13
May
2020

Rolls of steel in a warehouse

Building a world-scale Australian green steel industry should start now

by Guy Dundas


Published in the Gladstone Observer, Wednesday May 13

Today more than 20,000 Queenslanders dig coal and put it into power stations or onto ships for export. The people of Gladstone, Mackay, Moura, Moranbah and Collinsville quite literally help to power the economies of Australia and Asia.

But the future of coal is more uncertain than ever. The cost of renewable energy is plummeting. Coal is in decline in the United States and Europe. Is Asia next? The International Energy Agency forecasts coal use in China – the world’s largest coal consumer – will peak in just two years’ time. For coking coal used to make steel, the peak could be next year. And while Indian coal demand is still growing strongly, its Mines Minister recently flagged a boost to local mining and an end to coal imports.

Queensland’s coal miners deserve a better strategy than just hoping that demand for coal will continue indefinitely.

A new Grattan Institute report, Start with steel, sets out a better plan – starting work today to build the foundations of a new manufacturing industry built on clean energy. Using renewable energy to make low-emissions commodities is the best hedge Queensland’s coal miners have. If the world changes slowly, we’ll keep shipping coal. But if the world changes fast, we will be ready to sell new low-emissions products.

The largest single opportunity for Queensland is in low-emissions ‘green steel’. An essential ingredient to make it is sunshine, and Queensland has this in abundance. The cost of using solar and wind power to extract hydrogen from water is plummeting, and this renewable hydrogen can replace coal to make steel that is truly green – the main byproduct is water.

Central Queensland also has the other key ingredients needed to make and ship green steel to Asia. It has major ports, good power grid connections – and thousands of people willing to work hard to build a new export industry.

This jobs and exports opportunity will not happen overnight. But it is potentially so big that Australian governments – state, federal and local – should start planning for it today. The key is to start modernising Australia’s steel-making capability by moving to cleaner technologies. Coal-based steel-making is cheaper than green steel, so governments will need to fund a low-emissions steel ‘flagship’ project.

It will take decades to build a world-scale green steel industry. We must start now.