MENA’s green iron opportunity: Decarbonising the global steel industry
Summary
Green iron offers a credible pathway to decarbonise one of the world’s most emissions-intensive industries, but today project deployment is constrained by high upfront costs and a green premium, weak demand signals, and lack of clear standards. The MENA region - in particular Oman, Saudi Arabia and Egypt - is uniquely positioned to become a first mover, combining exceptional renewable energy resources, low-cost green hydrogen potential and existing DRI infrastructure. With the EU’s CBAM and emerging steel decarbonisation policies in Europe and Asia, demand for genuinely low-carbon iron is set to grow rapidly. Without decisive action, however, the region risks locking in gas-based assets that will struggle to remain competitive as carbon costs rise globally. To position MENA at the core of the global low-carbon steel value chain, green iron must become a strategic priority; supported by industrial policy, concessional finance, coordinated demand-side mechanisms and robust certification to avoid greenwashing. This brief takes stock of the current green iron landscape in MENA by analysing 23 projects and sets out key recommendations for scaling green iron production.
Key Takeaways
- Steel production is of strategic importance but today’s production methods are highly polluting. Currently, green iron and steelmaking based on renewable technologies is associated with a “green premium” primarily due to market failure in pricing fossil fuel-based iron and steel production. Investing in green iron and steel would position MENA’s industries for longterm competitiveness particularly as the world shifts to an energy system based on renewable electrification.
- Oman, Saudi Arabia, and Egypt have an opportunity to become first-movers in green ironmaking: they combine strong renewable energy potential, low levelised cost of hydrogen, and pre-existing Direct Reduced Iron (DRI) infrastructure. These countries could become green iron suppliers globally, with climate policies in the EU and Asia driving potential green iron trade. The production of green iron and steel should become a strategic priority and be integrated into national green hydrogen strategies and industrial policies.
- Export markets such as the EU, Japan, and South Korea, and their steel decarbonisation policies will be key drivers due to limited local willingness to pay a green premium. Buyers’ alliances, public procurement, concessional climate finance, carbon pricing, and mechanisms like H2Global should be leveraged to improve bankability and accelerate deployment.
- Genuinely low-carbon green iron projects in the region tend to be inactive, small-scale or at very early stage, with only two that have managed to secure offtake in Oman. This highlights the need for innovative demand-side coordination mechanisms. Additionally, many projects labelled “green” are natural gas-based DRI projects or “hydrogen-ready” projects for which it is unclear if/when they will ever use green hydrogen.
- Clear green iron standards and certification are essential to comply with policies like the EU’s Carbon Border Adjustment Mechanism (CBAM) and access low-carbon markets, where only green hydrogen-based iron products will be able to compete. Greater scrutiny is needed to avoid greenwashing and prevent stranded assets while securing long-term competitiveness and genuine emissions reductions.
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