MENA region can lead the world in green steel production – Report

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The Middle East and North Africa (MENA) region is in a prime position to start producing carbon-neutral or green steel, according to a new report from the Institute for Energy Economics and Financial Analysis.

“The MENA region can lead the world if it quickly switches to renewable energy and applies green hydrogen in its steel sector,” said report author Soroush Basirat.

The region’s steel industry is dominated by Direct Reduction Iron Electric Arc Furnace (DRI-EAF) technology, which emits fewer emissions than the increasingly obsolete coal-fired blast furnace and furnace process. basic oxygen (BF-BOF) used in 71% of cases. of world crude steel production in 2021.

According to Basirat, 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 electrolysis powered by renewable energy) and electric arc furnaces powered by renewable energy were used.

“MENA has an established supply of DR-grade iron ore and its iron ore pellet plants are among the largest in the world. In 2021, the MENA region produced only 3% of global crude steel, but accounted for nearly 46% of global DRI production,” the report notes.

“MENA’s knowledge of this specific steel technology is invaluable. This knowledge of production, enhanced by additional work on iron ore beneficiation, pellet and DR plants, is one of the most important pillars of steel decarbonization and will greatly help the transition from the MENA region”.

“Compared to other regions, MENA’s existing DRI-EAF capability means that no additional investment is needed to replace core technology. Any new investments could be focused on expanding green hydrogen production among other renewables,” the report says.

The International Energy Agency (IEA) in its Net Zero Emissions Scenario models the global share of DRI-EAF hydrogen (H2) based production reaching 29% of primary steel production by 2050.

BloombergNEF estimates that 56% (840 million tonnes) of primary steel production will come from H2DRI-EAF by 2050 under a net zero emissions scenario.

“The transition from a gas-powered DRI to green hydrogen could begin before other regions, given the MENA region’s in-situ DRI-EAF capability. Initially, it would be possible to replace 30% of the gas with hydrogen in the historic fleet of DR power plants without major modification of the equipment. The region could then switch to 100% green hydrogen to produce carbon-free steel,” the report said.

“Having access to high solar energy resources allows the production of green hydrogen at a competitive price,” Basirat said. “With available capacity in the MENA region, producing green hydrogen at less than $1/kg is achievable by 2050.”

With the EU soon establishing a carbon border adjustment mechanism, steel exports from the MENA region would have an advantage if they were carbon-free.

“MENA producers are ahead in terms of market positioning and will remain so if they accelerate the transition to carbon-free steel using the DRI-EAF green hydrogen pathway,” Basirat said.

The MENA region has good infrastructure and pipelines that could facilitate cheaper transport of hydrogen to steel producers, the report notes. Moreover, its steel and mining sector has already invested in the upstream value chain and can provide high-quality pellets to feed steel enterprises.

Iran, Saudi Arabia and Egypt are the major steel players in the MENA region, producing over 80% of the region’s total.

Costs
BloombergNEF suggests that with green hydrogen delivered at a price below $1.5/kg, H2DRI-EAF technology could be competitive by 2050.
The cost of producing hydrogen by electrolysis is currently lower than that of blue hydrogen in Middle Eastern countries. In July 2022, the cost of alkaline electrolysis in Qatar was $2.59/kg, Saudi Arabia $3.20, Oman $3.55 and UAE $5, according to the report. .
Headwinds
Challenges listed for the MENA region by the IEEFA report include technical barriers to the use of hydrogen for commercial scale DRI production, supply of DR grade pellets for expansion projects , scaling up the renewable energy and green hydrogen value chain and water stress.

The production of one million tonnes of green steel based on H2DRI-EAF technology requires photovoltaic solar power and an electrolyser with an annual capacity of more than 1 GW. Changing the DRI-EAF fleet to a hydrogen-based process supported by renewable energy is a big challenge, even for the MENA region.
Source: Reuters (Writing by Sowmya Sundar; Editing by Anoop Menon)


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