The steel industry, responsible for 7% to 9% of global carbon emissions, is under increasing pressure to decarbonize [1] as nations push toward net-zero targets by 2050.
A major hurdle in reducing steel productions’ emissions lies in the iron ore-to-crude steel process, which currently relies heavily on coal, accounting for 80% of steel-related emissions. However, emerging technologies, such as hydrogen-based steelmaking, is expected to significantly cut its carbon output. By replacing coal with hydrogen produced from renewable energy sources, the industry could lower emissions to 300 kg per ton of steel, compared to the current 2.2 tonnes.
However, emerging technologies, such as hydrogen-based steelmaking, could significantly cut carbon output. By replacing coal with hydrogen produced from renewable energy sources, the industry could lower emissions to 300 kg per ton of steel, about one-seventh of current levels.
Australia, the world’s largest iron ore exporter, is particularly exposed to this shift. The country sends over 80% of its iron ore exports to China, the world’s top steel producer. At the recent Green Iron and Steel Forum in Perth, experts highlighted the potential for Australia to transition from raw iron ore exports to green iron production, which could boost the industry’s value to $252 billion annually. A more conservative estimate suggests that converting 40% of iron ore output to green iron by 2050 could still yield an impressive $110 billion per year.
Scaling up green steel production requires massive investments in infrastructure, renewable energy, and regulatory frameworks. Steel mills in China, Japan, and South Korea must commit to adopting electric arc furnaces, which can process green iron without coal. Additionally, governments must coordinate policies to incentivize the transition. The cost of solar panels, wind turbines, and battery storage is expected to decline, making large-scale green hydrogen production more feasible.
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[1] Steel industry’s carbon reduction is crucial in meeting climate goals https://www.gulftoday.ae/business/2025/03/31/steel-industrys-carbon-reduction-is-crucial-in-meeting-climate-goals