Brazil is well-positioned to become a global green iron and steelmaking leader thanks to its abundant renewable electricity and high-quality iron ore reserves, finds a new report from Global Energy Monitor.
While three-quarters of the country’s steelmaking currently relies on coal-based capacity and many of the traditional methods for decarbonizing the sector face constraints, the country’s vast renewables can feed the production of large-scale green hydrogen required to power the low-emissions direct reduced iron (DRI) route, allowing Brazil to develop a value-added green iron export industry even as it reduces emissions from its domestic steel sector.
Production of green hydrogen demands huge amounts of renewable energy, a sector where Brazil has already established global leadership. According to data from GEM’s Global Integrated Power Tracker, Brazil ranks second globally in operating hydropower and bioenergy capacity, seventh globally in operating utility-scale wind capacity, and ninth in operating utility-scale solar capacity.
Production of green hydrogen demands huge amounts of renewable energy, a sector where Brazil has already established global leadership. According to data from GEM’s Global Integrated Power Tracker, Brazil ranks second globally in operating hydropower and bioenergy capacity, seventh globally in operating utility-scale wind capacity, and ninth in operating utility-scale solar capacity.
Future prospects for wind and solar are even more impressive. GEM data show that Brazil has 180 gigawatts (GW) of utility-scale wind farms in announced, pre-construction, or construction status, placing the country third globally behind China and Australia. Brazil’s 139 GW of prospective utility-scale solar farms ranks second globally, trailing only China.
Brazil has initiated a number of moves to expand green hydrogen capacity that could boost lower-emissions DRI production. It launched a national hydrogen program in 2021, and in August 2024, President Lula signed into law a legal framework for low-carbon hydrogen production.
The country’s Ministry of Mines and Energy estimates that Brazil can produce 1.8 gigatonnes of low-carbon hydrogen annually at a lower cost than any other nation. Brazil’s Northeast is especially fertile ground for green hydrogen, given the region’s exceptional wind and solar potential.
In April 2024, the Brazilian government awarded contracts for nearly 4,500 kilometers of new transmission lines and substations to bolster electricity distribution between the Northeast and the industrial Southeast.
Brazil is also a top producer and exporter of iron ore, surpassed only by Australia. Iron ore is an important component in iron and steelmaking, and Brazil boasts some of the highest quality iron ore anywhere on earth, with iron content ranging from 60% to 67%. High-quality ore is especially critical for the lower-emissions green hydrogen-based DRI production method.
Harnessing this vast renewables potential and quality iron may present Brazil’s most promising path to steel decarbonization, as more traditional approaches face limitations. Recent investments in Brazil’s largest, most emissions-intensive coal-based blast furnaces will likely delay their retirement, while limited and volatile scrap supply presents an impediment to the development of lower-emissions electric arc furnaces (EAF).
While several smaller Brazilian steel plants have adopted biochar as a replacement for coal in blast furnaces, potentially resulting in reduced greenhouse gas emissions, the amount of coal that can be substituted is limited — and partial coal replacement still ultimately equals coal dependence.
The World Economic Forum estimates that emissions from Brazil’s steel industry could rise nearly a third by 2050 without proactive moves to boost demand and supply of green iron and steel. However, the country could take advantage of its strengths to embark on a low-emissions overhaul.
Gregor Clark, Project Manager for the Portal Energético para América Latina with Global Energy Monitor, said, “The blueprint for Brazil to become a leader in green steel is there, and what better way to showcase this potential than as host of next year’s UN climate conference. Of course the challenges to get there are significant. Brazil will need policies to support a successful green iron and steel industry that uses a variety of subsidies, blended finance and carbon markets. Many of these depend on international cooperation and support from outside actors.”
Contact
Gregor Clark, Project Manager, Portal Energético para América Latina
Global Energy Monitor
Email: [email protected]
About the Global Steel Plant Tracker and Global Blast Furnace Tracker
Since 2021, GEM has provided a publicly-accessible database that identifies, maps, and records plant-level details such as plant ownership, production capacity, production process/technology, and geolocation for all crude iron and steel plants with capacity of 0.5 million tonnes per annum (mtpa) or greater, covering over 92% of global capacity. In 2023, GEM added unit-level data on the global blast furnace fleet, providing critical detail on the most emissions-intensive part of the steelmaking process. GEM’s datasets provide a robust view of the current and developing global iron and steel plant fleet, and the opportunity to examine the status of the iron and steel sector compared to global decarbonization roadmaps and corporate and country level net zero pledges.