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

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.