Technology portfolio assessment for near-zero emission iron and steel industry in China

Abstract

China aims to peak CO2 emissions before 2030 and to achieve carbon neutrality before 2060; hence, industrial sectors in China are keen to figure out appropriate pathways to support the national target of carbon neutrality. The objective of this study is to explore near-zero emission pathways for the steel industry of China through a detailed technology assessment. The innovative technology development has been simulated using the AIM-China/steel model, developed by including material-based technologies and optimal cost analysis. Six scenarios have been given in terms of different levels of production output, emission reduction and carbon tax. Near-zero emission and carbon tax scenarios have shown that China's steel industry can achieve near-zero emission using electric furnaces and hydrogen-based direct reduction iron technologies with policy support. Based on these technologies, minimised production costs have been calculated, revealing that the steel produced by these technologies is cost-effective. Moreover, the feedstock cost can play a key role in these technology portfolios, especially the cost of scrap, iron ore and hydrogen. In addition, the feedstock supply can have strong regional effects and can subsequently impact the allocation of steelmaking in the future. Therefore, China can achieve near-zero emissions in the steel industry, and electric furnace and hydrogen-based direct reduction iron technologies are crucial to achieving them.