Co-production of Steel and Chemicals Could Help Mitigate Hard-to-Abate Carbon Emissions

Written by
Cara Clase, Ph.D., Center for Policy Research on Energy and the Environment
June 27, 2024

Hard-to-abate sectors accounted for approximately 30% of global CO2 emissions in 2018.  One third of these hard-to-abate emissions were a result of the fossil fuels and feedstocks used in the steel and chemical industries.   A Princeton-led study suggests that the co-production of steel and chemicals could play a significant role in decarbonizing these sectors.  Being the world’s largest producer of steel and chemicals, China’s greenhouse gas (GHG) mitigation efforts in this sector will be crucial to lowering hard-to-abate emissions.

The steel production process often produces large volumes of coke oven gas, blast furnace gas, and converter gas that all contain H2 and CO.  These gasses are collectively referred to as “off-gas”.  Producing approximately 1.2 trillion cubic meters of off-gas per year, Chinese steel plants use about half of their off-gas for on-site electricity generation with the other half returned to steelmaking processes.  This approach  is carbon-intensive.  

“Converting CO-to-electricity is even more carbon-intensive than coal power generation,” explains lead author Yang Guo, a C-PREE associate research scholar and a Presidential Assistant Professor at the National University of Singapore. “Carbon-intensive processes in hard-to-abate sectors like the steel and chemical industry need to be addressed to meet  climate goals.”

But this overlooks the opportunity to use the H2 and CO from steelmaking off-gas to replace coal-derived H2 and CO.  Traditionally, Chinese coal chemical plants gasify coal to produce CO, which then undergoes a water-gas shift reaction to produce H2. Given this process produced one-third of China’s coal-chemical emissions in 2020,  redirecting steelmaking off-gas to chemical production could significantly reduce  GHG emissions from both the steel and chemical industries.

Using plant-level geodata and a life-cycle-based optimization model, Dr. Yang Guo, Prof. Denise Mauzerall, and their research team examined plant-level characteristics of existing steel and coal-chemical plants to model the carbon and cost implications of deploying the co-production of steel and chemicals across China. They suggest extracting and transporting H2 and CO via pipelines from excess steelmaking off-gas to coal chemical plants for chemical syntheses.   The researchers used 2022 data from 272 steel plants and 187 coal chemical plants to spatially quantify the supply of H2 and CO from steel plants and the demand for these compounds from coal chemical plants.  They then used a customized optimization model to match plant-level H2 and CO supply and demand while maximizing GHG mitigation in a co-production system of steel and chemicals in a cost-effective way.  

“Improvements within individual industries, as typically examined in previous studies, are insufficient for deep decarbonization of industrial systems,” explains Guo. “Integrating different industries is a promising way to achieve  additional carbon mitigation.”

Without carbon pricing, co-production reduces GHG emissions by 36 million tonnes of CO2 per year (-7%) and costs by 1.5 billion Chinese yuan (CNY)(~$206 million) per year (-1%) compared to independent production of steel and chemicals. With a carbon price of 350 CNY per tonne of CO2, emission and cost reductions are enhanced to 113 million tonnes of CO2 equivalent per year (-22%) and 25.5 billion CNY (~$3.5 billion) per year (-10%).  

Co-author and STEP Ph.D. student Jieyi Lu comments on the importance of carbon pricing in this mitigation strategy.  

“China might bring the steel and chemical sectors into their national emissions trading market,” says Lu.  “A sufficiently high carbon price can further unlock emissions mitigation and economic benefits of the co-production of steel and chemicals.”

The researchers also found that 60% of total emission and cost reductions could be achieved by 24% of potential connections between steel and chemical plants.  50% of these potential connections are  located in Hebei, Henan, Shanxi, and Shandong, many of which could connect steel and coal chemical plants via short-distance pipelines.  

“As the world attempts to reach net-zero carbon emissions by mid-century, innovations in carbon mitigation in the hard-to-abate industrial sectors will be extremely important,” explains co-author Denise Mauzerall, a professor at Princeton’s School of Public and International Affairs and the School of Engineering and Applied Science.  “As this work shows, developing mitigation strategies that link different industries can provide vital carbon mitigation and environmental co-benefits compared with independent improvements in a single industry alone.”




The paper, “Co-Production of Steel and Chemicals to Mitigate Hard-to-Abate Carbon Emissions,” was co-authored by Yang Guo (School of Public and International Affairs, Princeton University; College of Design and Engineering, National University of Singapore), Jieyi Lu (School of Public and International Affairs, Princeton University), Qi Zhang (State Environmental Protection Key Laboratory of Eco-Industry, Northeastern University), Yunling Cao (Peking University Pioneer Technology Co.), Lyujun Chen (School of Environment, Tsinghua University), and Denise Mauzerall (School of Public and International Affairs and the Department of Civil and Environmental Engineering, Princeton University). The paper appeared in Nature Chemical Engineering on April 26, 2024.