Beyond Technology Substitution: Resource Constraints and Engineering Realities in China’s Steel Decarbonization

Haoxuan Yu

doi:10.1016/j.eng.2025.11.026

Engineering ›› :202511026 DOI: 10.1016/j.eng.2025.11.026

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Beyond Technology Substitution: Resource Constraints and Engineering Realities in China’s Steel Decarbonization

Haoxuan Yu ^a^,^b^,^c^,^*

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Abstract

The decarbonization of China’s steel sector illustrates a central paradox of industrial transformation: technologies that can deliver deep emissions reductions remain constrained by resource availability, deployment feasibility, and regional disparities. Drawing on the Multi-resolution Emission Inventory for China (MEIC, 2010-2023), this perspective situates the challenge against an empirical baseline where national CO₂ totals rose from 8.2 Gt (2010) to 11.2 Gt (2023), with industry and power emissions are tightly coupled, and a handful of regions—Hebei, Shandong, Jiangsu, Inner Mongolia, and Guangdong—exerting disproportionate influence. Within this context, carbon capture, utilization, and storage (CCUS) and hydrogen-based direct reduced iron (H₂-DRI) emerge as the two most prominent pathways, yet both present significant limitations often obscured by macro-level comparisons. CCUS offers the largest near-term abatement 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 high energy penalties and concentrated water burdens, raising concerns over long-term sustainability. H₂-DRI, by contrast, achieves near-zero process emissions under moderate renewable hydrogen supply but faces diminishing returns at aggressive deployment levels, where reliance on grid electricity and fossil-derived hydrogen erodes life-cycle benefits—indeed, emission intensities increase more than six-fold when renewable supply saturates. Economic comparisons are equally boundary-sensitive: CCUS costs hinge on capture and storage integration, while H₂-DRI depends on electricity pricing, electrolyzer utilization, and hydrogen transport infrastructure—factors often excluded in optimistic projections. A viable transition therefore requires more than technological substitution. 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.

Keywords

Steel industry decarbonization / Carbon capture and storage / Hydrogen-based direct reduced iron / Techno-economic assessment / Climate mitigation pathways

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Haoxuan Yu. Beyond Technology Substitution: Resource Constraints and Engineering Realities in China’s Steel Decarbonization. Engineering 202511026 DOI:10.1016/j.eng.2025.11.026

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