Establishing 1 million tonnes of green steel production capacity will cost between $4.5 billion and $6.5 billion

Australia’s green steel industry requires massive investment and government support to realise its potential. Achieving these ambitions will require investment of around $110 billion (170 billion Australian dollars) over the next 14 years. This is reported by Steel Times, citing a report by the Institute for Energy Economics and Financial Analysis (IEEFA).

According to government forecasts, export revenue from ‘green’ steel could reach around $62 billion a year (96 billion Australian dollars) by 2040. This will make it possible to replace traditional coking coal exports with an equivalent volume of environmentally friendly raw materials and offset the fall in demand for fossil fuels amid global decarbonisation. Australia exports approximately 150 million tonnes of coking coal per year, which is equivalent to around 270 million tonnes of ‘green’ steel per year (around 0.55 tonnes of coking coal is used to produce 1 tonne of steel).

Experts estimate that establishing 1 million tonnes of ‘green’ steel capacity requires capital investment of between $4.5 billion and $6.5 billion (7–10 billion Australian dollars). Renewable energy accounts for around half of these costs. For example, the state of South Australia will have to more than double its solar generation and storage capacity just to supply energy to a single project in Wyall.

Despite the high cost of the technology, Australia has ample resources to attract capital. IEEFA experts suggest adapting successful mechanisms for supporting renewable energy (in particular, feed-in tariffs and contracts for difference) to create a ‘green premium’ for exports.

The IEEFA emphasises that without a clear government policy, financial guarantees and large-scale funding, the country risks losing its investment appeal and failing to realise its ambitions in the global market for green steel.

Australia increased its coking coal exports by 2.4% year-on-year in January–June 2026, reaching 74.1 million tonnes. In June, the figure reached 15 million tonnes, which was 14% higher than the previous month, but 3% lower year-on-year.