Green steel and aluminium could reduce Australia’s cumulative emissions by around 200 Mt CO₂-e to 2040, while increasing economic activity and generating many thousands of new jobs in the long-term.
Steel and aluminium are important global commodities and thousands of people are employed in these industries in Australia, many in regional areas. Australia can help to unlock the technologies that will reduce emissions from these sectors.
Low emissions steel and aluminium could reduce Australia’s cumulative emissions by around 200 Mt CO₂-e to 2040, while increasing economic activity and generating many thousands of new jobs in the long-term. If Australian low emissions steel and aluminium exports can meet a greater share of projected global demand for these metals, we could help to reduce international emissions cumulatively by over 500 Mt CO₂-e over the period to 2040.
Green steel offers the potential for $65 billion in export revenue, creating 25,000 manufacturing jobs in Queensland and New South Wales (assuming Australia captures 6.5% of the global steel market in 2050).
Setting the stretch goal
In the long-term, achieving stretch goals of $900 per tonne for green steel and $2,700 per tonne for green aluminium would retain cost-competitiveness with existing production
The stretch goals would cover emissions associated with steel and aluminium production, including direct process emissions and supplied electricity emissions.
While emerging technologies to reduce upstream emissions from iron ore mining and alumina production are not included in the stretch goal, the Government will continue to monitor global learnings, research and investment trends.
One possible pathway for low emissions steel is likely to be ‘greenfield’ developments involving direct reduction of iron (initially using natural gas and then clean hydrogen) and electric arc furnaces using low-cost renewable electricity. Direct reduced iron using natural gas may be commercially viable in Australia by 2030, with hydrogen steel-making available by 2040. Partially reducing emissions by optimising blast furnaces with hydrogen is also being explored internationally.
For low emissions aluminium, increasing supply of low-cost firmed renewable electricity, more efficient smelter technology, and inert anodes that do not produce emissions will reduce direct emissions. There may also be ways to reduce the emissions in the supply chains (e.g. alumina production for aluminium).
Governments and businesses will need to work together to unlock and integrate new technologies while maintaining and expanding existing industries. Alongside ongoing research, development and demonstration investments, and building international partnerships, technology deployment will be accelerated where the regulatory environment recognises and rewards broader co-benefits.
Electricity market reforms, such as pricing demand response to improve grid reliability and reduce costs for all users, will reward aluminium smelters for the services they provide and may enable the adoption of new production technologies.