs for adapting, improving, or replacing equipment to accommodate biofuels, as well as maintenance costs. Furthermore, as biomass recovery systems become more robust and biomass carbonization technology continues to improve, the advantages of widespread and inexpensive biomass sources will become more prominent. This may enhance price competitiveness further. Biomass substitution technology is economically sound, with about 80% of the cost spent on equipment modifications and the remainder mainly on biomass fuel preparation or purchase.

4.3. Economic Analysis of Zero-Carbon Electricity Substitution Technology

Zero-carbon electricity requires little or no equipment retrofitting, so only the price of the zero-carbon electricity is of concern. It mainly includes the following types: solar photovoltaic power generation, wind power generation, hydroelectric power generation, and energy storage systems. According to statistics and forecasts from the International Renewable Energy Agency, the Global Wind Energy Council, and the International Hydropower Association, a comparison of the electricity generation costs of four types of zero-carbon power in different scenarios is shown in Figure 5.

A comparison of energy storage technologies reveals that solar, wind, and hydroelectric power have substantial cost advantages. However, the electricity supply from these sources is unstable, and integrating them into the grid is challenging. This makes it difficult to meet the intensive electricity supply requirements of the EAF processes. Therefore, in some regions with high hydroelectric power generation, such as hydro-rich regions, this may become the primary choice for steel plants to replace zero-carbon electricity. Conversely, if solar and wind power can address the issue of sustained and stable supply, or if energy storage technologies achieve cost breakthroughs, they will provide multi-dimensional long-term support for zero-carbon power alternatives.

4.4. Economic Analysis of CCUS Technology

The main cost components of CCUS technology come from its three main processes: capture, transport, and storage. The capture costs mainly include the installation and maintenance costs of capture equipment and the cost of chemical agents. The transportation costs vary depending on the transportation method used. For pipeline transport, in addition to compression costs, governments and states also need to consider pipeline construction costs. Pipeline construction costs may depend on factors such as terrain, population density, pipe diameter, etc. In a baseline scenario, the construction cost of pipelines is approximately USD 58,594 per kilometer [68]. For tanker and vessel transport, only the transportation volume and distance need to be considered. For storage costs, there are many influencing factors such as the type of storage site, geological conditions of the site, number and depth of injection wells, etc. For different types of storage sites, the costs can vary significantly. For example, in CO₂ storage projects in oil and gas reservoirs for enhanced oil recovery (EOR), the storage cost is approximately USD 9.9 per ton. By 2030, this cost is projected to decrease to around USD 8.4 per ton [69]. In contrast, for CO₂ storage projects in saline aquifers for Enhanced Water Recovery (EWR), the storage cost is USD 15.27 per ton. Under future scenarios, this cost may decrease to around USD 13 per ton. The difference in storage costs mainly arises from the enhanced oil recovery (EOR) benefits generated in oil and gas reservoir storage projects. These benefits are primarily influenced by the recovery factor and international oil prices. According to assessments, the full process cost of CCUS technology is estimated to be around USD 43 to USD 107 per ton. By 2060, this cost is projected to decrease to approximately USD 19.4 to USD 57 per ton [70]. The cost of CCUS technology comes from three main components: capture, transportation, and sequestration. For the iron and steel industry, capture accounts for about 46% of the total cost, transportation 28%, and storage 26%. Equipment investment accounts for about 90% of the cost of each component.

5. Policy and Measures

The Chinese ISI imposes a limited number of carbon quotas and stringent carbon emission limits [71], and the nation has instituted rigorous capacity replacement policies, categorically banning the augmentation of steel-production capacity under the pretext of mechanical processing, casting, ferroalloys, and other methods. This is done to forestall the resurgence of “low-quality steel” production capacity. For regions where progress in achieving energy-saving and carbon reduction targets during the first three years of the 14th Five-Year Plan period lags behind, there should generally be no addition of steel production capacity in the last two years of the 14th Five-Year Plan period. Additionally, introducing a carbon tax or carbon market mechanism would accelerate deep decarbonization in the ISI [72].

To encourage steel enterprises to thoroughly adjust their product structure, vigorously develop high-performance specialty steels and other high-end steel products, and strictly control the export of low-value-added basic raw material products, the government has collaborated with some steel enterprises to implement multiple low-emission steel production demonstration projects such as hydrogen-based steelmaking. Production restrictions are expected to slow down steel production, thereby accelerating the adoption of low-carbon production technologies [70]. The promotion of integrated layouts of steelmaking, coking, and sintering has been shown to result in a significant reduction in standalone coking, sintering, and hot-rolling enterprises and processes. This should encourage enterprises to increase research and development investment to explore new low-carbon smelting technologies such as DRI and CCUS technology [73,74].

Improving energy efficiency is a critical strategy for the ISI to reduce carbon emissions. Accelerating energy-saving and carbon reduction transformations in the ISI is paramount through the comprehensive utilization of blast furnace top gas, coke oven gas waste heat, and low-grade waste heat and promoting process integration technologies such as “one ladle to bottom” for hot metal and continuous casting for hot charging. Strengthening demonstrations and applications of low-carbon smelting technologies like hydrogen metallurgy, the government must accelerate the promotion of energy-saving technologies in the ISI. It is strongly recommended to phase out outdated equipment by 2030, and by 2040, the adoption rate of integrated recycling plant technologies should exceed 90%. Furthermore, by the years 2040 and 2050, the prevalence rates of converter exhaust heat recovery and dry quenching coke technology are both projected to reach 100% [75].

6. Geographical and Infrastructure Factors

The deployment of decarbonization technologies needs to consider geographical factors of the deployment location and the accompanying infrastructure development. Hydrogen injection technology exhibits lower sensitivity to geographical and infrastructure factors; hence, minimal analysis is needed in this context.

6.1. Geographical Factors in Solid Biomass Substitution Technologies

The main reasons solid biomass technologies are influenced by geographical factors include differences in biomass resource endowments and variations in the difficulty of biomass resource utilization across different regions. Meanwhile, there exists an optimal economic transport radius issue for the utilization of biomass resources: The optimal economic transport radius for crop straw resources is approximately 18.3 to 25.8 km, while for forestry residues, it is around 20.7 to 22.6 km [76]; the inter-provincial differences are not significant. Therefore, biomass resource production, transportation, and utilization are all sensitive to distance factors, requiring the complete process from production to supply and utilization to be achieved within a small range to maximize its economic advantages.

Due to the large amounts of biomass resources necessary for steelmaking and ironmaking, widely scattered municipal solid waste is not conducive to solid biomass substitution in the ISI. For crop straw resources, regions with significant utilization potential include Heilongjiang, Henan, Xinjiang, Shandong, Hebei, and Liaoning [77]. Regions with significant potential for utilization of forestry residues include Heilongjiang and Yunnan [78]. These regions have abundant biomass resources and are suitable for solid biomass substitution in the ISI, thereby facilitating substantial emission reductions.

6.2. Geographical and Infrastructure Factors in Zero-Carbon Power Substitution Technology

Geographical factors influence zero-carbon electricity technologies primarily through the proportion of zero-carbon electricity in regional power supply compositions. Certain regions are rich in zero-carbon electricity resources, such as the Gobi Desert, with abundant solar and wind energy, the Yunnan-Guizhou-Sichuan region, with plentiful hydroelectric resources, as well as Guangxi and Hubei provinces. These regions have abundant supporting infrastructure for clean electricity production, making them naturally advantageous for implementing zero-carbon power substitution. Moreover, they can supply sufficient electricity to the ISI within the entire industrial system.

6.3. Geographical and Infrastructure Factors in CCUS Technology

Geographical factors affect CCUS technology primarily in pipeline construction and site selection for carbon storage. Currently, CO₂ transport is primarily carried out by tanker trucks and ships, relying on well-developed road and waterway infrastructure along the route. In future scenarios where pipeline transport predominates, the focus of CO₂ transport will shift to the construction of pipeline networks. Pipeline construction is constrained by factors such as rivers, lakes, reservoirs, forests, seismic zones, terrain, and topography [70,79]. The impact of terrain on cost estimation is a significant source of uncertainty [80].

For selecting carbon sinks, suitability assessment and risk evaluation are necessary, including the potential for carbon storage assessment, water resource constraints, cost constraints, seismic risks, leakage risks, and other factors. Currently, the most suitable basins for carbon storage are believed to be the Songliao Basin, Ordos Basin, Bohai Bay Basin, Tarim Basin, and others [81].

Currently, CO₂ transport is predominantly carried out by means of tanker trucks and ships, relying on well-developed road and waterway infrastructure along the routes. In the future scenario where pipeline transport dominates, the construction of pipeline networks will be the focal point for CO₂ transport. Scholar Li Xiaoyu calculated that 25% of the national road area’s pipeline construction costs are unaffected by the various factors noted, mainly concentrated in North China, the northwest, and areas north of the Hu Huanyong Line, but 36% of regional pipeline construction costs are affected by these factors, potentially doubling the costs, mainly concentrated in areas south of the Hu Huanyong Line. Furthermore, 39% of the regions are projected to experience cost escalations of several times or even tens of times, with the majority of these regions situated in natural reserves or ecologically crucial areas. It is also noteworthy that there are regions where the construction of CO2 transport pipelines is not feasible. According to Herzog H’s study in 2016, under baseline conditions, the pipeline construction cost is approximately USD 58,594 per kilometer [82].

6.4. Sub-Regional Emission-Reduction Technology Recommendations

Combined with the above analysis of the geographic factors of different emission-reduction technologies, we recommend suitable emission-reduction technologies for steel companies in China according to the following administrative and geographic divisions.

North China: The region’s ISI is extremely well developed and lacks new technology, but old steel enterprises must not be decommissioned hastily. Due to the high degree of clustering of steel companies in the region, especially in the Beijing-Tianjin-Hebei region, it is very favorable for CCUS demonstration projects. At the same time, new steel plants utilizing DRI technology or EAF technology can be gradually developed to guarantee that the future steel supply will be produced in a low-carbon mode.

Northeast China: The region is highly consistent with the situation in North China, and the emission-reduction pathways largely overlap with those in North China.

Eastern China: The region is economically developed and highly urbanized, which makes it unsuitable for large-scale equipment renovation and allows for small-scale piloting of advanced emission-reduction technologies, with new, high-end technology development as the main focus.

Central China: The region is relatively well developed in heavy industry, very well developed in agriculture, and rich in biomass resources, making it suitable for biomass-substitution technologies.

Southwest China: The region is rich in hydropower, which is a good source of zero-carbon electricity, so it is suitable for zero-carbon electricity technologies. At the same time, its general industrial development, which does not have a technology lock-in problem, also allows for the construction of advanced-technology enterprises.

Northwest China: The region is sparsely populated and rich in solar and geothermal resources, making it a good source of zero-carbon electricity as well as an ideal backup sequestration site for CCUS technologies, with high suitability for various technologies. However, due to its remoteness, the technology economics may be poorer.

7. Future Prospects and Opportunities

7.1. Future Outlook for Individual Technologies

Hydrogen injection technology primarily aims to reduce the ISI’s heavy reliance on fossil fuels by replacing the fuels and reducing agents. The principle is relatively straightforward, and it achieves a high rate of emission reduction. Alongside achieving emission-reduction goals, hydrogen injection technology also brings additional benefits such as lower fuel consumption and improved reaction rates. However, in industrial practice, it may involve significant process and equipment improvements, which can be costly [26]. At the same time, constrained by current hydrogen production costs and scale, the ISI is a lower priority in the allocation of limited hydrogen resources, making it challenging to obtain sufficient hydrogen supply. Currently, there is no large-scale commercial or fully mature hydrogen production technology available, and high costs remain a significant challenge for hydrogen injection technology to overcome. From a fuel substitution perspective, solid biomass fuel is a more economically feasible alternative. The “3060 Zero-Carbon Biomass Energy Development Potential Blue Book”, released in September 2021, predicts that China’s current biomass resources have an energy utilization potential equivalent to 460 million tons of standard coal. According to the methodology outlined in the “Carbon Emission Accounting Methodology”, appropriately utilizing these biomass energy sources could contribute to approximately 312.89 million tons of emission reductions in a low-cost scenario.

Solid biomass substitution technology and hydrogen injection technology share the same primary emission reduction principle in the BF-BOF process, both achieving emission reductions through substituting fuels or reducing agents. However, the emission-reduction benefit brought by this technology in practical applications is “net-zero emissions” rather than the “zero emissions” of hydrogen injection technology [83]. Compared with hydrogen injection technology, solid biomass technology has lower costs, more readily available raw materials, and can also bring additional benefits such as improved sintering rates and increased ore metallization rates in practical production. However, the physicochemical properties of solid biomass fuels may not fully align with existing steelmaking equipment. In industrial practice, this may require preprocessing of raw materials or equipment modifications. Moreover, in China, there is a limited availability of biomass resources suitable for blast furnace injection [36], and the production cost of converting biomass into biochar is high. Therefore, there is still a need to explore more suitable biomass feedstocks and technologies.

Zero-carbon power substitution technology is theoretically simpler and technologically more convenient compared with other emission-reduction technologies: It does not involve complex physicochemical reactions or require extensive retrofitting of existing equipment or facilities; it simply requires replacing the electricity source with a clean one. As new energy and clean-energy technologies continue to mature, zero-carbon power technology will become the most direct and efficient emission-reduction technology for electricity-intensive processes. As emission reduction efforts deepen in the process of low-emission, highly electricity-dependent EAF and DRI technologies increasingly replacing traditional BF-BOF technologies, zero-carbon power technology will also contribute significantly to emission reductions [84]. By then, one of the main challenges for zero-carbon power technology will be how to seek lower-cost sources of zero-carbon electricity. However, whether it is hydrogen injection, solid biomass substitution, or zero-carbon power substitution, each has its own emission reduction limitations. The theoretical portion of carbon emissions that cannot be fully eliminated can be reduced through Carbon Capture, Utilization, and Storage (CCUS) technology, achieving net-zero emissions.

CCUS technology plays a crucial role as a fallback technology in achieving greenhouse gas emissions control and mitigating climate change, holding a significant position among all emission-reduction technologies. Applying CCUS technology to the ISI, regardless of the specific process, has its suitable application scenarios. It holds tremendous emission reduction potential in the steel sector and is crucial for achieving emissions reduction targets in the ISI [56]. As technology advances, CCUS technology will continue to undergo improvements and innovations. To provide long-term support for achieving net-zero emissions in the ISI through CCUS technology, it is necessary to continuously improve and innovate carbon capture technologies to make them more efficient and cost-effective. This involves reducing the construction and operational costs of CCUS projects and developing new carbon utilization pathways to increase the value of CO₂ and promote its resource utilization. It also requires increased participation from society and government to establish a complete and sustainable industry chain that can absorb the costs of CCUS technology and emission reductions [85].

7.2. Summary

Based on the above research, we summarize the future opportunities and challenges for the application of four emission reduction technologies in the ISI. Shown in

Table 3. Opportunities and challenges of mainstream emission-reduction technologies in the ISI.

Summary of Emission-Reduction Technologies
Emission-Reduction Technology	Future Opportunities	Potential Difficulties
Hydrogen injection technology	The cleanest emission-reduction technology. Lower fuel consumption and higher reaction rates [15,16,17,18,19,20,21].	High cost of hydrogen production. Requires major equipment modifications [15,17,18,19,20,21].
Solid biomass substitution technology	Lower costs, easy availability of raw materials [36,37,39]. Increased sintering and ore metallization rates [39].	Emission reduction benefits are net zero. Requires minor equipment modifications [39,42,43,44].
Zero-carbon power substitution technology	The simplest principle and the most convenient technology [50]. Technology with the highest potential for future emission reductions in the ISI [50,51].	Sources of zero-carbon electricity need to be considered [57,65].
CCUS technology	Foundational technology to achieve carbon neutrality [7,52,56,58].	Requires large-scale retrofitting, has technology lock-in after deployment. Not suitable for enterprises with low remaining lifespan [71,72].

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8. Conclusion and Policy Recommendations

This study delineates the contemporary state of steel production in China, synthesizes the practical applications of several prevalent steel production technologies in China, and provides a concise overview of the primary processes and characteristics of these technologies. A meticulous evaluation of four decarbonization technologies in the ISI, with a particular focus on their applications under diverse processes, has been conducted. The analysis encompasses their suitability, advantages, and disadvantages along with an economic assessment incorporating technical costs and carbon market mechanisms. The insights derived from this study are expected to provide valuable guidance for enterprises undertaking low-carbon transformations. The study is further strengthened by the incorporation of research and publications from renowned scholars and authoritative figures in the industry, which have collectively contributed to the formulation of several feasible policies and measures for policymakers’ consideration. An analysis has been conducted on the impacts of geography and infrastructure factors on the deployment of potential emission-reduction technologies, particularly for technologies significantly influenced by geographical factors. In addition, a summary and long-term outlook have been provided for four specific technologies.

Only four of the more mainstream abatement technologies are discussed in this study, and the data were collected from existing studies. The discussion of the opportunities and challenges of these technologies is based on the current state of the industry and research, and it is subject to change due to new technological breakthroughs.

The road to emission reduction in China’s ISI is arduous. To successfully achieve the “dual carbon” goals, the following recommendations are proposed based on research and academic achievements from industry experts:

(1)

Increase the proportion of EAF technology in steel production. EAF technology emits significantly less compared with BF-BOF processes and can easily integrate zero-carbon electricity substitution technologies and CCUS (Carbon Capture, Utilization, and Storage) technologies to achieve deep emissions reductions. Simultaneously, to successfully increase the proportion of EAF technology, it is necessary to increase the proportion of scrap steel recycling to ensure an adequate supply of raw materials for EAF processes. In addition, it is necessary to expand zero-carbon electricity sources to increase the supply. Currently, the supply of zero-carbon electricity sources available for steel production is limited and is insufficient to support EAF technology in achieving emission reductions through zero-carbon electricity substitution technologies.

(2)

Persist in technological innovation to reduce the costs associated with various technologies. Currently, hydrogen injection technology, solid biomass substitution technology, and CCUS technology all face challenges with high costs. By innovating technologies to reduce the costs of hydrogen, biochar, and the entire CCUS process, steel companies would be greatly incentivized to adopt low-carbon technologies. At the same time, low-cost and fully matured emission-reduction technologies can provide long-term support for achieving carbon neutrality in the ISI.

(3)

Policymakers can improve carbon market mechanisms and policy formulations in the following ways: continuously improve carbon market mechanisms, advance project pilots, and establish reasonable emission reduction targets while respecting individual differences and allowing enterprises to explore suitable emission-reduction combinations on their own; provide certain policy and financial support to alleviate the financial pressure on enterprises, and offering necessary infrastructure support to lay a solid foundation for deploying low-carbon technologies; enhance incentive and penalty mechanisms, establish compliance mechanisms, and increase enterprises’ initiative in deploying emission-reduction technologies.

(4)

Promote the implementation of demonstration projects and the formation of commercial models. The government and steel enterprises should collaborate to initiate demonstration projects for emissions reduction in the ISI, gradually scaling them up to provide references and insights for other steel companies. At the same time, more stakeholders can be involved by offering emission-reduction technology deployment or operation as a service to steel enterprises. Transferring some of the high costs to other investors in the short term would not only effectively alleviate the economic pressure of low-carbon transformation for steel companies but also extend the commercial chain, enhancing market vitality.

(5)

Develop comprehensive energy-saving technologies. To alleviate the current emission-reduction pressure primarily from the dominant BF-BOF ISI system, it is crucial to accelerate the development of comprehensive energy-saving technologies with widespread economic benefits. Classifying energy-saving effects according to different energy types can help pave the way for technological development, enabling the research and development of more efficient energy-saving technologies. This approach will ultimately promote emission reductions in the ISI. Accelerating the development of integrated energy-saving technologies, coal-saving technologies, and interlinked technologies can not only improve coal utilization efficiency but also reduce coal consumption. This will reduce China’s overall carbon dioxide emissions while ensuring economic development.