Egypt, Algeria and Libya set to lead world’s ‘green steel’ revolution

By Conrad Onyango, bird story agency

Egypt, Algeria and Libya have been listed among the countries set to lead the world in what is expected to be a massive shift to carbon-neutral steel production by 2050.

In 2021, the three North African countries, together with six others in the Middle East, produced more than 55 million tonnes of steel using gas-fired plants, accounting for 46 percent of the world’s “low-carbon” steel.

 In Africa, Egypt leads in gas-based steel production with 5.2 million tonnes, accounting for 50 per cent of its crude steel, followed by Algeria (3.08 million tonnes) and Libya (0.88 million tonnes), according to an analysis by the Institute for Energy Economics and Financial Analysis (IEEFA) covering the Middle East and North Africa.

Three African countries are poised to lead the world in the switch to carbon-free steel production.

These countries, based on the analysis have among the world’s highest number of gas-fired plants using direct reduced iron-electric arc furnaces (DRI-EAF) that use a mixture of carbon monoxide and hydrogen derived from natural gas to remove oxygen from iron ore – part of the refining process. Currently, hydrogen makes up some 55 percent of that mixture.

Analysts now point to the potential of these African countries to quickly switch from natural gas to the 100  percent use of green hydrogen (hydrogen made using renewable energy) as a feedstock, offering the three countries an opportunity to leap ahead in production terms.

“With ample renewable energy potential, the region could become a leader in hard-to-abate and carbon-intensive industries, specifically steel,” said Soroush Basirat, energy financial analyst at the Institute for Energy Economics and Financial Analysis (IEEFA).

IEEFA analysts also say that green hydrogen offers these countries the upper edge when it comes to significantly expanding carbon-free steel production at very low costs compared to their global peers.

According to Basirat, Africa’s steel industry must first work on replacing 30% of natural gas in their steel-making plants with green hydrogen since the existing capacity does not require extra investment for replacing the base technology.

“All new investment could be focused on expanding production of green hydrogen among other renewables. If it acts fast, MENA has the potential to lead the world in green steel production,” she said.

Already, Africa has begun recording major investments in green hydrogen, particularly in countries such as Mauritania, Namibia, South Africa, Morocco and Egypt.

In February, South African President Cyril Ramaphosa announced the development of a pipeline of green hydrogen projects worth some US$ 17.8 billion over the coming ten years. Neighbouring Namibia, in November 2021, announced a US$ 9.4 billion green hydrogen project to be developed near the coastal town of Luderitz.

Accelerating these efforts across the continent, Kenya and other countries have embarked on baseline studies to consider the production of green hydrogen at scale.

Three months ago, Kenya, South Africa, Namibia, Egypt, Morocco and Mauritania formed an alliance to boost cooperation around green hydrogen projects in Africa.

Rising demand for green steel is led by European car manufacturers, which are leading a bid to “green” their production processes. Top carmakers like Mercedes Benz and BMW are looking to green steel to help them meet their carbon reduction targets.

A Swedish-Finnish advisory firm, AFRY AB, said that although countries would face higher green hydrogen production costs than traditional fossil fuel methods, this would vary, based on the costs of renewable energy sources.

“One of the biggest challenges facing the industry is how to decarbonise and produce “green” steel in an extremely competitive market,” said AFRY AB in its latest analysis, “Green Steel: Decarbonising with Hydrogen-Fuelled Production”.

“This means they (cost of renewables) vary by region, but also that they will reduce as production capacity and subsidies for renewables and green hydrogen increase,” AFRY said.

With vast unpopulated areas and some of the world’s highest solar energy capacity, a number of African countries have the potential to create renewable energy extremely cost-effectively.

The North African countries offer more than 5.8-kilowatt hours (Kwh) per square metre per day of solar potential, compared to around 3.8 Kwh/day in Europe, according to the World Bank.

Lower solar energy costs will help reduce the price – currently still prohibitively high – of creating green hydrogen at scale. Local production of hydrogen will also minimise one of the biggest hurdles facing a hydrogen economy – transport costs.

“Access to such rich solar energy resources will allow for the production of green hydrogen at a competitive price,” said Basirat.

According to the International Energy Agency (EA), countries in North Africa and the Middle East have the potential to produce green hydrogen below US$1/kg by 2050.

The IEA, in its Net Zero Emissions scenario, projects that the global share of hydrogen-based green steel production will reach 29 percent of primary steelmaking by 2050.
 
More optimistically, BloombergNEF estimates that 56 percent – equivalent to 840 million tonnes of primary steel production, will come from green hydrogen-powered plants by 2050 in a net zero emissions scenario.

African countries, from the north to the south – where South Africa not only has huge solar potential but also mines large amounts of iron ore – stand to gain from this switch to green steel if they move fast enough to retain a competitive position.

bird story agency
 

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