With green hydrogen investments MENA region can lead global steel decarbonisation, report finds

September 14, 2022, by Ajsa Habibic

The Middle East and North Africa (MENA) region could emerge as a leader in global steel decarbonisation with investment in green hydrogen and renewable energy, according to a new report from the Institute for Energy Economics and Financial Analysis (IEEFA).

As the global steel industry moves to switch to direct reduced iron (DRI) production and use green hydrogen to reduce emissions, the MENA region is in a prime position to start producing carbon-neutral or green steel, the report finds.

The report’s author explains that the direct reduced iron-electric arc furnace (DRI-EAF) process, which is dominant in the region and uses syngas made from natural gas or gasified coal and also electricity, could be zero emissions if hydrogen (produced using renewable energy-powered electrolysis) and electric arc furnaces powered by renewable energy were used.

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

“Compared to other regions, MENA’s existing DRI-EAF capacity means no extra investment is needed for replacing the base technology. All new investments could be focused on expanding the production of green hydrogen among other renewables. If it acts fast, MENA has the potential to lead the world in green steel production”, the author says.

Furthermore, the report notes that MENA has excellent solar resources to aid the production of green hydrogen from renewable electricity.

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

“Having access to such high solar energy resources allows for the production of green hydrogen at a competitive price. With MENA’s available capacity, producing green hydrogen below $1/kg is achievable by 2050”, the report’s author said.

Egypt, Saudi Arabia and the United Arab Emirates (UAE) are MENA’s pioneers in shifting towards renewables and green hydrogen.

Just recently, Australian iron ore company Fortescue proposed a green hydrogen facility in Egypt, with a capacity of 9.2GW, which could be one of the largest plants of its kind.

Egyptian government units also entered into an agreement with Abu Dhabi’s Masdar and investment platform Hassan Allam Utilities to establish green hydrogen production plants with an electrolyzer capacity of 4 GW by 2030 and an output of up to 480,000 tonnes of green hydrogen per year.