Report Highlights Urgent Need for Policy Change
Australia’s potential to become a leader in the green iron and steel industry is at risk, as highlighted in a recent report by the independent think tank Climate Energy Finance (CEF). Released on 30th April 2026, the report warns that Australia’s current policies are insufficient to seize its advantages in low-emissions production.
Australia possesses the world’s largest iron ore reserves and significant renewable energy potential. Without transformative policy changes, these benefits will not translate into leadership in green iron production as global value chains shift.
The report underscores the emerging role of the Middle East and North Africa (MENA) region as a competitive corridor for direct reduced iron (DRI) production. This region leverages its renewable resources and lower costs, presenting a challenge to Australia’s aspirations in the green iron sector.
Matt Pollard, CEF’s net zero transformation analyst, stated, “Australia’s window of comparative advantage in supplying green iron to the Asian steel corridor is real, with our iron ore endowment, renewable energy potential, low geopolitical risk, and established trade relationships.”
China and MENA Set the Pace
China is advancing rapidly in developing its infrastructure for a low-carbon iron and steel economy. It positions itself as a leader in green hydrogen and electrolyser manufacturing. In contrast, Australia has yet to see significant investment in lower-emission iron production.
Tim Buckley, CEF director, emphasised the need for Australia to engage in “Green Energy Statecraft” to build bilateral support with key trading partners. “Developing First-of-a-kind (FOAK) demonstration plants is essential to ensure Australia remains competitive,” he explained.
The report calls for a strategic approach to policy and investment that can counter the competitive advantages of the MENA region. This strategy is crucial to ensure Australia attracts the necessary green iron investments.
Australia’s established trade relationships with key Asian steelmaking markets are crucial. These relationships, combined with its world-class superannuation pool valued at A$4.5 trillion, provide a foundation for potential growth in green iron production.
Australia became the global leader in LNG in 2019, thanks to public-private collaborations and long-term investments. Similar strategies could be applied to the green iron sector to capitalise on current opportunities.
To secure its place in the global green iron and steel market, Australia must swiftly implement necessary policy changes and investments. This will ensure the country capitalises on its current advantages.
