Financial barriers may get in the way of BlueScope Steel's plans for a $1 billion-plus co-generation plant at Port Kembla, the company's chairman has warned.Graham Kraehe told a meeting of shareholders this week that a review into the viability of the plant - which would reduce greenhouse gas emissions each year by the equivalent of taking 185,000 cars off the road - would have to consider "sound financial management in a tough economic environment".The new national emissions trading scheme, and its potential effect on BlueScope profits, would also have to be factored in.A one-year feasibility study of the co-generation plant, which would convert waste gas into electricity, was announced exactly two years ago. BHP also revealed plans for a plant in 1998 but it did not proceed.The BlueScope board spent Wednesday at Port Kembla analysing the feasibility study but a decision is unlikely until next year."Apart from improving operational performance, the investment will deliver environmental benefits by reducing carbon emissions by a net 800,000 tonnes annually," Mr Kraehe said."However, while the board would like to proceed with the project, we are studying the proposal to fully understand our real options," he added.Meantime, the $370 million reline of the No 5 blast furnace will begin in March. Steel production will be halved for at least 105 days, but "given the current global slowdown, the timing of the reline is fortuitous", Mr Kraehe said.With the price of steel expected to drop, BlueScope is predicting a tough period ahead and is focusing on reducing costs by limiting "non-essential spending" and "re-scheduling production".It aims to cut capital costs by $200 million by the end of the financial year.The poor financial environment in the United States has also led BlueScope to speed up its plans to rationalise manufacturing facilities there.BlueScope took the unusual step of revealing its fully franked interim dividend several months before its half-year result to reassure shareholders.Mr Kraehe said despite a fall in the share price, from about $12 to below $4 at one stage in the past six months, "we remain confident in BlueScope's future".BlueScope's shares opened at $4.49 yesterday.However, Mr Kraehe argued the present share price did not reflect the true value of the company."The current replacement value of our largest manufacturing facility, the Port Kembla steelworks, is more than $10 billion - well above the current market capitalisation of the company," Mr Kraehe revealed."So it is clear the current share price does not reflect the full value of this asset, let alone BlueScope's total suite of assets."