Summary: Government support for industries transitioning to using mostly renewables protects domestic industry and the jobs it creates. But what if, for example, green steel could be produced cheaply outside of a domestic region? If that meant putting domestic industry jobs at risk, would governments be as keen? The MENA region produced just 3% of global crude steel in 2021 but it accounted for nearly 46% (55 Mt) of the world’s Direct Reduced Iron production. Some of the largest iron ore pelletising plants in the world are in MENA too.
Why this is important: If renewable electricity becomes cheap enough, we could see green steel production potentially moving at scale to the MENA. That could be interesting politically, and it might put the current consensus around industry support at risk.
The big theme: Over the long term, the production of many industrial materials could be relocated, as companies switch from the use of fossil fuels to renewable based inputs. Historically, the decision as to where to site large production plants was based on easy access to key raw materials. That may not necessarily be the case going forwards.
It's clearly going to need a lot of government support to get from where we are now, using a lot of coal, to where we want to be, using mostly renewables. While some governments might provide that support because "it's the right thing to do", for others it's about protecting their own domestic industry and the jobs it creates. The industry directly employs c. 310,000 people across the European Union, with a lot more relying indirectly on steel jobs. These are jobs that are seen as being worth protecting. Green steel is clearly a good thing, we must all agree on that.
But what if green steel could be produced cheaply outside the EU, putting the domestic industry jobs at risk. Would governments be as keen then?