MENA region can lead global steel decarbonisation with investment in green hydrogen and renewable energy

A new report from the Institute for Energy Economics and Financial Analysis (IEEFA) has found that the Middle East and North Africa (MENA) region is in a prime position to start producing carbon-neutral or green steel as the global steel industry eyes switching to direct reduced iron (DRI) production.
MENA region can lead global steel decarbonisation with investment in green hydrogen and renewable energy
Courtesy of Martin Abegglan, Flickr.

“The MENA region can lead the world if it shifts promptly to renewables and applies green hydrogen in its steel sector” said author of the report Soroush Basirat.

Fortuitously, the region’s sector is dominated by direct reduced iron-electric arc furnace (DRI-EAF) technology, which releases lower emissions than the increasingly obsolete coal-fuelled blast furnace and basic oxygen furnace (BF-BOF) process used in 71 percent of global crude steel production in 2021.

Mr Basirat says the DRI-EAF process, which uses syngas made from natural gas or gasified coal and also electricity, could be zero emissions if green hydrogen (produced using renewable energy-powered electrolysis) and electric arc furnaces powered by renewable energy were used.

“MENA has an established supply of DR-grade iron ore and its iron ore pelletising plants are among the world’s largest” added Basirat. “In 2021, MENA produced just 3 percent of global crude steel but accounted for nearly 46 percent of the world’s DRI production. MENA’s knowledge of this specific steel technology is an invaluable asset. This production knowledge, abetted by further work on iron ore beneficiation, pelletising and DR plants, is among the most important steel decarbonisation pillars, and will greatly assist MENA’s transition. Compared to other regions, MENA’s existing DRI-EAF capacity means no extra investment is needed for replacing the base technology. All new investment could be focused on expanding production of green hydrogen among other renewables. If it acts fast, MENA has the potential to lead the world in green steel production.”

The International Energy Agency (IEA) in its Net Zero Emissions scenario models the global share of hydrogen-based (H2) DRI-EAF production reaching 29 percent of primary steelmaking by 2050. BloombergNEF estimates that 56 percent (840 million tonnes) of primary steel production will come from H2DRI-EAF by 2050 in a net zero emissions scenario.

Basirat notes MENA has excellent solar resources to aid production of green hydrogen from renewable electricity.

“A switch from gas-fuelled DRI to green hydrogen could commence ahead of other regions, given MENA’s in situ capacity of DRI-EAF” Basirat said. “Initially, it would be possible to replace 30 percent of gas with hydrogen in the incumbent fleet of DR plants without any major equipment modifications. The region could then move towards 100% green hydrogen to produce carbon-free steel.”

The report notes new renewable capacities will change the power mix in MENA.

The World Bank found MENA has the highest photovoltaic power potential capacity globally and could theoretically produce more than 5.8 kilowatt hours (kWh) per square metre daily. It is predicted that 83 gigawatts (GW) of wind and 334GW of solar power will be added by 2050, increasing the share of wind and solar from 1 percent and 2 percent respectively to 9 percent and 24 percent.

Demand for green steel is rising globally, led by European car manufacturers.

Egypt, Saudi Arabia and UAE are MENA’s pioneers in shifting towards renewables and green hydrogen. Fortescue’s recently announced green hydrogen facility, with an ambitious capacity of 9.2 GW, could be one of the largest plants of its kind. Saudi Arabia’s investment to produce green hydrogen from the Mohammed bin Rashid Al Maktoum Solar Park and the joint investment of Emirates Steel and TAQA are among the tens of green project announcements in the MENA region.

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Institute for Energy Economics and Financial Analysis (IEEFA)


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