Forging a sustainable future: Brazil’s opportunity to lead in steel decarbonization

Abstract

High-quality iron ore reserves, abundant renewable electricity, and a skilled workforce make Brazil a prime candidate to lead Latin America’s green steel transition. Brazil’s well-developed and rapidly growing renewable energy sector will be instrumental in the large-scale green hydrogen production required to ramp up steelmaking via the low-emissions hydrogen-direct reduced iron (DRI) route. Brazil ranks among the world’s top ten nations in operating hydropower, bioenergy, and utility-scale wind and solar capacity, as well as within the top three for prospective utility-scale solar and wind capacity. Despite efforts to partially decarbonize the Brazilian steel industry through the use of biochar in blast furnaces (BFs) and scrap in electric arc furnaces (EAFs), two-thirds of Brazil’s operating steel capacity continues to rely on emissions-intensive, coal-based blast furnace-basic oxygen furnace (BF-BOF) technology. Lower-emissions EAF and DRI technology are less prevalent in Brazil than in most other large steelmaking countries. EAFs account for less than one-quarter of Brazil’s steelmaking capacity, and DRI capacity is limited to a single plant not currently operating. More than half of the coal-based BFs at Brazil’s largest steel plants are relatively new or recently relined and are thus capable of operating well into the 2030s without significant interventions to switch technologies. Advance company planning, government policy, financial incentives, and international cooperation will be crucial in supporting green alternatives.