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China's steel sector, contributing 40% of world steel production, are moving the plants out of highly-populated areas in China. Carbon capture and storage (CCS) is an important technology to achieve a deep reduction of emissions in steel plants. Given by high cost and lack of policy incentive in deploying the CCS process, there has been a lack of progress in CCS within the steel sector in China. Capture readiness is a design concept to ease future CCS retrofit and avoid the carbon lock-in effect in steel plants. Capture Readiness design requires moderate upfront investment, i.e. less than 0.5% additional capital expenditure, but could easily enable the plant to be retrofitted with CCS technologies in their lifetime. The paper develops a novel linear programming model to assess the economic cost of Capture Readiness design in a generic steel plant in China. The Baowu Steel Zhanjiang project was used as a reference plant to develop the generic steel plant for the model. Through a Monte Carlo simulation, the results show that the economic cost of making new steel plants in capture readiness for 0.5 million tonnes capture is CNY 65 million (USD 9.5 million) in a conservative 5% carbon price growth rate scenario. The paper found the value of flexibility brought by capture readiness design is significant and is equal to approximately 15% of initial capital investment. The economically viable chance of retrofitting steel plants with CCS technologies in the lifetime is 49%. In an uncertainty analysis, for a 6% growth rate of carbon price, the option value could be increased to CNY 145 million while the probability of retrofit increases to 79%. China's CCS policy should consider a requirement for newly built steel plants to adopt capture readiness design to capture the significant economic value and ease emissions reduction in the iron and steel sector in the long term. • This is the first study investigating CCS readiness in the iron and steel sector. • Capture readiness steel plant can ease retrofit processes with carbon capture and storage in a plant's lifetime. • The paper proposes the key criteria for designing a CCS readiness steel plant. • A novel model is developed in assessing the value of capture readiness. • The retrofit option value of a steel plant is higher than the estimated additional cost for making CCS readiness. [ABSTRACT FROM AUTHOR]

Carbon Capture and Storage (CCS) has been viewed as an emission abatement option with great potential in China as coal has dominated China's energy consumption. China has already started to pay attention to CCS, as well as to the proposed the concept of ‘CCUS’ (which adds CO 2 Utilization into the chain of capture, transportation and storage). However, CCS is still in the early stages of its technological development, and the high cost, with several internal and external uncertainties make the role that CCS can play in China's future emission reduction unclear. From the perspective of general equilibrium analysis, this paper introduces CCS into a regional energy–economy–environment integrated assessment model, and makes a comprehensive evaluation of CCS's potential for future development and contribution to emission abatement in China. At climate policy level, the potential contribution of CCS in emission abatement has been evaluated against different future emission constraint scenarios in China. At technological level, the effects of endogenous learning and policy incentives on CCS have been investigated, and the substitution capacities of CCS and Non-hydro renewables to fossil energy have been discussed, as well as their technology penetration rates. Furthermore, the impact of CO 2 utilization on the development of CCS has also been discussed. [ABSTRACT FROM AUTHOR]