Brazil Poised To Lead In Green Iron And Steelmaking With Renewable Energy Advantage

Brazil is set to emerge as a global leader in green iron and steelmaking, driven by its extensive renewable energy resources and high-quality iron ore reserves, according to a new report from Global Energy Monitor (GEM).

Currently, about 75% of Brazil’s steel production relies on coal-based processes, presenting challenges for decarbonization. However, Brazil’s abundant renewable energy resources, including its substantial hydropower, wind, and solar capacities, offer a pathway to producing green hydrogen, which is crucial for the low-emissions direct reduced iron (DRI) process. This shift could enable Brazil to develop a green iron export industry while also reducing domestic steel sector emissions.

The report highlights Brazil’s significant position in the renewable energy sector. The country ranks second globally in operating hydropower and bioenergy capacity, seventh in utility-scale wind capacity, and ninth in solar capacity. Brazil’s future prospects are even more promising, with 180 gigawatts (GW) of wind projects and 139 GW of solar projects in various stages of development, placing Brazil among the top global leaders.

To support green hydrogen production, Brazil has been actively expanding its capacity. In 2021, it launched a national hydrogen program, and in August 2024, President Lula enacted a legal framework to support low-carbon hydrogen production. The Ministry of Mines and Energy estimates that Brazil could produce 1.8 gigatonnes of low-carbon hydrogen annually, potentially at the lowest cost globally. The country’s Northeast, with its exceptional wind and solar potential, is particularly well-suited for this initiative.

In April 2024, Brazil awarded contracts for nearly 4,500 kilometers of new transmission lines and substations to improve electricity distribution between the renewable-rich Northeast and the industrial Southeast.

Additionally, Brazil remains a top global producer and exporter of iron ore, known for its high-quality reserves with iron content ranging from 60% to 67%. This high-quality ore is essential for the green hydrogen-based DRI production method.

While Brazil faces challenges, such as delays in retiring coal-based blast furnaces and limited scrap supply for electric arc furnaces, the country’s strengths present a significant opportunity for a low-emissions steel sector overhaul. The World Economic Forum projects that emissions from Brazil’s steel industry could increase significantly by 2050 without substantial investment in green iron and steel technologies.

Gregor Clark, Project Manager at GEM, commented, “Brazil has a clear blueprint to become a leader in green steel. Hosting next year’s UN climate conference offers a prime opportunity to showcase this potential. However, significant challenges remain, including the need for supportive policies, subsidies, blended finance, and international cooperation.”

As Brazil prepares for its role on the global stage, the country’s efforts to advance green iron and steelmaking could pave the way for a more sustainable and economically robust future.