Brazil’s green iron opportunity could drive jobs, trade and global steel transformation

Berlin and São Paulo, 7 November 2025. Brazil could play a defining role in cleaning up one of the world’s most emission-intensive industries. New research by Agora Industry and E+ Energy Transition Institute finds vast potential to transform the global sector through strategic green iron partnerships with Brazil. Producing 10 million tonnes of green iron by 2040 could enable the country to avoid 12.8 million tonnes of carbon dioxide, create around 35,000 new jobs and more than double current export revenues compared with raw iron ore exports. This volume of green iron would correspond to roughly three times Brazil’s current exports of pig iron, an intermediate product with lower value.

As governments convene in Brazil for COP30, industrial decarbonisation – a crucial lever for delivering on countries’ national climate action plans (NDCs) – is set to take centre stage. The steel sector, responsible for roughly nine percent of global greenhouse gas emissions, must shift from coal-based production to low-carbon pathways for the world to stay on track to climate neutrality by mid-century. Based on techno-economic modelling and stakeholder consultations, the analysis shows that green iron trade – producing low-carbon iron in renewable-rich regions and exporting it to steelmaking hubs – offers a pragmatic route to accelerate this transformation. The modelling integrates parameters such as renewable electricity prices, hydrogen costs and transport emissions, also allowing for direct comparison between Brazil and other potential suppliers.

“Steel underpins the global economy, but the sector remains one of the heaviest industrial polluters. With the right policies, it can become a flagship of green industrial transformation. Governments can drive this shift by building green iron trade partnerships between traditional steel hubs and Global South countries rich in renewables and iron ore,” said Julia Metz, Director of Agora Industry. “Such collaboration – for example between the EU and Brazil via the existing ‘Global Gateway’ – could catalyse a global green steel market, cutting emissions at scale and creating high-quality jobs.”

Win-win: Brazil as green iron hub to drive mutual gain

Brazil combines a unique set of advantages that make it ideally suited for large-scale green iron production. Its vast renewable energy potential, especially solar and hydropower, allows for abundant and affordable green hydrogen production. The country also holds some of the world’s highest-grade iron ore, competitive labour costs and an established industrial base. Additionally, Brazil’s existing logistics infrastructure for iron ore exports and experience in metallurgical processes provide a solid foundation for scaling green iron clusters near ports and mining regions. These factors position Brazil to become one of the most cost-effective producers of green iron globally. 

Seizing this opportunity will require Brazil to coordinate the expansion of renewable and hydrogen infrastructure while de-risking investments in new power generation, grid capacity and electrolysers. Integrating industrial and energy planning under a coherent national decarbonisation strategy – supported by the Hydrogen Act, stable regulation, clear permitting timelines and access to low-cost financing – can attract capital and ensure affordable renewable hydrogen supply for green iron production. Establishing a national certification system aligned with international standards, coupled with transparent carbon accounting and traceability mechanisms, will secure market access under frameworks such as the EU’s carbon border adjustment mechanism (CBAM). Public procurement and targeted incentives can then help build early demand and strengthen competitiveness.

“Green iron trade would enable Brazil to add value to existing iron ore exports, move up the value chain and advance global climate goals while fostering national socio-economic development,” said Rosana Santos, Executive Director of E+ Energy Transition Institute. “It can attract sustainable investment, boost GDP and create thousands of quality jobs for Brazilians.Formalising bilateral green iron task forces could accelerate pilot projects and enhance data exchange. Large-scale green iron production could also serve as a benchmark for developing green industrial hubs across Latin America, with regional spillover effects in logistics, energy and employment.”

For traditional industrial centres, such as Germany, South Korea or Japan, sourcing green iron from countries like Brazil could reduce steelmaking costs by 12 to 15 percent by 2040. This could help countries preserve their high-value steel production sites and downstream manufacturing chains while meeting increasingly stringent climate targets and strengthening industrial resilience through diversified low-carbon inputs. In this model, both producer and importer countries share in the benefits of a cleaner, more competitive steel industry. As around 90 percent of employment in the steel sector is concentrated in the more labour-intensive steelmaking and finishing stage rather than in primary iron production, green iron trade can advance decarbonisation while sustaining domestic industrial employment. 

Enabling partnerships: finance and policy coordination 

At the core of the transition is green hydrogen-based direct reduction technology (H₂-DRI), which can reduce up to 100 percent of carbon emissions compared to the coal-based blast furnace-basic oxygen furnace route, depending on the power source and process integration. While many industrialised economies face constraints in affordable hydrogen supply, Brazil’s electricity mix – already over 90 percent renewable – creates a strong foundation for large-scale, low-cost hydrogen and green iron production.

The analysis underscores that targeted financial and policy coordination will be crucial to unlocking this potential. Brazil’s high cost of capital remains a key barrier to scaling investment, requiring concessional financing, guarantees and blended de-risking mechanisms to improve project bankability. Expanding cross-border offtake and financing mechanisms – for example through the demand side platforms such as the German H₂Global, and multilateral development banks – will help secure investment, lower capital costs and provide long-term supply certainty. Introducing long-term (carbon) contracts for difference could further improve price visibility and investment security.  Clear policy alignment across hydrogen, energy and industrial planning can strengthen investor confidence and help position Brazil as a cornerstone of an emerging global green iron market, the analysis notes. 

International cooperation will be critical to scale green iron trade. Existing cooperation platforms, such as the German-Brazilian Energy Partnership or the EU’s Clean Energy and Investment Partnerships (CTIPs) can be used to embed green iron in clean industrial supply chains. Coordinated standards, certification and carbon accounting frameworks can ensure transparent and fair markets. At the same time, technology cooperation, skills partnerships and vocational training aligned with new hydrogen and metallurgical technologies can accelerate innovation, facilitate long-term job creation and ensure that Brazil’s rise as a green iron hub supports both national development and global climate goals. 

The 29-page slide deck was produced in close collaboration with E+ Energy Transition Institute in Brazil and is available at www.agora-industry.org. It builds on an earlier publication The role of green iron trade in accelerating competitive steel transformation, which provides a global perspective based on techno-economic modelling and stakeholder consultations.