Australia finally enters the global race towards decarbonisation!

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The Green Steel Economic Fairways Mapper compares the levelised cost of steel, including production and transport to the port. a) Regional changes across Australia b) Example of how to optimise the system to minimise the levelised cost of producing 1 million tonnes per annum c) Breakdown of costs d) Hourly system performance, in terms of energy flows. Credit: Green Steel Economic Fairways Mapper, Geoscience Australia

Green iron fund will lay foundations for Australia to become renewable energy superpower

Matt Pollard & Tim Buckley

The Albanese government has announced a landmark package to salvage the beating heart of South Australia’s steel industry and provide the necessary, strategic public intervention to future-proof and catalyse the region’s transition to a nation-leading green iron and steel hub.

Building on the federal government’s $2 billiion Aluminium Production Tax Credit announcement to decarbonise the energy demand of the nation’s aluminium smelters – the largest source of emissions in the aluminium supply chain – the $1bn Green Iron Investment Fund leverages strategic public capital to crowd in private investment into value-added green iron projects.

Comparatively, iron is the largest source of emissions in the steel value chain, with blast furnaces accounting for up to 87% of traditional, coal-based steel emissions.

CEF has continued to emphasise the critical importance of getting moving and supporting first-of-a-kind (FOAK) capital deployments to learn-by-doing in the domestic context. The rescue and re-industrialisation package announced on Thursday is exactly that.

Whyalla is strategically important for Australia for its manufacturing capacity and highly skilled workforce. It is imperative that we protect and build upon our sovereign capabilities, and massive investment, employment and export potential to lead the world in shifting to green steel supply chains.

As Climate Energy Finance (CEF) emphasised in its submission to the Senate Inquiry into the Future Made in Australia’s (FMIA) Production Tax Credits Bill, Australia’s iron ore exports generated $138 billion in revenues in 2023-24, the largest fuel and resource industry in Australia by volume and value.

The introduction of the FMIA’s critical mineral and hydrogen tax incentives were a result of the government’s recognition that public intervention to alleviate the cost premium of value-adding was vital to addressing market failures and developing industrial capabilities critical to the economic resilience and security of Australia.

However, failure to extend such measures to facilitate the creation of a domestic green iron industry would be the single biggest risk to Australia in the global transition to a decarbonised economy, and would be the single biggest opportunity of Australia this century if Australia captured this value.

As such, CEF applauds and celebrates the ambition of the federal and South Australian (SA) governments to introduce an intergenerational industry policy that supports the long-term future of Australia’s economic prosperity, and the long-term future of the planet.

The announcement of a joint industrial policy package from the federal and SA government, including the commitment to invest into the necessary enabling infrastructure to support the transition to low-emission iron and steel production, can lay the foundation and blueprint for the development of Renewable Energy Industrial Zones (REIZ) for green iron production.

The success of onshoring a large-scale green iron industry will, in part, be dependent on leveraging economies of scale and public-private partnerships in enabling infrastructure, including high-voltage transmission corridors, energy firming capacity, port facilities and hydrogen pipelines.

The Whyalla Steelworks is perfectly positioned to develop a REIZ, with high-grade magnetite reserves, a deep-water port, high renewable penetration in the existing electricity grid, and an established, skilled workforce.

This presents a massive opportunity to learn-by-doing in order to support the development of other future-facing resource hubs in Australia, including Gladstone, the Oakajee Strategic Industrial Area (SIA), Port Hedland SIA, and so on.

As Springmount Advisory also emphasised in its advocacy for the creation of a green iron industrial package: Despite the natural advantages, Australia is lagging significantly behind other regions in terms of supportive policy settings and is suffering from significant under-investment relative to our potential compared to other regions.

The federal government urgently needs to send a clear signal to industry and investors that the FMIA program will help establish a large-scale green iron industry.

This week’s announcements have introduced the price signals required to industry, and to new entrants that the state and federal governments recognise the scope and scale of this immense opportunity.

The announcements build on the critically important supply-side incentives introduced via the more than $22bn Future Made in Australia legislation and other industrial packages to kickstart value-adding of strategic metals and minerals, including:

– The legislated $2/kg clean hydrogen production tax incentive to scale the production of renewable-powered hydrogen to embed decarbonisation in value-added resources onshore;

– The 10% critical minerals production tax incentive, providing a tax offset in proportion to the level of expenditure of value-adding key, future-facing minerals for the energy transition, including lithium, nickel, rare earths, etc;

– $3.4bn investment into Geoscience Australia to accelerate the discovery of resources;

– The doubling of Hydrogen Headstart to $4bn, bridging the commercial gap between market prices and the green premium for early movers in hydrogen production and clean energy industries.

CEF also recognises the strength and long-term vision of the SA government to force the GFG Alliance’s Whyalla Steelworks intro administration this week.

CEF, national and international media have continued to highlight the increasingly dire financial situation of the global GFG Alliance portfolio, and the risk to Australia’s future as a sovereign steel producer that would be realised with the continued governance and operation under Sanjeev Gupta.

CEF endorses the move by SA Premier Peter Malinauskas, and supports his Government’s commitment to the long-term prosperity of the Upper Spencer Gulf as the first mover for green iron, and the positive impact it will have on accelerating investments in the broader national landscape.

Now that the Steelworks is no longer under the control of GFG, the state government can partner with the federal government and make the long-term investments necessary to secure the future of Whyalla and Australian steelmaking.

As CEF formulated in its recent Green Metal Statecraft: Forging Australia’s Green Iron Industry report, there are key, interconnected pillars required to be jointly developed by the federal and state governments to develop a globally competitive Australian green metals industry.

The deployment of a complementary mix of financing and budgetary measures for supply-push and demand-pull market mechanisms, deployed as a coherent strategy can form the basis of Australia’s green metal statecraft, including:

– A national green iron and steel strategy with clear, measurable targets.

– Demand-side incentives, including: Development of a trilateral, government owned Clean Commodities Trading Company; Australiasian Green Iron Corporation JV between Australia and key trading partners like China – Australia’s largest iron and steel trading ally; public procurement for green metals to create a national demand signal, and; contracts for difference (CfDs) to bridge the gap between market prices and the green premium for early movers.

– Supply-side incentives, including: $20bn Future Fund mandate for renewables-powered green metals processing. The $1bn Green Iron Investment Fund is a positive first start; Production tax credits for green iron, and; exclusion of state investment in fossil fuel-powered onshore strategic metals refining.

– Measures to address technical challenges, including: $500m over 10-years to the CSIRO for RD&D to accelerate commercialisation of
green iron technologies.

– Measures to improvise international collaboration and foreign policy, including: A DFAT & Austrade mandate to build collaboration on an Asian Carbon Border Adjustment Mechanism, creating a premium price signal for green iron; A focus on Australian/Asian steel supply chain decarbonisation collaboration to champion Asia-Pacific’s opportunities leading up to COP31.

– Accelerating renewables deployment, including: Overriding Public Interest Test to speed renewable energy project approvals; industrial demand response mechanisms to optimise renewables supply/demand; renewables investment conditional on community benefit/First Nations benefit sharing, and; accelerated development of Renewable Energy Industrial Precincts.

As the Smart Energy Council has put it, Thursday’s announcements mark the moment Australia’s mining, manufacturing and renewable energy industry enter the global race towards decarbonisation.

A Green Iron Investment Fund is exactly what Australia needs to lay the foundations for Australia becoming a Renewable Energy Superpower.

Matt Pollard is net zero transformation analyst at Clean Energy Finance. Tim Buckley is director, Clean Energy Finance.

The promise of green iron, steel and ammonia is keeping the green hydrogen dream alive

by Changlong Wang and Stuart Walsh, The Conversation

The Green Steel Economic Fairways Mapper compares the levelised cost of steel, including production and transport to the port. a) Regional changes across Australia b) Example of how to optimise the system to minimise the levelised cost of producing 1 million tonnes per annum c) Breakdown of costs d) Hourly system performance, in terms of energy flows. Credit: Green Steel Economic Fairways Mapper, Geoscience Australia

Hydrogen was once sold as a universal climate fix—a clean, green wonder fuel for cars, homes, power grids and even global export. But reality has cooled that buzz.

This week, the South Australian government shelved plans for a A$593 million hydrogen power plant, in favor of injecting that money into the $2.4 billion Whyalla steelworks rescue package. Premier Peter Malinauskas said there was “no point in producing hydrogen” without a customer: the steelworks.

It’s the latest in a series of setbacks for hydrogen. Last year, Australian mining and energy giant Fortescue pared back its green hydrogen projects as a result of increasing costs and changing financial circumstances in the United States.

Then, gas and oil heavyweight Woodside withdrew plans for two large-scale green hydrogen projects and Origin Energy dropped out of the Hunter Valley Hydrogen Hub.

Meanwhile, the Hydrogen Energy Supply Chain project in Victoria, meant to ship hydrogen to Japan, has met with delays and overruns. Earlier this month, the new Queensland government chose to halt further investment in the Central Queensland Hydrogen Project, putting plans to export hydrogen in doubt.

These setbacks show hydrogen isn’t the ultimate solution to all our energy needs, especially if we want to export it. But they don’t spell doom. Instead, they nudge us toward where hydrogen really shines: in heavy industry, right where it’s made.

Heavy industry: Where hydrogen makes sense

Heavy industries such as steel manufacturing and  are where hydrogen proves its worth. These sectors are significant contributors to climate change—steel accounts for about 8% of global greenhouse gas emissions, ammonia a further 2%.

Most emissions from steelmaking come from burning coal in blast furnaces to convert ore into iron and .

In a cleaner alternative, hydrogen (when produced using renewable energy) can be used to strip oxygen from the ore and make iron, with water as a byproduct. The result is green iron, ready to be turned into steel in an electric arc furnace—with a fraction of the emissions.

Ammonia is used to make fertilizer and industrial chemicals, and hydrogen is one of the main ingredients in its production. Hydrogen bonds with nitrogen from the air to form ammonia. No hydrogen, no ammonia—it’s that simple. Conventional ammonia plants get hydrogen from methane, producing CO₂ in the process. Green ammonia uses renewable energy to produce hydrogen by splitting water via electrolysis.

Our recent research crunched the numbers on producing these new green commodities. We found making green iron in Australia with hydrogen and shipping it to Europe for steel production could be 21% cheaper than exporting raw iron ore and hydrogen separately. Plus, it could cut emissions by up to 95% compared to traditional methods.

There are huge economic opportunities for Australia too. Instead of shipping low-value raw materials, Australia could export ready-to-use green iron or green steel, reshaping global supply chains while cutting costs and carbon. That’s the kind of rethink hydrogen enables.

Industry hubs: A practical fix

Transporting hydrogen long distances is costly and inefficient. The fix? Industry hubs that produce hydrogen right where it’s needed—next to steel mills, ammonia plants, desalination plants, water treatment plants or even aluminum smelters. Putting producers and consumers together slashes transport costs and unlocks efficiencies.

We’ve built tools to pinpoint places with the greatest potential to produce these new green commodities.

The Hydrogen Economic Fairways Tool maps where renewable energy, infrastructure and industrial sites align for cost-effective hydrogen production.

The Green Steel Economic Fairways Mapper zooms in on prime locations for green steel, spotlighting places such as Eyre Peninsula in SA and the Pilbara in Western Australia, among others (see below). These locations have abundant wind and solar resources alongside an existing industrial base.

Challenges remain

Green hydrogen promises to revolutionize heavy industries, but significant hurdles stand in the way of widespread domestic adoption. The biggest challenge comes from the unpredictable nature of renewable energy, which makes it hard to maintain the steady hydrogen supply industries need.

The costs remain steep, too. Splitting water into hydrogen using renewable electricity isn’t cheap, particularly when you need backup storage systems to keep production going during cloudy or windless periods.

Getting hydrogen where it needs to go poses another major challenge. As hydrogen is both bulky to transport and highly flammable, it requires special handling and infrastructure, driving up costs, especially for facilities far from production sites.

Many companies also hesitate to invest in hydrogen-compatible equipment, as retrofitting existing plants or building new ones requires substantial upfront costs without guaranteed returns.

Government backing: A push in the right direction

Thursday’s announcement of A$2.4 billion investment in the Whyalla steelworks along with plans for a $1 billion green iron investment fund are a bold bet on green steel. Furthermore, the landmark Future Made in Australia legislation introduces a $6.7 billion Hydrogen Production Tax Incentive, offering $2 per kilogram of renewable hydrogen produced between 2027–28 and 2039–40, alongside a 10% tax credit for critical minerals processing.

Meanwhile tax credits for green aluminum and alumina should help another heavy industry to navigate the energy transition using clean hydrogen.

These measures aim to unlock tens of billions in private investment, boost regional economies, and position Australia as a leader in clean energy manufacturing. This isn’t just about one-off projects. It’s laying the groundwork for hubs that link renewable energy and hydrogen production to industrial demand.

There’s more in the pipeline. The Hydrogen Headstart program pumps funds into hydrogen innovation, and the Future Made in Australia initiative backs clean industry with billions more. Add in policies like carbon pricing or low-interest loans, and the economics tilt even further toward green steel and ammonia. Government buying power—in the form of procurement targets for low-carbon materials—could seal the deal by guaranteeing demand.

These policies aren’t just wishful thinking—they’re practical steps that are already working elsewhere. Sweden’s HYBRIT project, which paired green steel with government-backed demand, has already led to construction starting on new industrial-scale green steel facilities. At the same time, the European Union’s hydrogen strategy leans on carbon pricing and subsidies to guide industries and suppliers through the energy transition, while Japan offers incentives for the use of green  in their automotive industry.

Australia has the  and the industrial base to take advantage of these opportunities. With the right leadership, we can turn hydrogen’s stumbles into a global triumph for heavy industry.

Provided by The Conversation
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