Australians want industry, and they’d like it green. Steel is the place to start



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Tony Wood, Grattan Institute; Guy Dundas, Grattan Institute, and James Ha, Grattan Institute

Australia has an historic opportunity to build a new, export-focused manufacturing sector based on renewable energy.

As a bonus, it could enable a less politically fraught conversation about climate change. Global action on climate change is in Australia’s national interest.

The changing climate is already reducing profits for Australian farmers. Tens of thousands of jobs depend on the again-bleached Great Barrier Reef.

But for too long, political leaders have struggled to balance the national interest with the legitimate concerns of Australians who live and work in regions that host coal mining and other carbon-intensive industries – most notably central Queensland and the Hunter Valley in NSW.



Source: Grattan Institute (2020)’Start with steel: A practical plan to support carbon workers and Out emissions.

This climate conundrum has greatly complicated the national debate about climate change: neither commitments to a “just transition” to a low-emissions future, nor promises of coal exports in perpetuity, have proven convincing, leaving regional jobs in the lurch.

Australians want industry

In the 2019 federal election, voters in these carbon regions, perhaps fearing for their livelihoods, seemingly rejected Labor’s more ambitious climate policies.

But with 85% of our black coal exported each year, decisions made in Beijing and New Delhi matter more to these communities than decisions made in Canberra.

Australia needs a credible plan to replace carbon jobs as the world decarbonises, and ideally the new jobs will offer similar salaries, need similar skills, and be located in similar places.




Read more:
How to transition from coal: 4 lessons for Australia from around the world


This is the key to cracking the climate conundrum: a plan based on sound economics that can offer hope to communities that currently depend on carbon-intensive activities.

A new Grattan Institute report, Start with steel, finds that manufacturing green steel for export is the largest job opportunity for these regions of Australia.

We can start with steel

Green steel can be made by using renewable energy to produce hydrogen, and then using that hydrogen in place of metallurgical coal in the steelmaking process.

The byproduct is water, rather than carbon dioxide.

Winding back the 7% of global emissions that come from steel production will require creating demand for low-emissions steel.

Australia has far better renewable resources than many of our major Asian trading partners, allowing us to make low-emissions hydrogen more cheaply, and therefore to make cheaper green steel.

And because hydrogen is expensive to transport, it makes sense to use it to make green steel here rather than exporting it to make green steel somewhere else.


Notes: Land higher than 3,000 metres is excluded because renewable energy resources are harder to use when they are in mountainous terrain. High-quality resources are defined to be areas with average wind power-density of at least 450 W/m2 and average daily solar photovoltaic potential of at least 4.5 kWh/kWp. North Africa includes the Horn of Africa.
Sources: Grattan analysis of Global Wind Atlas (2020), Global Solar Atlas (2020) and U.S. Geological Survey and National Geospatial-Intelligence Agency (2010)

The Pilbara in Western Australia is the world’s largest iron ore province, which makes it look like the natural place to make green steel.

But it is difficult to attract workers to remote Western Australia. Making green steel for export would require large industrial workforces like those in central Queensland and the Hunter Valley.

Our calculations suggest that the availability of reasonably-priced labour on the east coast of Australia more than outweighs the cost of shipping iron ore from Western Australia to turn it into green steel there.




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Enough ambition (and hydrogen) could get Australia to 200% renewable energy


If Australia captured just 7% of the global steel market, it could create 25,000 ongoing manufacturing jobs.

Seven per cent is much higher than the 0.3% of globally-traded steel that Australia produces today – but it is much less than our share of iron ore production, which is 38%.

Crucially, the opportunity does not rely on leaps of faith or endless subsidies – it is one of the few economically-credible ways to make the low-emissions steel the world will need if it gets serious about tackling climate change.

We should act quickly

There are also opportunities for Australia’s regions to manufacture biofuels for aviation and use renewable hydrogen to make ammonia.

The markets for these products are less certain, but if the world moves decisively to limit emissions, the projects that respond will deliver thousands of jobs.

Governments cannot single-handedly create these industries, and nor should they.

Instead, they should focus on bringing down the cost of the key intermediate product – hydrogen – by funding pre-commercial studies of geological structures suitable for storing hydrogen cheaply.

And they should invest in Australia’s low-emissions steel making capabilities by partly funding a flagship project that uses the direct reduction technology needed to use hydrogen to make steel.




Read more:
For hydrogen to be truly ‘clean’ it must be made with renewables, not coal


The politics of climate change skewered a decade’s worth of prime ministers. And an inability to communicate the costs of action – and why they’re justified – contributed to a would-be prime minister losing an unlosable election.

Green steel offers Australia a reset button: a chance to get bipartisan cooperation to tackle a wicked problem that threatens our national interest.

We’ve heard plenty about the climate crisis. It’s time to talk about the opportunities.The Conversation

Tony Wood, Program Director, Energy, Grattan Institute; Guy Dundas, Energy Fellow, Grattan Institute, and James Ha, Associate, Grattan Institute

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Albanese says we can’t replace steelmaking coal. But we already have green alternatives



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Dominique Hes, University of Melbourne

Despite a wealth of evidence to the contrary, some still propagate the myth that the world will need Australian coal for decades to come. Last weekend Opposition Leader Anthony Albanese joined in, saying thermal and metallurgical coal mining and exports would continue after 2050, even with a net zero emissions target.

Metallurgical coal (or “coking coal”) is mined to produce the carbon used in steelmaking, while thermal coal is used to make steam that generates electricity.

Albanese argues there’s no replacement for metallurgical coal, but this is not the case. The assertion stems from a fundamental misunderstanding of modern steelmaking, and places Australian manufacturers at risk of missing out on massive opportunities in the global shift to a low-carbon economy.

Just as thermal coal can be replaced with clean energy from renewables, we can use low-emissions steel manufacturing to phase out metallurgical coal.




Read more:
Labor’s climate policy is too little, too late. We must run faster to win the race


The problem with steel

Steel is the second-most polluting industrial material in the world after cement, causing 7-9% of global emissions.

Australia manufactures a relatively small amount of steel – 5.3 million tonnes, or 0.3% of world output. Yet, we’re one of the biggest exporters of raw materials for steel production.

There is potential to not only strengthen Australia’s steel manufacturing industry, but also to grow it using the ore (rock containing metals like iron) we currently export and our extensive renewable energy sources.

Doing so would work to our manufacturing strengths, history, abundant resources, and would cater to the future low-carbon market that will still require steel.

There are a few ways we can do this.

Recovering waste

Seventy-two per cent of the world’s virgin steel (steel made from ore, not from recycled material) is created from a high emissions manufacturing process – via the integrated steel-making route. This involves a blast furnace and a basic oxygen furnace, using coal, coke, iron ore and gas.

We can replace the coal and coke with rubber tyres that would otherwise end up in landfill, as shown by University of NSW’s Professor Veena Sahajwalla, who dubbed this process “green steel”.




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Right now we can also boost the recovery of steel from landfills in greater percentages. According to a 2018 national waste report, Australia generated an estimated 67 million tonnes of waste in 2016-17.

Steel makes up 2.5% of this. That’s more than 1.5 million tonnes, enough to build 150,000 buses.

‘Direct reduction’ from renewable hydrogen

But the best way to reduce emissions in steel manufacturing is to shift to “direct reduction”. This process produces more than 60 million tonnes of primary steel each year.

And almost 50 plants around Australia already make steel this way. It results in 40% lower greenhouse gas emissions, while supporting a viable and thriving manufacturing industry, which uses our own raw materials rather than exporting them.




Read more:
Enough ambition (and hydrogen) could get Australia to 200% renewable energy


Here’s how it works. Direct reduction removes the oxygen in ore, which produces metallic iron. The chemical reaction that drives this process uses carbon monoxide and hydrogen, sourced from greenhouse gases – reformed natural gas, syngas or coal.

But there’s no reason these fossil fuels can’t be entirely replaced with renewable hydrogen in the near future.

We’ve seen this from two leading direct-reduction technologies, called Midrex and Energiron. Both use fossil fuels, but also with a high proportion of hydrogen. In fact, Energiron facilities can already use up to 70% hydrogen, and they’ve also trialled 100% hydrogen.

The source of this hydrogen is critical, it can be made from fossil fuels, or it can be made using renewable energy.




Read more:
For hydrogen to be truly ‘clean’ it must be made with renewables, not coal


At least five companies in Europe are also working on producing low emissions steel. What’s more, three companies (SSAB, LKAB and Vattenfall) are collaborating to progress the technology, creating the “world’s first fossil-free steel-making technology, with virtually no carbon footprint” – called the “HYBRIT system”.

In fact, SSAB recently announced they’re bringing their plans forward to will produce fossil-free steel by 2026.

A new Aussie industry

The key message is this: it is possible to create low-emissions steel, without metallurgical coal. And it is already happening.

With the support of industry and government, non-metallurgical, low-emissions steel could provide an opportunity to create jobs, develop a decarbonised industry and extend the steel market’s contribution to Australia’s economy.

Not to mention what products we can produce from the steel – adding value in many more ways than just exporting ore – and taking advantage of an increasing consumer demand for low carbon products. This is especially relevant for communities transitioning away from fossil fuels.

There’s not much stopping low-emissions steel from forming a core new Australian industry. Australia must address the costs involved in transitioning the infrastructure, to upgrade plants and processes.

But it needs to start with working from facts – and effective government support and vision.




Read more:
How hydrogen power can help us cut emissions, boost exports, and even drive further between refills


The Conversation


Dominique Hes, Senior Lecturer in Sustainable Architecture, University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.