MENA region can become a leader in the race for green steel – IEEFA

Steelmakers in the Middle East and North Africa (MENA) have a chance to take advantage of their advantages and become leaders in global efforts to decarbonize steel production. This is stated in a study by the Institute for Energy Economic and Financial Analysis (IEEFA).

The MENA steel industry must rapidly incorporate renewable energy sources into its energy mix to significantly reduce indirect emissions (Scope 2). In terms of direct emissions (Scope 1), they are ideally positioned to gradually switch from gas to hydrogen and convert their gas DRI plants to hybrid systems.

As global producers turn to DRI technology to reduce their carbon footprint, MENA steel companies that have been producing direct reduced iron for decades have a head start on their competitors. However, the region’s heavy reliance on fossil fuels for electricity generation is a major obstacle as international restrictions on carbon-intensive steel, such as the implementation of the European ETS, are tightening.

Increasing the distribution of green hydrogen for steel production in the region is also important. MENA producers could become key consumers for such projects.

Global DRI production capacity is projected to increase to 175 million tons by 2030, with MENA accounting for about a third of this growth. Annual global trade in direct reduced iron will reach 85 million tons by 2050, and almost half of global exports will come from this region, IEEFA notes.

A number of announcements of low-carbon projects in the MENA region show that the transition to DRI and pig iron and green steel is already gaining momentum here.

“As the region gradually transitions to cleaner grids powered by renewable energy, this transition period offers an opportunity for cooperation between steel producers in the EU and DRI producers in MENA,” IEEFA said.

The Green Prize could also be a key moment for MENA steel producers to accelerate the environmental transition.

As GMK Center reported earlier, the Indian conglomerate Essar Group recently confirmed a $4 billion investment in setting up a green steel production facility in Saudi Arabia. The company will also invest approximately $3.6 billion over the next four years in a green hydrogen plant in India (Jamnagar, Gujarat).