Can Australia Become a Green Iron Powerhouse?

• Published date: 01 December 2024
• Author: Geoffrey Brooks,Paul H. Jensen,Stephen Petrie,Elizabeth Webster
• Date: 01 December 2024
• DOI: http://doi.org/10.1111/1467-8462.12578

The Australian Economic Review, vol. 57, no. 4, pp. 413–421 DOI: 10.1111/1467-8462.12578

Policy Forum

Can Australia Become a Green Iron Powerhouse?

Geoffrey Brooks, Paul H. Jensen, Stephen Petrie and Elizabeth Webster

Abstract

As a country with an abundance of renewable

resources, Australia has an opportunity to

emerge as a global leader in the production of

green iron rather than simply extracting and

exporting iron ore around the world. While it

makes sense to do so in the changing geopoli-

tical environment, and to assist in achieving our

commitments to dramatically reduce our carbon

emissions, this paper sheds light on the complex

technical and economic arguments for the

creation of a green iron industry here in

Australia. We argue that targeted government

intervention coupled with industry commitment

to transforming the sector could realistically

result in the emergence of a nascent green iron

industry in the medium term.

1. Introduction

The production of steel currently contributes

between 7 per cent and 9 per cent of

global CO

2

emissions. Australia is currently

a minor player in global iron and steel

production, but it is a large producer and

exporter of iron ore

1

(to China, Japan, Korea

and India) which is the key input into iron

(and steel) production. As the world moves

to carbon net‐zero, there is an opportunity

for Australia to assess whether it should get

more involved in the production of green

iron (i.e. iron produced without fossil fuels),

thereby moving up the value‐added supply

chain. In this paper, we examine the

economics of this proposition and consider

whether market forces alone will make

Australia a green iron powerhouse or public

intervention is needed.

Converting iron ore into iron is the

emission‐intensive part of steel production.

The most common process involves reacting

coking coal with iron oxide to remove

oxygen, thereby creating iron and carbon

dioxide. One exciting area of innovation

relates to the use of hydrogen in the iron

production process. If green hydrogen is used

to remove oxygen, the only by‐product is

water. However, hydrogen‐based processes

require a step‐change in new equipment and

R&D—the change will not be achieved

through incremental improvements. Existing

pilot plants (in Sweden, China, Trinidad and

*Brooks and Petrie: Swinburne University of

Technology, Hawthorn, Victoria, Australia; Jensen and

Webster: University of Melbourne, Parkville, Victoria,

Australia. Corresponding author: Jensen, email pjensen@

unimelb.edu.au.

1

Estimated as 29 per cent of global iron ore

deposits in 2018 (Summerfield 2020).

© 2024 The University of Melbourne, Melbourne Institute: Applied Economic & Social Research, Faculty of Business

and Economics.

Published by John Wiley & Sons Australia, Ltd