As Europe races to decarbonize its steel industry, MENA could be poised to lead in “green” steel production: Europe’s steel players face big choices between now and 2030 on whether to invest in renewing heavily-polluting infrastructure or switch to carbon-cutting production processes, as they work to make good on decarbonization pledges, the BBC noted last week. Several emissions-reduction options are available, including retrofitting plants with carbon capture tech and using biomass as a substitute for coal. But the only way to produce zero-emission steel is to use green hydrogen, multiple stakeholders argue. For MENA, this opens up chances to become a green steel hub.

MENA has recently been identified as a hotspot for “greenifying” the industry: MENA could lead the world in “green” steel production, according to a report (pdf) last year by the Institute for Energy Economics and Financial Analysis (IEEFA). By 2035, Egypt could produce some 45 mn tons of green steel annually while the North-West African hub of Morocco and Mauritania could produce some 30 mn tons per year, under a hypothetical scenario put forward by recent research (pdf).

Steel is one of the world’s three highest-emitting materials, alongside aluminum and cement: Steelmaking was responsible for some 7-9% of the world’s carbon emissions in 2020. This is due to the use of high-carbon coking coal as a fuel source to heat iron ore pellets at very high temperatures and liquify the pure iron — a process known as coal-fuelled blast furnace and basic oxygen furnace (BF-BOF). As of 2019, some 71% of global crude steel production used BF-BOF, according to data cited by the IEA.

Why does MENA have a green steel advantage? Because production is already dominated by a lower-emissions process — using grey hydrogen: The main steel production process used in MENA — Direct Reduced Iron-Electric Arc Furnace (DRI-EAF) technology — involves using carbon monoxide and natgas-derived hydrogen to turn iron ore into iron, the IEEFA report notes. MENA’s steel industry accounted for nearly half of global DRI-EAF production in 2021 — in part, because of our abundance of gas, the report notes. The process emits an average of 1.2 tons of CO2 equivalent (tCOe) per ton of steel produced compared to BF-BOF’s 2.2 tCOe/ ton of steel produced, according to data-driven climate tech platform Carbon Chain.

With green hydrogen, emissions could plummet further: Substituting grey hydrogen for green using electric arc furnaces powered by renewable energy could make the DRI-EAF process zero-emissions, according to IEEFA report author Soroush Basirat.

MENA could immediately begin shifting towards green hydrogen use: It could be possible to swap 30% of the natgas currently used with green hydrogen in direct reduction plants without any major equipment modifications as a first step towards using 100% green hydrogen to produce zero-CO2 emissions steel, the IEEFA report tells us. MENA’s strong overall potential for green hydrogen development is another key advantage for the region when it comes to leading green steel production, it adds.

And it would be less costly for us than for 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,” the IEEFA report notes. For most economies — which use primarily coking coal-reliant BF-BOF technology — the cost of shifting to green hydrogen-powered steel production would be “prohibitively high,” Bloomberg tells us.

We can see Europe embarking on a green steel push: Last week, the European Commission (EC) approved EUR 55 mn in German state aid to support ArcelorMittal's plans to build a steel production plant powered by green hydrogen. The EC also approved a EUR 460 mn direct grant to support ArcelorMittal España’s plans to build an iron plant largely based on clean hydrogen use. And Swedish startup H2 Green Steel is targeting the production of 5 mn tons of green steel every year by 2030, with plans to roll out its first commercial batches of the material by 2025.

The GCC has its own green steel plans: Oman’s Jindal Shadeed Iron and Steel (JSIS) plans to set up a USD 3 bn green steel plant targeting 5 mn tons of steel annually by 2026. Some 30-40% of this would be for consumption in Oman and the GCC, with the rest earmarked for export to the Middle East, Europe and Japan. The UAE’s Emirates Steel Arkan plans to partner with two Japanese firms to look at setting up an iron ore processing facility in Abu Dhabi that could be partly powered by green hydrogen, due to begin production in 2H 2025. And Saudi Arabia is reportedly looking to invest some USD 266 bn in a host of green hydrogen-focused areas — including the creation of industrial centers for green steel and aluminum.