Gas vs. hydrogen – pros and cons of two pathways to lower-emission iron BOX 2 Some participants maintained that using gas as a transitional fuel can rapidly reduce emissions, while infrastructure and renewable generation ramp up. Carefully structured contracts for gas supply can prevent long-term lock-in and support a staged decarbonization pathway that eventually integrates hydrogen and other renewables. Others argued that if a green premium is being charged then the product must be truly green and trusted, i.e. near-zero or low-emissions in line with IEA definitions.25 For green iron specifically, that points to iron made with renewable energy and green hydrogen rather than gas. Using gas-based DRI/EAF results in ~1.4 tonnes of CO2 per tonne of steel produced – about 35-40% less than the ~2.2 tonnes of CO2/t released by the traditional coal/coke-based BF- BOF process.26 But this is still far more CO2 than production based on renewable power with inputs of either scrap steel or green iron. The benchmark used by the First Movers Coalition for its steel commitment requires that near zero-emissions steel should emit less than 0.4 tonnes of CO2-equivalent per tonne of crude steel produced, falling to just 0.05 tonnes of emissions if 100% of inputs are scrap steel.27 There are economic implications too. According to workshop participants, domestic gas in South Australia costs twice as much as in the US and three times more than in Qatar. Australia is in a race to compete with other countries for the green iron market, so there is no time to lock into gas. Informal polling among participants found a strong preference for green hydrogen-based DRI over gas-based DRI (see Figure 1). A third pathway to green iron is electro-winning, which does not use coal, gas or hydrogen as a reducing agent. Instead, the ore is reduced at low temperatures through electrolysis, producing pure metallic iron directly with oxygen as the sole by-product – as long as the process is powered by renewables. This technology has a significant advantage: it works with many different grades of iron ores, but it is particularly well-suited to reducing hematite – Australia’s main export.28 It can also work with intermittent renewable power sources and the process is able to monetize waste ores already stockpiled. Meanwhile, carbon capture and storage (CCS) has been touted as another way of reducing emissions from steelmaking in the short term. However, the application of CCS in steelmaking is not yet a proven or commercially viable technology, with Midrex (a company specializing in DRI) stating recently that “its practical use in steelmaking remains limited”.29 An indicative poll of workshop participants, representing various groups of stakeholders (industry, government, civil society, academia), while not a statistically robust sample size, found that a clear majority (59%) prioritize green hydrogen-based DRI as the preferred technology for green ironmaking in Australia. A notable 23% of participants favoured low-temperature electrolysis (electro-winning), given its compatibility with intermittent renewables and diverse ore grades. Meanwhile 16% backed natural gas-based DRI with progressive hydrogen blending over 10-15 years. No-one supported gas-based DRI with CCS, and retrofitting carbon capture onto existing blast furnaces was seen as unviable by participants (see Figure 1). Unlocking Asia-Pacific as a First Mover: Australia’s Green Iron Opportunity 13

Unlocking Asia-Pacific as a First Mover 2025