19 June 2020
4 min read

Australia can use its abundant renewable energy resources to become an exporter of near zero emissions steel to a rapidly decarbonising world. Here’s how.

What if there were a way to drastically reduce Australia’s greenhouse gas emissions, create tens of thousands of manufacturing jobs for fossil fuel workers and solve our energy problems forever? It’s a future that is well within reach, but only if Australian policymakers fully embrace renewable energy. Right now, we’re at a crossroads: do we remain a major exporter of fossil fuels in a world that is starting to decarbonise, or do we switch to renewables to supply the world with low emissions commodities? There is only one answer if we want to build a sustainable future. Here’s how we can do it.

Our renewable energy resources

According to the Grattan Institute, Australia has 4 million square kilometres of land that can house “good coexisting wind and solar”. Geographically speaking, that’s second only to North Africa which has 10 million square kilometres of comparable land across a dozen countries. Simply put, we have a huge amount of land where solar and wind energy can comfortably co-exist. The ‘coexisting’ part is important, because it means the energy generated from each type of renewable energy can smooth (or ‘firm’) the other. In other words, if the sun isn’t shining there’s a good chance the wind is blowing.

We're backing a new campaign by WWF Australia to transform Australia into a renewable energy powerhouse. Australia’s renewable energy resources are just as plentiful as our mineral and fossil fuel deposits – and we don’t have to pollute the environment and mine Indigenous land to tap into them. The plan by WWF Australia has five targeted stimulus measures, the first three of which focus on battery power, local solar and electric buses. This article will focus on the final two measures: modernising Australian manufacturing with renewable power, and exporting renewable hydrogen fuel to the world.

It’s clear that we can create far more electricity than we need if we properly harness the renewable resources this country has to offer. So, what should we do with the excess renewable power? According to the Grattan Institute and economists like Ross Garnaut and Alan Finkel, the answer is obvious: export it. As the world transitions to a low-carbon future the demand for cheap renewable power is likely to increase. One option is to directly export our renewable electricity using undersea cables; another idea is to export low-emissions hydrogen to our trading partners. However, both options come with substantial costs and risks. It makes much more sense, argues Garnaut, to use renewable power to manufacture commodities here in Australia. Aluminimum and ammonia are possible candidates, but the most compelling opportunity is near zero emissions steel. Once manufactured, this ‘green steel’ can then be exported to our trading partners in Asia.

Where does hydrogen come from?

Pure hydrogen can be produced by running an electric current through water and separating the oxygen from the hydrogen. This process, called electrolysis, produces emissions free or ‘green’ hydrogen as long as the electricity used for the process comes from 100% renewable sources. Another way to produce zero-emission hydrogen is to ‘reform’ natural gas as a mix of carbon dioxide and hydrogen, and then capture and store the carbon dioxide. This is known as ‘blue’ hydrogen. Our strong preference is for green hydrogen.

Manufacturing green steel

At present, Australia only produces 0.3% of the world’s steel despite producing 38% of the world’s iron ore. We also produce 18% of the world’s metallurgical (coking) coal, the other key ingredient in the current steel-making process. At present, iron ore is converted into steel in blast furnaces using coking coal in a process that causes 6-7% of global emissions. In a renewable energy future with abundant hydrogen fuel, it will make sense to use hydrogen to directly reduce iron ore to iron (and then steel). Because the only byproduct of burning hydrogen is water, it will be possible to produce near zero emissions steel. This technology already exists, but it has not been proven on a commercial scale. Hydrogen direct reduction pilot plants are being built or planned in Sweden and Germany. Tests of blast furnace use of hydrogen are currently being conducted by thyssenkrupp Steel in Germany. So in order for Australia to capitalise on this opportunity, we need to start moving now.

Jobs for carbon workers

The best part about the green steel story is that it will generate the same types of jobs that are threatened by the phase-out of fossil fuels. Building renewable energy infrastructure tends to produce one-off jobs, but the production of commodities like green steel creates ongoing work. According to the Grattan Institute, there are about 55,000 geographically-concentrated ‘carbon workers’ in Australia. Near zero emissions steel production would plausibly create 25,000 jobs, while biofuels for aviation would add 10,000 and green ammonia a further 5,000-20,000 jobs. Ross Garnaut, the author of Superpower: Australia’s low-carbon opportunity, writes:

"As the world moves closer to requiring zero-emissions steel, there is scope for iron metal and steel production at an immense scale near Australian iron ore resources in the Pilbara, the mid-west and south-west of Western Australia and in the Upper Spencer Gulf and adjacent parts of South Australia."

Garnaut adds:

Converting one-quarter of Australian iron oxide and half of aluminium oxide exports to metal would add more value and jobs than current coal and gas combined.

This is our moment

Australia has incredible renewable energy resources and we have an opportunity to lead the world in low emission manufacturing. Turning our iron ore into green steel using zero-emission hydrogen is a great place to start. Australian Ethical is helping to build a better future by investing in the renewable energy we’re going to need to make this vision a reality. Now it’s up to policymakers and business to start taking action. The future prosperity and climate of Australia – and the world – depends on it.

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