Exxon Mobil Corp. said June 1 it has sealed a carbon capture and storage agreement (CCS) with U.S. steel company Nucor Corp., marking the energy company’s third such contract and the first in what is considered a hard-to-abate industry.

Starting in 2026, Exxon plans to capture, transport and store up to 800,000 metric tons per year (mt/year) of CO2 from Nucor’s direct-reduced iron manufacturing plant in Convent, La. The project will utilize the same transportation and storage infrastructure as Exxon’s CCS project with fertilizer maker CF Industries, Exxon said.

The CCS agreement will be integrated into the existing COtransportation framework with EnLink Midstream, analysts at Tudor, Pickering, Holt & Co. (TPH) said in a June 2 report.

Exxon holds firm commitments for 3.2 million tons per annum (mtpa) of transportation capacity with EnLink. EnLink is in the process of converting a legacy, large-diameter natural gas pipeline and building a greenfield, supercritical phase COline for downstream connectivity to Exxon’s sequestration field in Vermilion Parish.

With the Nucor agreement, Exxon has 2.8 mtpa of emissions to be shipped across the EnLink system, which comprises nearly 90% of Exxon’s initial commitment, TPH said.

“Our agreement with Nucor is the latest example of how we’re delivering on our mission to help accelerate the world’s path to net zero and build a compelling new business,” Dan Ammann, president of Exxon Mobil Low Carbon Solutions, said in a news release. “Momentum is building as customers recognize our ability to solve emission challenges at scale.”

RELATED: Exxon, Chevron Shareholders Shoot Down ESG Proposals

The deal comes as companies of all types and sizes work to reduce emissions to combat climate change. On average, the energy-intense steel industry released 1.891 mt of COinto the atmosphere for every tonne of steel produced in 2020, according to the World Steel Association (WSA). With a total global production of 1,860 MMmt produced that year, the WSA put total direct emissions from the sector that year at an estimated 2.6 Bmt, equivalent to about 8% of global anthropogenic COemissions.

Nucor sees CCS as a key part of its decarbonization strategy.

“We are taking a multi-faceted approach to decarbonization, and this partnership builds on previous investments we have made in a carbon-free iron start-up, renewable energy generation and the development of small modular nuclear reactor technology,” Nucor CEO Leon Topalian said.

The direct-reduced iron process, which removes oxygen from iron ore with carbon monoxide and hydrogen instead of melting in a blast furnace, has lower CO2 emissions than other methods. Nucor, which remelts recycled scrap in electric arc furnaces, also said its steel mills generate about two-thirds less than the CO2 of extractive blast furnace steelmaking plants.

With the deal, Exxon brings its CCS customers—which also include industrial gas company Linde—up to 5 million metric tons per year (mtpy). The company is tapping into part of the CCS, hydrogen and biofuels “molecules” market it believes could reach $6 trillion by 2050.

Exxon did not disclose the value of the Nucor agreement, saying the company is “not publicly discussing certain aspects of the deal for competitive reasons.”

However, Exxon anticipates “revenue from our first CCS projects could begin as soon as 2025,” Exxon spokesperson Chevalier Gray told Hart Energy in a statement.

The company believes policies such as the Inflation Reduction Act and technology deployed at scale are needed to grow CCS. In addition to reducing emissions from its operations, Exxon is targeting “high-emitting and hard-to-decarbonize” sectors, including heavy industries such as cement, refining and manufacturing; power generation; and commercial transportation.

“Exponential growth [in CCS] will be enabled by significant technology innovation to bring costs down for CCS, hydrogen and biofuels by 30%-70% to make the business returns viable at scale,” Gray said. “There is a small addressable market today that is willing to pay the premium—as policy and carbon price take hold, and the infrastructure develops and technology brings the cost of CO2abatement down, market will develop."

RELATED: Exxon Mobil Targets Multi-trillion Dollar Low-carbon Market

The energy company isn’t alone in its pursuit of growing CCS. In 2022, more than 60 new CCS facilities were announced worldwide, bringing the total number of facilities to nearly 200, according to the Global CCS Institute.

Exxon and its partners—including Air Liquide, BASF and Shell—are also currently working to advance large-scale CCS in the Houston area. Their efforts could capture and store about 50 mtpy of carbon by 2030, the company has said.