New Grand Era of Carbon Capture Tech : Part 1

(Feat. Elon Musk, RE100, Net-Zero Energy, Climate Change, Hydrogen Steel Production, Green Technology, CCUS, EU, US, ArcelorMittal, SAAB, Stranded Asset)

Part 1 covers the industry’s historical context, Part 2 dives into recent developments, and Part 3 provides key investment insights.

1. Back in 1970, the United States was the world’s leading carbon emitter.

2. Fast forward 50 years to 2020, and China has taken the lead, responsible for around 30% of global carbon emissions.

3. Even India, which wasn’t previously among the top emitters, now ranks 3rd globally.

4. Globally, investment is being funneled into reducing carbon emissions and researching methods to capture released carbon.

5. Carbon capture technology has been advancing rapidly.

6. Planting trees to capture carbon isn’t as effective as we might think.

7. A forest of 10,000 trees captures only around 400 tons of carbon annually.

8. The tidal marshes along the coastlines in regions like the U.S. East Coast offer highly effective carbon-capture capabilities.

9. While 10,000 trees capture 400 tons of carbon a year, coastal marshes can absorb up to 10 times more carbon per acre annually.

10. Even so, natural ecosystems’ capacity pales compared to human-produced carbon emissions.

11. For perspective, in 2022, ArcelorMittal-the world’s largest steel producer- alone emitted approximately 117 million metric tons of CO₂ globally​.

12. ArcelorMittal has one of the steel industry’s highest emissions due to its global operations, primarily in Europe, the Americas, and Asia.

13. ArcelorMittal’s significant footprint underscores the challenge of industrial carbon management on a global scale.

14. On average, ArcelorMittal emits around 1.9 tons of carbon per ton of steel produced, with a global goal of net-zero emissions by 2050​.

15. In short, nature captures only a fraction of the massive carbon output, especially from industries like steel.

16. Due to this imbalance, regulations on carbon emissions have started tightening.

17. The EU has set a carbon cap for natural gas power plants at 270g of carbon per kWh.

18. Currently, EU natural gas plants emit around 430g of carbon per kWh.

19. To meet these standards and attract green investments, European power plants will need CCUS technology.

20. CCUS (Carbon Capture, Utilization, and Storage) combines CCS and CCU.

21. CCS stores captured CO₂, while CCU utilizes it in other processes.

22. In practice, carbon capture involves separating and liquefying CO₂ for storage.

23. Today’s carbon capture technology can trap CO₂, but…

24. The challenge is cost.

25. It currently costs over $500 per ton to capture CO₂ with existing technology.

26. Meanwhile, CO₂ trades around $100 per ton.

27. The real value lies in making carbon capture cost less than $100 per ton.

28. This is why Elon Musk has pledged $100 million to anyone developing efficient carbon capture technology.

29. Captured CO₂ is often stored deep underground in old mines, depleted oil fields, or even under the ocean floor.

30. In the U.S., new storage projects focus on deep saline aquifers and depleted oil fields, with an estimated capacity of 2,600 to 22,000 gigatons.

31. Yet, with companies like ArcelorMittal emitting over 100 million tons annually, current storage capacity is far from what’s needed for industrial-scale decarbonization.

32. Since storage is limited, we need to explore ways to utilize captured CO₂.

33. That’s where CCU technology comes in.

34. Using CO₂ to create carbon fiber reinforced plastic (CFRP) for cars can cut emissions by 5 tons per vehicle.

35. CFRP is over three times lighter than aluminum and four times lighter than steel, yet 10 times stronger, making it an excellent material.

36. However, it’s costly.

37. Because both capture and utilization are still expensive, research is also focusing on reducing carbon emissions.

38. This led to the RE100 initiative, where companies aim to use 100% renewable energy for their electricity.

39. For RE100 to succeed, the issue of stranded assets* needs to be addressed.

40. A stranded asset was once economically viable but has become a financial liability as markets change.

41. Fossil fuel-reliant industries like refining, petrochemicals, automotive engines, steel, cement, and plastics fall into this category.

42. Middle Eastern oil-producing nations like Saudi Arabia and the UAE are investing in renewables to avoid stranded assets.

43. Saudi Arabia has world-class conditions for solar energy, with annual sunlight generating 5,700–6,700 Wh per square meter.

44. Saudi Arabia has made hydrogen a core part of its renewable energy strategy.

45. Its plan is to produce green hydrogen by using solar energy to split seawater through electrolysis.

46. Currently, most hydrogen is produced by reforming natural gas with hot steam.

47. Producing 1 ton of hydrogen this way releases 10 tons of CO₂.

48. Reforming natural gas for hydrogen thus has little impact on reducing carbon.

49. Electrolysis using solar, wind, or nuclear power is essential for a true hydrogen ecosystem.

50. Steel production is one of the most problematic stranded assets due to emissions.

51. As mentioned above, ArcelorMittal is currently one of the world’s largest CO₂ emitters in the steel industry.

52. With 117 million tons of emissions, ArcelorMittal is a significant factor in global steel emissions​.

53. Traditional steel production inevitably leads to CO₂ emissions.

54. Iron ore arrives at steel mills in the form of iron oxide (iron bonded with oxygen).

55. Steel mills produce iron by separating oxygen from iron oxide.

56. This separation occurs by heating coke (carbon) in a blast furnace.

57. Heated coke binds with oxygen from iron oxide, creating CO₂.

58. The result is pure iron but with significant CO₂ emissions.

59. A new method uses hydrogen instead of carbon to separate oxygen from iron oxide.

60. Rather than combining oxygen with carbon to produce CO₂, hydrogen is used to create water (H₂O) instead.

61. This process is called hydrogen-based steelmaking (=hydrogen reduction steelmaking).

62. ArcelorMittal plans to invest $10 billion by 2030 in hydrogen-based steelmaking and other decarbonization methods​.

63. Sweden’s SSAB is the only company that has produced pilot samples using hydrogen-based steelmaking technology.

64. The output is currently limited to 8,000 tons per year, so it’s still in testing.

65. A challenge with hydrogen-based steelmaking is that hydrogen must be heated to over 800°C, requiring substantial electricity.

66. SSAB, located in Sweden, has secure electricity access.

67. Sweden’s energy mix includes 181 TWh from nuclear, 109 TWh from fossil fuels, 65 TWh from hydropower, and 20 TWh from wind, creating a stable power supply.

68. While Sweden has ample power and even exports electricity, ArcelorMittal’s operations face challenges in securing sufficient green energy.

69. For ArcelorMittal and other companies to power hydrogen-based steelmaking, they’ll need stable energy sources like nuclear, rather than intermittent options like solar or wind.

70. The EU plans to impose a carbon border adjustment mechanism (CBAM), or carbon border tax, in 2026.

71. Current estimates suggest the carbon tax on steel mills will reach about 12% of their revenue.

72. Given that steel industry operating margins are below 10%, this tax would be a nightmare.

73. To prepare, ArcelorMittal has begun building pilot hydrogen-based steelmaking facilities in Spain, with completion aimed for 2025.

74. This facility will have an annual production capacity of 1 million tons of DRI (Direct Reduced Iron) steel using hydrogen.

75. If successful, ArcelorMittal plans to expand hydrogen-based steelmaking across additional locations.

76. Globally, only Sweden’s SSAB and ArcelorMittal are testing hydrogen-based steelmaking at scale.

77. SSAB plans to complete its pilot facility by 2026, followed by full-scale production by 2030.

78. If both succeed, ArcelorMittal’s Smart Carbon route may complement hydrogen efforts for higher efficiency.

79. Sweden SSAB’s approach combines iron ore pellets and natural gas, while ArcelorMittal utilizes a combination of circular carbon technologies.

80. ArcelorMittal also plans to combine hydrogen and electric arc furnaces (EAF) to further reduce emissions.

81. This hybrid EAF method could reduce emissions by up to 90% compared to traditional blast furnaces​

83. With the high costs of carbon capture, the focus has shifted toward directly reducing emissions.

84. Recently, a groundbreaking study published in Nature introduced promising new solutions.

To be continued in Part 2.