The Institute for Energy Economics and Financial Analysis (IEEFA) has shared a report regarding the MENA region’s role in global decarbonization efforts and green transition.
The IEEFA stated that steelmakers around the world are accelerating their transition to direct reduced iron (DRI) technology in order to significantly reduce their carbon footprint. The MENA region is known for spearheading low-carbon iron and steelmaking by utilizing DRI technology for over four decades. However, even though there are recent low-carbon iron and steel projects in the MENA region indicating that the transition has gained momentum, the existing natural gas-based DRI-electric arc furnace (EAF)-based plants need to immediately begin reducing their Scope 1 and 2 emissions, the institute noted. Most emissions from the DRI-EAF plants come from the use of natural gas and from electricity consumption during production. The carbon intensity of electricity grids in the MENA region is above the global average due to fossil fuels and the low penetration of renewables. However, the region holds exceptional potential for renewable energy.
The green transition in the steel industry of the MENA region can start by shifting gradually from fossil fuel-based electricity to renewable energies, the IEEFA stated. The steelmakers in the region have a real opportunity to reduce emissions by transforming their natural gas-based DRI plants into hybrid systems, paving the way for a full transition to hydrogen. Global gas-based DRI technology providers highlight that it is possible to inject hydrogen into existing furnaces.
According to the data released by World Steel Dynamics, global DRI capacity is forecast to reach 175 million mt per year by 2030, with the EU and MENA regions due to account for 20 million mt per year and 69 million mt per year, respectively. In addition, Wood Mackenzie, a global provider of data and analytics for the energy transition, said it expects that global DRI demand will rise to 320 million mt per year by 2050, with the MENA region estimated to become a major exporter, accounting for 35-40 million mt per year of global DRI trade.