China’s steel industry, responsible for approximately 56% of global output and 14%–16% of the nation’s total carbon emissions, confronts a fundamental paradox in its decarbonization efforts: technologies capable of delivering deep emissions reductions remain constrained by resource availability, deployment feasibility, and regional disparities. A new perspective published in Engineering draws on the Multi-resolution Emission Inventory for China (MEIC, 2010–2023) to reveal that national CO₂ emissions rose from 8.2 Gt in 2010 to 11.2 Gt in 2023, with industrial and power emissions tightly coupled across concentrated regional clusters.
The analysis identifies carbon capture, utilization, and storage (CCUS) and hydrogen-based direct reduced iron (H₂-DRI) as the two most prominent decarbonization pathways, yet both present significant limitations often obscured by macro-level comparisons. CCUS offers the largest near-term abatement potential through retrofits to existing blast furnace–basic oxygen furnace assets, with potential contributions exceeding 40% of industry reductions by 2060. However, full-chain accounting reveals substantial resource burdens: nationwide CCS retrofitting would add approximately 1.0–1.3 EJ of energy, equivalent to 21.7%–22.4% higher sectoral final energy use, and imply net water use of approximately 1.60–1.69 m³ per tonne CO₂ captured. These burdens concentrate heavily in water-stressed industrial hubs, with Hebei Province alone bearing approximately 36.6%–40.3% of added water consumption.

H₂-DRI, by contrast, achieves near-zero process emissions under moderate renewable hydrogen supply but faces diminishing returns at aggressive deployment levels. Under moderate deployment scenarios aligned with local renewable supply, life-cycle carbon intensities remain low—0.15 to 0.91 tCO₂ per tonne steel depending on energy source. At aggressive deployment levels, however, emission intensities increase multi-fold as renewable supply saturates and fossil-derived hydrogen fills the gap, with some pathways showing increases of 1.2- to 6.4-fold compared to moderate deployment. This counterintuitive outcome results from upstream energy constraints: once nearby renewables are saturated, additional demand must be met by grid electricity and fossil-based hydrogen, whose higher emission factors dominate the carbon footprint.

Economic comparisons prove equally boundary-sensitive. CCS levelized abatement costs average 187–193 CNY/(tCO₂) (approximately 25–26 USD/(tCO₂)), with site-level heterogeneity spanning 74–542 CNY/(tCO₂). H₂-DRI cost estimates, however, often assume near-site renewable hydrogen supply and exclude long-distance hydrogen infrastructure costs, making direct comparisons misleading without transparent boundary definitions. Under moderate deployment scenarios, solar- and wind-based H₂-DRI pathways can achieve net economic benefits at a carbon price of around 363 CNY per tonne CO₂—a level far above current market conditions.

The analysis establishes that neither CCUS nor H₂-DRI alone can deliver the necessary reductions within available time windows. The provinces with highest steel emissions—Hebei, Shandong, Jiangsu, Inner Mongolia, and Guangdong—possess limited renewable energy endowments, with approximately 52.6%–55.8% of operating steel units nationwide lacking conditions for locally obtaining sufficient green hydrogen. Process-level engineering complexities further constrain operational feasibility: H₂-DRI retains gangue from iron ore embedded in reduced products, requiring additional melting steps that fundamentally alter energy consumption and cost structures, while BF-BOF-CCUS faces practical multi-point capture limitations that reduce achievable abatement to approximately 60% in retrofitted systems despite theoretical potential exceeding 90%.

Closing the gap between theoretical pathways and practical implementation demands new analytical frameworks that integrate detailed process engineering with regional resource constraints, infrastructure requirements, and dynamic techno-economic assessment across consistent boundaries. Demand reduction, material efficiency, and scrap recycling must complement region-differentiated strategies, while disruptive innovations in hydrogen transport, electrolytic ironmaking, and capture efficiency will be essential. The steel industry’s trajectory thus becomes a decisive test case for whether large-scale industrial decarbonization can succeed under the real-world constraints of resource scarcity, economic feasibility, and governance capacity.

The paper “Beyond Technology Substitution: Resource Constraints and Engineering Realities in China’s Steel Decarbonization,” is authored by Haoxuan Yu. Full text of the open access paper: https://doi.org/10.1016/j.eng.2025.11.026. For more information about Engineering, visit the website at https://www.sciencedirect.com/journal/engineering.