BP has stood down contractors working on its biofuel plant just weeks before discovering if its adjacent green hydrogen project will win $1 billion of government backing.
WA mining giants seek government help to turn their low grade ore into green iron
Australia's largest export has a problem - its low grade and high impurities make it unsuitable for producing low emissions iron and steel with current technology
Making steel produces seven percent of the world's climate-heating carbon pollution and Australia may lose from the race to lower those emissions without new technology that can use its $100 billion of annual exports.
About three quarters of the world's iron comes from heating iron ore with coal in a blast furnace - a highly polluting process - to make pig iron that is later turned into steel.
This is where almost all of Australia's exports go as the process can tolerate the relatively low grade and high impurity levels of the hematite mined in the Pilbara.
The rest of the world's steel comes from direct reduced iron from gas-fired shaft furnaces that are still enormously polluting, but 40 per cent better than blast furnaces.
Emissions from this process could be slashed by using "low-carbon" hydrogen instead of gas, but almost all Australian iron is unsuitable.
A report by consultants Mandala Partners commissioned by WA's mining and gas lobby group the Chamber of Minerals and Energy has identified the most prospective technology to make low-emissions so-called green iron in the near term with Australian ore
A shaft furnace would be fired with hydrogen instead of gas and then impurities removed in an electric smelting furnace. The hydrogen would need to be produced from water with renewable energy to achieve the near total reduction in emissions.
Mandala identified using natural gas as a suitable transition pathway until the hydrogen was available.
It estimated an alternative technology that can use renewable electricity directly, instead of making hydrogen with it, as a decade away from being ready for use.
A big green prize for the Pilbara
The report outlined an unrealistically ambitious target of WA making 4.5 million tones of green iron by 2030.
Mandala estimated $37 billion of investment would be needed in the next six years: $23 billion for renewable energy infrastructure, storage and transmission, $2 billion transport and water infrastructure and$12 billion to build facilities to produce "low-carbon" hydrogen and green iron.
Until low carbon hydrogen is available natural gas could be used in the furnaces.
Longer-term Mandala estimated WA could supply 14 per cent of the world's green iron by 2050, reducing global emissions by 456 million tonnes a year - almost as much as Australia produces now - and employ close to 20,000 people.
However it warned the opportunity could be lost to other competitors, and lowering the cost of generating renewable electricity - the biggest cost in making green iron - was crucial.
"Long development timeframes mean investment is needed now, but WA’s fragmented electricity networks, complex State and Federal approval processes, and the high-cost environment are slowing investment," the report said.
Help wanted
The report - endorsed by the heads of the state's three biggest miners of hematite iron ore Fortescue, Rio Tinto and BHP - had a long list of recommended government policy reform and expenditure to safeguard the future of their primary revenue source.
The asks included:
redirect existing industry finance schemes to common user transmission investment in WA
significantly increase the $1.9 billion federal Power the Regions Fund to support renewable generation for green metals projects
fund companies' feasibility and front end engineering studies
prioritise regulatory approval for projects that can reduce global emissions
increase investment in Pilbara ports and roads to help the importation of large equipment
increase limits on tax deduction for research and development
add a green iron production tax credit to the one already proposed hydrogen
Fortescue chair Andrew Forrest said green iron would help avert the most catastrophic, irreversible impacts of climate change.
"It presents a once in a generation economic opportunity to build what could be our largest ever single industry," he said.
The report also recommended the federal Safeguard Mechanism designed to reduce industry emissions be made less onerous for magnetite producers and projects not connected to the power grid.
Chen Zeng, chief executive of WA's major magnetite producer CITIC Pacific, said the state's emerging magnetite sector was already helping deliver lower emissions steel.
“Emissions don’t stop at national boundaries. It’s critical we have policy settings which encourage the high-grading of WA’s very significant endowment of magnetite ore," he said.
I worked in oil & gas in commercial and engineering roles for 20 years. Since 2016 I have written for The West Australian, The Saturday Paper, RenewEconomy, Michael West, Boiling Cold and WAtoday.
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Australia will lose thousands of jobs to rival resource-rich economies if the federal government fails to kickstart the nascent green iron industry, experts warn.
