Report author Soroush Basirat said the MENA region – with its abundant solar power which can aid production of green hydrogen from renewable electricity – can lead the world if it shifts promptly to renewables and applies green hydrogen in its steel sector.
The region’s sector is dominated by direct reduced iron-electric arc furnace (DRI-EAF) technology, which 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.
Basirat says the DRI-EAF process, which uses syngas made from natural gas or gasified coal and also electricity, could be zero emissions if green hydrogen (produced using renewable energy-powered electrolysis) and electric arc furnaces powered by renewable energy were used.
He said MENA has an established supply of DR-grade iron ore and its iron ore pelletising plants are among 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.
“MENA’s knowledge of this specific steel technology is an invaluable asset,” he added. “This production knowledge, abetted by further work on iron ore beneficiation, pelletising and DR plants, is among the most important steel decarbonisation pillars, and will greatly assist MENA’s transition.
“Compared with 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.”
But the major caveat is it needs to act fast.
The International Energy Agency (IEA) in its Net Zero Emissions scenario models the global share of hydrogen-based (H2) DRI-EAF production reaching 29% of primary steelmaking by 2050.
BloombergNEF estimates that 56% (840m tonnes) of primary steel production will come from H2DRI-EAF by 2050 in a net zero emissions scenario.
A switch from gas-fuelled DRI to green hydrogen could commence ahead of other regions, given MENA’s in situ capacity of DRI-EAF.
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.
The report notes new renewable capacities will change the power mix in MENA.
The World Bank found MENA 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 83 GW of wind and 334 GW of solar power will be added by 2050, increasing the share of wind and solar from 1% and 2% respectively to 9% and 24%.
Basirat added, “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.”
Demand for green steel is rising globally, led by European car manufacturers.
With the European Union soon establishing a Carbon Border Adjustment Mechanism, MENA steel exports would have an advantage if they were 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,” Basirat said. “Providing green electricity, a big challenge for steel producers in some parts of the world, is not a barrier in MENA.”
Egypt, Saudi Arabia and UAE are leading the regional charge to renewables and green hydrogen.
Fortescue’s recently announced green hydrogen facility in Egypt, with an ambitious capacity of 9.2GW, could be one of the largest plants of its kind.
Read more: Fortescue Future Industries in talks for 9.2GW green hydrogen project in Egypt
Saudi Arabia’s investment to produce green hydrogen from the Mohammed bin Rashid Al Maktoum Solar Park and the joint investment of Emirates Steel and TAQA are among the tens of green project announcements in the MENA region.
“With ample renewable energy potential, the region could become a leader in hard-to-abate and carbon intensive industries, specifically steel,” concluded Basirat.