The US Institute of Energy Economics and Financial Analysis (IEEFA) said South Australia risks losing its early leadership in low-emission iron and steel production after policy support shifts from green hydrogen to natural gas.
Less than two years after launching the Green Iron and Steel strategy, the State Government has signed a 10-year agreement with Australian oil and gas company Santos covering supply 200 petajoules of gas, as previously reported by SteelOrbis. The fuel will primarily support the Whyalla smelter's transition from coal-based blast furnace production to direct reduction iron (DRI) technology.
Gas-based DRI is seen as a transition rather than a green solution
While gas-based DRI generates lower emissions compared to traditional steel-based coal, IEEFA stressed that the process remains carbon-intensive and cannot achieve fully clean steel production.
The agreement follows the cancellation of a planned green hydrogen project in South Australia, which was originally intended to supply the Whyalla site. Government guidance that natural gas will dominate the plant's future energy mix points to a strategic shift from earlier plans to move towards hydrogen-based steelmaking.
Global momentum increasingly favors hydrogen-based steelmaking
Gas risks are not prioritized according to IEEFA analysis interprets global technological
