A new report jointly produced by the World Wildlife Foundation (WWF) Australia and Deloitte have championed the economic and environmental case for Australia to leverage green hydrogen in its emerging green iron industry.
The report assessed several pathways for Australia to support the decarbonisation of steelmaking in the Asia-Pacific, which is home to nine of the world’s ten largest steel producers.
It found that developing green iron manufacturing capacity supported by renewable hydrogen and exporting these products to countries like Japan and South Korea for steelmaking would be the most economically competitive option for Australia.
Finding the right balance
“Exporting green iron is Australia’s natural sweet spot,” said Georgine Roodenrys, Partner at Deloitte Australia.
“Our massive iron ore reserves, renewable energy and green hydrogen potential, and proximity to Asian markets gives us a competitive advantage over other prospective exporters.”
That said, there are still several social and environmental factors to consider in building out Australia’s green iron industry.
The current or proposed projects required to deliver on green iron exports to the world overlap with eight of Australia’s fifteen biodiversity hot spots, including in the prolific mining regions of the Pilbara and Northern Kimberly.
WWF-Australia’s Industry Decarbonisation Manager (Steel), Nicole Wyche said specific protections and incentives are needed to preserve nature and promote regeneration throughout the lifecycle of mining and industrial activities.
“While rapid decarbonisation is essential, if not managed effectively, it has the potential to further damage Australia’s natural assets,” she said.
“The decarbonisation of heavy industry is a chance to redesign our approach to industry development to prevent threats to nature and restore past damage.”
Capturing the first-mover advantage
The report found that this form of green iron manufacturing has potential to deliver somewhere between $96 and $295 billion to the Australian economy, but the current pace of development is glacial.
“At the current pace, it would take over 100 years to deploy the necessary renewables to replace 10% of Asian steelmaking with green iron,” said Deloitte’s Georgine Roodenrys.
“Australia needs to accelerate the deployment of renewables and establish pragmatic policies that support both economic and environmental goals.
“By fostering partnerships with Asia-Pacific trading partners and aligning on high integrity standards, Australia can solidify its position as a leading supplier of green iron and drive global steel decarbonisation efforts.”
While the two organisations welcome the recent announcement of the Federal Government’s $1 billion green iron investment fund, they say it’s not enough to meet the needs of a decarbonising industry.
“With fast action and smart investments, Australia can be the key that transforms Asia’s steel industry and construction sector,” added WWF-Australia’s Nicole Wyche.
“This is a chance to future-proof our largest industries and economy as decarbonisation policy, carbon pricing, and emissions regulation place ever shortening horizons on fossil fuel usage.”