A new report by Climate Energy Finance (CEF) highlights the urgent need for Australia to electrify and decarbonise its Pilbara region to capitalise on the burgeoning global demand for green iron.
The report, titled Superpowering-Up, warns that failing to act could jeopardise Australia’s potential to double its iron exports to $250 billion annually by transitioning to green iron production.
The Pilbara, known as Australia’s resources engine room and the world’s largest iron ore exporter, currently relies heavily on fossil fuels, burning 2.4 billion litres of diesel annually.
The report suggests that replacing this with renewable energy could require 16.66 terawatt hours of electricity per year, equivalent to 7.8 per cent of Australia’s National Electricity Market.
Currently, only 2 per cent of the Pilbara’s electricity is sourced from renewables.
The report advocates for the development of a common-user electricity grid infrastructure (CUI) in the Pilbara. This infrastructure is deemed critical to decarbonising the region and unlocking over $50-100 billion in new investments in renewables, battery firming, and transmission.
Such a move would enable the processing and value-adding of the Pilbara’s vast reserves of critical minerals and strategic metals onshore using zero-emissions power.
The report’s recommendations include prioritising First Nations equity participation in energy projects, introducing “Overriding Public Interest” principles to expedite environmental approvals, and leveraging the federal government’s Future Made in Australia Act to attract private investment.
The WA and federal governments are urged to deploy the $3 billion Clean Energy Finance Corporation concessional financing to support the Pilbara’s transition.
Tim Buckley, CEF Director, emphasised the strategic importance of the Pilbara in the global race to decarbonise, noting the potential for Western Australia to lead in developing a green steel global supply chain.
Matt Pollard, CEF Net Zero Transformation Analyst, highlighted the challenges of building large-scale infrastructure in the region but stressed the need for collaborative efforts between the government and industry to accelerate the transition.
Former Chief Scientist Dr Alan Finkel underscored the need for regulatory reforms to facilitate faster deployment of renewable energy projects, while Marilyne Crestias, Interim CEO of the Clean Energy Investor Group, pointed out the significant investment opportunities in the Pilbara.
The report concludes that embracing these measures is crucial for Australia to maintain its competitiveness in a world economy increasingly focused on carbon pricing and to secure its position as a leader in the global green transition.