"That rust can be regenerated straight back into iron powder with the application of electricity, and if you do this using solar, wind or other zero-carbon power generation systems, you end up with a totally carbon-free cycle."
Making solar panels is not carbon free. Making batteries instead of emitting gases is not carbon free. We still have to recycle those panels and those batteries and take in account the impact of it.
I feel like we are changing the place where gases are emitted or residues stored instead of making less cars, consuming less in general, etc.
One thing to keep in mind is that while commercial and consumer users of electricity generally require steady, high-quality, alternating current, electrolysis can be done with low-quality, intermittent direct current of the sort that can be generated with low-tech electrostatic generators.
A whole new parallel infrastructure of low-quality electricity generation could be built without too much effort for electrolysis of iron oxide, powered by low-grade heat and motion sources that currently can't be effectively utilized.
Same applies to production of ammonia, which has numerous uses other than fuel--right at the point of production, if that happens to be under a wind turbine placed at the edge of a farmer's field.
Waste oxygen is a byproduct of ammonia production from water and air. You really want to use pure oxygen to burn your iron, to avoid producing NOx.
Consuming less in general is very good, but it's not a strategy that can take you to net zero emissions. Building large amounts of renewables and using excess energy to sequester some carbon on the other hand can become a net zero system.
Making solar panels is not carbon free. Making batteries instead of emitting gases is not carbon free. We still have to recycle those panels and those batteries and take in account the impact of it.
I feel like we are changing the place where gases are emitted or residues stored instead of making less cars, consuming less in general, etc.