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Middle East & North Africa could lead way on global green steel production

January 15, 2025

As the global steel industry looks at switching to direct reduced iron production and using green hydrogen to reduce emissions, the Middle East and North Africa are in a prime position to start producing green steel.

So says a new report from the Institute for Energy Economics and Financial Analysis, Green Steel Opportunity in the Middle East and North Africa. It points out the Middle East and North Africa (MENA) region is already dominated by direct reduced iron-electric arc furnace (DRI-EAF) technology.

This releases lower emissions than the increasingly obsolete coal-fuelled blast furnace and basic oxygen furnace (BF-BOF) process used in 71% of global crude steel production in 2021.

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

He said the DRI-EAF process, which uses synthetic gas made from natural gas or gasified coal and also electricity, could emit zero emissions if they use green hydrogen – produced using renewable energy-powered electrolysis – and renewable energy-powered electric arc furnaces.

Knowledge already exists in-region

“MENA has an established supply of DR-grade iron ore and its iron ore pelletising plants are amongst the world’s largest. In 2021, MENA produced just 3% of global crude steel but accounted for nearly 46% of the world’s DRI production,” said Basirat.

He explained that MENA’s production knowledge of the specific steel technology plus further work on iron ore beneficiation, pelletising and DR plants will help its 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,” said Basirat.

 Renewable energy changing power mix in MENA

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

Basirat notes that the MENA region’s excellent solar resources would boost hydrogen production from renewable electricity. A switch from gas-fuelled DRI to green hydrogen could thus start earlier across the MENA than any other regions.

“Initially, it would be possible to replace 30% 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,” he said.

The World Bank has previously stated that the region has world’s highest photovoltaic power potential capacity and could theoretically produce more than 5.8kWh per square metre every day. It predicts that 83GW of wind and 334GW of solar power could be added to the region by 2050. This would increase the share of wind and solar from 1% and 2% to 9% and 24% respectively.

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

Demand for green steel is rising globally

With the European Union soon establishing its Carbon Border Adjustment Mechanism, green steel exports from MENA would have the advantage if they are zero carbon. “MENA’s producers are ahead in terms of their market positioning and will remain so if they accelerate the transition to carbon-free steel using the green hydrogen DRI-EAF route.

“Providing green electricity, a big challenge for steel producer in some parts of the world, is not a barrier in MENA.”

Egypt, Saudi Arabia and the UAE are already pioneering the region’s shift to renewables and green hydrogen, with announcements of green projects popping up across the MENA every week.

“With ample renewable energy potential, the region could become a leader in the hard-to-abate and carbon intensive industries, specifically steel,” posits the Institute for Energy Economics and Financial Analysis report.

About the author

ESI Africa
Content Team
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