Private sector demand for “green” steel across seven APAC countries could reach 6.1 million tonnes/year by 2030, according to a new report by clean energy think tank Rocky Mountain Institute (RMI).
Of this, ore-based steel is estimated to account for 80% of demand, while scrap-based steel accounts for the remaining 20%. Total steel demand across the seven analysed countries – Japan, South Korea, Vietnam, Indonesia, Malaysia, the Philippines, and Thailand – is projected to reach 241m t/y by decade-end, Kallanish finds from the report.
If public procurement aligns with 2030 emissions targets, governments could unlock a further 11.5m t/y demand for near-zero emissions steel in the region. However, only 2.5mt of ore-based green steel capacity is expected to be operational by 2030 in the APAC region, excluding China, RMI estimates.
“This gap creates opportunities for new clean supply projects, some of which could be met by green iron imported from cost-competitive regions like Australia to complement domestic production,” the report notes.
Steelmakers across the region are exploring a range of decarbonisation solutions. These include injecting green hydrogen to reduce the use of coking coal in blast furnaces, or replacing coal with green hydrogen to produce DRI, which is subsequently melted in an electric arc furnace.
Green H2 DRI-EAF, paired with renewable energy, is currently the leading large-scale, commercially viable technology to remove nearly all iron production emissions, RMI points out. If all analysed countries replaced pig iron with green H2-based DRI, it would collectively reduce 211mt of CO2 equivalent per year – equal to 64% of these nations’ total steel emissions, the report claims.
Despite the projected green steel demand, several barriers impact buyers, including “supply chain complications, unclear product definitions and standards, and premiums for near-zero emissions steel products,” RMI points out. It recommends demand aggregation mechanisms, as well as government actions and public incentives, as “critical to scaling the green market” in this region.
“A combination of supply-side and demand-side incentives, coupled with stringent emissions standards, is needed to unlock demand at scale and support supply development,” the report concludes.
The report comes as the Institute for Energy Economics and Financial Analysis (IEEFA) recently warned against the South Australian government’s reliance on natural gas for the planned revival of the Whyalla steelworks. This, the think tank said, could undermine the project’s long-term competitiveness and delay South Australia’s green iron and steel ambitions.
