Policy Paper by the Carboun Institute’s Green Industry Project

Leveraging Green Trade: The MENA Region’s Opportunity in the Global Green Iron and Steel Market

The steel industry must decarbonize and to do so fast. The sector contributes between  8 to10% of global energy-related CO2 emissions, and starting from 2026 the EU’s  Carbon Border Adjustment Mechanism (CBAM) will charge imports for embedded emissions thereby reshaping trade economics.

This policy paper argues the MENA region can convert this shift into advantage by leaning on three existing strengths: incumbent Directed Reduced Iron (DRI) capacity, low-cost renewables and green Hydrogen, and a central geography to become a competitive supplier of certified low-CO2 green iron.

Although the MENA region produces only 3.6% of global crude steel, it is the world’s largest DRI producer, delivering 44% of global DRI in 2024 (62.5 Mt of 140.8 Mt): a springboard to lead green-iron (HBI) trade.

The primary recommendation of this policy paper is that MENA governments and investors move decisively to integrate upstream pelletizing with midstream HBI production, backed by sovereign support and international finance. Establishing credible carbon certification and pursuing green trade corridors with Europe and Asia will help ensure secure market access. By doing so, the region can convert its energy advantage into global leadership in green iron, securing long-term industrial growth while contributing to climate goals. 

The baseline opportunity is a is a two-step value-chain upgrade: secure upstream of Iron concentrate and DR-grade pelletizing, then scale midstream HBI (“green iron”) exports, so European and Asian steel mills can melt HBI in EAFs while downstream capacity in-region develops.

This policy paper explores how these opportunities can be implemented, via four trade pathways, by  analyzing how  regulatory developments, along with market scale, security and supply-chain resilience and regional cooperation can build and scale corridors linking MENA supply to demand centers in Europe and Asia. 

Together, the pathways provide complementary routes for translating MENA’s structural advantages into durable market positions.

Seizing these opportunities depends on meeting five conditions for success:

• Boosting bankability through credible offtakes, sovereign support, and blended finance.

• Securing early market access with robust MRV and regional carbon pricing alignment.

• Anticipating volatility with structured pricing models that protect against down cycles.

• Adapting to shifting demand by phasing hydrogen ramp-up and managing green premiums pragmatically.

• Diversifying export markets to reduce exposure to uneven carbon policies and trade disputes.

Meeting these conditions will ensure that the envisioned green iron corridors remain investable, compliant, and resilient, turning MENA’s energy advantage into a long-term industrial edge.

For more details, download the policy paper