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It’s the first project to turn steel-related emissions into products. But can it scale?
Last week, the Department of Energy announced $6 billion in awards to help clean up some of the most greenhouse gas-intensive industries in the U.S., including $1.5 billion to transform iron and steel manufacturing. U.S. Steel, one of the biggest American steelmakers, was not among the recipients.
On Wednesday, U.S. Steel made an announcement of its own: It is signing a 20-year agreement with CarbonFree, a Texas-based company, to capture carbon dioxide from Gary Works, the largest integrated steel mill in the country, and turn it into a marketable product. The $150 million project is the first to capture and utilize carbon from an American steel plant at a commercial scale.
Gary Works releases an ungodly amount of carbon into the air each year — more than the entire state of Vermont. CarbonFree will use its technology, known as SkyCycle, to collect 50,000 tons of CO2 from the plant per year and transform it into high grade calcium carbonate, a valuable ingredient for the food, pharmaceuticals, paint, and plastics industries.
Something certainly has to change if U.S. Steel is going to make good on its pledge of achieving net-zero emissions by 2050, let alone stay competitive in a market that’s expected to increasingly look for greener products. It’s unclear, however, whom the company is going to convince with this project, which will capture less than 1% of the plant’s annual emissions.
“It’s deeply unserious, I think, is the words that come to mind,” Hilary Lewis, the steel director at Industrious Labs, a nonprofit that advocates for decarbonizing heavy industry, told me. The effort is especially embarrassing, she said, given that two of the company’s competitors, SSAB and Cleveland Cliffs, were awarded $500 million each by the DOE for far more transformative green steel projects. “This announcement is emblematic of how U.S. Steel is a laggard.”
U.S. Steel declined to make any of its executives available to interview for this story. In response to my request for comment, the company provided a statement that said this was a first of its kind opportunity to “significantly reduce” emissions at Gary Works, and that it was “the first step in exploring the scalability of this technology” to support the company’s goals.
CarbonFree executives, too, asserted that the Gary Works project is a stepping stone to something bigger. But outside experts I spoke with were skeptical that it would be able to scale enough to make a meaningful difference in the plant’s — or the industry’s — emissions.
The steel industry contributes about 8% of global energy-related emissions. Though the U.S. is not one of the worst offenders (we actually make some of the cleanest steel in the world) U.S. steelmakers still have a long, expensive journey ahead to decarbonize.
That’s because there are eight steel plants in the U.S. that still use blast furnaces, a dirty, coal-intensive production method. Gary Works is one of them. Though these plants only represent about 30% of the country’s steel production, they are responsible for nearly 70% of the sector’s emissions, according to the Department of Energy.
The advantage of the SkyCycle project is that it doesn’t require U.S. Steel to do very much. “We build, own, and operate the [carbon capture equipment], and we’re able to get a return based on the chemicals we sell,” Martin Keighley, the CEO of CarbonFree, told me. “So it’s a much more attractive proposition for, in this case, U.S. Steel, because they don't have to invest large amounts of money into the plant.” More attractive than at least one alternative, that is, which is to capture the carbon and sequester it underground.
It’s a compelling argument. Carbon capture and storage adds big costs — to install the equipment, transport the CO2, and pump it into the bedrock — with no financial benefit to manufacturers. While the federal government does encourage carbon capture by offering an $85 federal tax credit for every ton of CO2 captured and stored, no law compels steel companies to do so. In many cases, the subsidy may not be not enough to get investors on board for a project, especially since tax credits can come and go depending on the whims of Congress.
But if you find someone else who can take your carbon and make money off of it, then what have you got to lose? Keighley said CarbonFree will be able to earn a slightly smaller federal tax credit — $60 — for every ton of carbon it turns into calcium carbonate, but that the company’s business model doesn’t depend on that.
“You know, we all look at 2050 and net zero, but it doesn't stop there. To be net zero, we’re still emitting CO2, so we still have to capture it,” he said, referring to the idea that the “net” in net zero implies there will continue to be emissions that must be neutralized. “We're going to be capturing forever. So, therefore, we need sustainable business models that aren’t reliant on government sources.”
One advantage of SkyCycle over other carbon capture technologies is that it works with raw, dirty flue gas, which might have all kinds of other gases and chemicals mixed in with the CO2. The gas is channeled through a series of chemical reactions and eventually reacts with calcium, a mineral that’s notoriously thirsty for CO2, to create calcium carbonate. Once it binds with calcium, the CO2 is essentially locked up permanently. It would take either very high heat or a very strong acid to remove it.
Keighley said the high grade calcium carbonate on the market today has much greater emissions associated with its production than CarbonFree’s process, and is about the same price. That creates a “multiplier effect,” he told me. Not only is the company reducing emissions from the Gary Works plant, it’s also reducing emissions associated with the products that incorporate the cleaner calcium carbonate. On top of that, the company is sourcing its calcium from steel slag, a waste product from the steelmaking process that nobody has really figured out what to do with. (This is different from blast furnace slag, which is valuable for decarbonizing the cement industry as a replacement for carbon-intensive “clinker.”)
So far, so good. But the issue, according to Rebecca Dell, a former Department of Energy analyst and senior director of industry at the ClimateWorks Foundation, is that the market for high grade calcium carbonate is tiny. “You’re gonna saturate these high end markets way before you get anywhere close to absorbing the full 8 or 9 million tons a year of CO2 that just the Gary Works is emitting,” she told me.
When I raised this with Keighley, he acknowledged that the market was limited. But he said the market for calcium carbonate in general, not just the high purity stuff, is much bigger, and that the company could move into other segments later. CarbonFree is already working on its next system, which will be capable of capturing 250,000 tons of CO2 per year. Calcium carbonate is essentially limestone, which is an abundant and cheap material, so it might be hard to compete in lower-grade markets without bringing down production costs. But Keighley mentioned another plan. “The beauty is, if and when you run out of market altogether, you store it,” he told me. In other words, the company could just stash the calcium carbonate on the grounds of the Gary Works plant. That assumes, however, that they’ve brought down their costs enough to make a profit off the federal tax credit for carbon storage — and that assumes the tax credit still exists.
Lewis, of Industrious Labs, raised a different issue. “If you’re choosing to invest in carbon capture, you're locking in that reliance on coal for another 15, 20 years,” she told me. Carbon capture doesn’t address the other health-harming pollutants these steel mills rain over their surrounding community, including nitrous oxides, sulfur dioxide, and soot. She also noted that the biggest consumer of the types of steel produced by blast furnaces, the auto industry, has ambitious climate targets. While automakers have yet to make truly market-transforming commitments to buy cleaner steel, if and when they do, Gary Works could be left unprepared, threatening the job security of its more than 4,000 workers.
U.S. Steel’s plan is a stark contrast to one of the projects awarded funding by the DOE last week, Lewis said. Cleveland Cliffs, which owns five of the remaining seven blast furnace steel mills, will get $500 million to replace one of its blast furnaces at a mill in Ohio with what’s called a “direct reduced iron” plant. Direct reduction is more efficient, cleaner, and cheaper than a blast furnace; the company said it would save $150 per ton of steel produced by making the switch. Though some direct reduction plants rely on natural gas, and therefore aren’t exactly carbon-free, the process can also be done with green hydrogen. That’s what a second project announced last week, led by the Swedish steelmaker SSAB, will be using at a new plant in Mississippi.
In my interview with Keighley, I asked what he thought about the criticism that this project would keep Gary Works hooked on coal for another 20 years, and that advocates wanted to see the plant transition to direct reduction. He responded by raising questions about green hydrogen. Producing green hydrogen requires lots of renewable energy, he said. Is that the best use of that renewable energy, or could you “get more decarbonization for your buck” by using it for something else?
Later, in an email, Keighley also pointed to SkyCycle’s readiness for deployment compared to the long development timelines for other solutions. Construction is expected to start as early as summer 2024, with operations beginning in 2026. He also emphasized that CarbonFree would be able to “easily” increase the size of the plant. “There’s so many different options and everyone’s trying to second guess everybody else. Just get on with doing something, you know?”
But Chris Bataille, a research fellow at the Columbia University Center on Global Energy Policy who focuses on pathways to net-zero for heavy industry, told me the tiny scope of this project is indicative of a larger issue. “These marginal changes are attractive to people who are just used to running a blast furnace their whole careers,” he said. “You can keep the rest of your plant, but that piece of equipment needs to change.”
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Did a battery plant disaster in California spark a PR crisis on the East Coast?
Battery fire fears are fomenting a storage backlash in New York City – and it risks turning into fresh PR hell for the industry.
Aggrieved neighbors, anti-BESS activists, and Republican politicians are galvanizing more opposition to battery storage in pockets of the five boroughs where development is actually happening, capturing rapt attention from other residents as well as members of the media. In Staten Island, a petition against a NineDot Energy battery project has received more than 1,300 signatures in a little over two months. Two weeks ago, advocates – backed by representatives of local politicians including Rep. Nicole Mallitokis – swarmed a public meeting on the project, getting a local community board to vote unanimously against the project.
According to Heatmap Pro’s proprietary modeling of local opinion around battery storage, there are likely twice as many strong opponents than strong supporters in the area:
Heatmap Pro
Yesterday, leaders in the Queens community of Hempstead enacted a year-long ban on BESS for at least a year after GOP Rep. Anthony D’Esposito, other local politicians, and a slew of aggrieved residents testified in favor of a moratorium. The day before, officials in the Long Island town of Southampton said at a public meeting they were ready to extend their battery storage ban until they enshrined a more restrictive development code – even as many energy companies testified against doing so, including NineDot and solar plus storage developer Key Capture Energy. Yonkers also recently extended its own battery moratorium.
This flurry of activity follows the Moss Landing battery plant fire in California, a rather exceptional event caused by tech that was extremely old and a battery chemistry that is no longer popular in the sector. But opponents of battery storage don’t care – they’re telling their friends to stop the community from becoming the next Moss Landing. The longer this goes on without a fulsome, strident response from the industry, the more communities may rally against them. Making matters even worse, as I explained in The Fight earlier this year, we’re seeing battery fire concerns impact solar projects too.
“This is a huge problem for solar. If [fires] start regularly happening, communities are going to say hey, you can’t put that there,” Derek Chase, CEO of battery fire smoke detection tech company OnSight Technologies, told me at Intersolar this week. “It’s going to be really detrimental.”
I’ve long worried New York City in particular may be a powder keg for the battery storage sector given its omnipresence as a popular media environment. If it happens in New York, the rest of the world learns about it.
I feel like the power of the New York media environment is not lost on Staten Island borough president Vito Fossella, a de facto leader of the anti-BESS movement in the boroughs. Last fall I interviewed Fossella, whose rhetorical strategy often leans on painting Staten Island as an overburdened community. (At least 13 battery storage projects have been in the works in Staten Island according to recent reporting. Fossella claims that is far more than any amount proposed elsewhere in the city.) He often points to battery blazes that happen elsewhere in the country, as well as fears about lithium-ion scooters that have caught fire. His goal is to enact very large setback distance requirements for battery storage, at a minimum.
“You can still put them throughout the city but you can’t put them next to people’s homes – what happens if one of these goes on fire next to a gas station,” he told me at the time, chalking the wider city government’s reluctance to capitulate on batteries to a “political problem.”
Well, I’m going to hold my breath for the real political problem in waiting – the inevitable backlash that happens when Mallitokis, D’Esposito, and others take this fight to Congress and the national stage. I bet that’s probably why American Clean Power just sent me a notice for a press briefing on battery safety next week …
And more of the week’s top conflicts around renewable energy.
1. Queen Anne’s County, Maryland – They really don’t want you to sign a solar lease out in the rural parts of this otherwise very pro-renewables state.
2. Logan County, Ohio – Staff for the Ohio Power Siting Board have recommended it reject Open Road Renewables’ Grange Solar agrivoltaics project.
3. Bandera County, Texas – On a slightly brighter note for solar, it appears that Pine Gate Renewables’ Rio Lago solar project might just be safe from county restrictions.
Here’s what else we’re watching…
In Illinois, Armoracia Solar is struggling to get necessary permits from Madison County.
In Kentucky, the mayor of Lexington is getting into a public spat with East Kentucky Power Cooperative over solar.
In Michigan, Livingston County is now backing the legal challenge to Michigan’s state permitting primacy law.
On the week’s top news around renewable energy policy.
1. IRA funding freeze update – Money is starting to get out the door, finally: the EPA unfroze most of its climate grant funding it had paused after Trump entered office.
2. Scalpel vs. sledgehammer – House Speaker Mike Johnson signaled Republicans in Congress may take a broader approach to repealing the Inflation Reduction Act than previously expected in tax talks.
3. Endangerment in danger – The EPA is reportedly urging the White House to back reversing its 2009 “endangerment” finding on air pollutants and climate change, a linchpin in the agency’s overall CO2 and climate regulatory scheme.