Submission: Inquiry into the role of Western Australia in the global effort on decarbonisation

10 October 2025

To: Economics and Industry Standing Committee
Re: Inquiry into the role of Western Australia in the global effort on decarbonisation
 

Thank you for the opportunity for the Institute for Energy Economics and Financial Analysis (IEEFA) to provide input to the Economics and Industry Standing Committee’s Inquiry into the role of Western Australia in the global effort on decarbonisation.

IEEFA is an independent energy finance think tank that examines issues related to energy markets, trends and policies. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy.

The key points of our submission are as follows: 

• Green iron represents a major economic opportunity for WA, but pathways that prolong fossil fuel use should be avoided. Direct reduced iron (DRI) is an existing, mature technology that offers the most viable pathway for green iron production. 
• The use of methane gas in DRI plants should be minimised as it would put pressure on domestic gas supplies and increase emissions, WA faces international competitors who are better placed to produce gas-placed DRI. Carbon capture and storage (CCS) is unlikely to be effective in decarbonising iron production. 
• Green iron requires the use of green hydrogen, made using renewable energy. WA should aim to include a proportion of green hydrogen in all future DRI plants with the aim to ramp up use as it becomes more affordable. 
• Liquefied natural gas (LNG) exports from WA face an uncertain outlook amid a looming supply glut and uncertain demand.
• LNG is unlikely to displace coal for power generation in emerging markets as LNG is relatively expensive and uncompetitive. Where gas has replaced coal, its position is being eroded by renewables and battery storage. 
• China is the world's largest LNG importer, but its significant domestic gas production and changes in its economic output indicate limited prospects for demand growth. In India the share of gas generation in the electricity sector fallen, with LNG demand growth unlikely. 

Kind regards,

Simon Nicholas, Lead Analyst, Global Steel
Joshua Runciman, Lead Analyst, Australian Gas