BlueScope could use wind power as a sustainable way of making steel, according to a report.
The report's authors include the CSIRO and several trade unions and identifies Port Kembla as an "excellent location" for an offshore wind farm.
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The Offshore Wind Energy in Australia report stated that wind could be used in conjunction with hydrogen to make green steel.
"The potential of hydrogen for decarbonising steel production is immense," the report stated.
"Such a scenario would drive substantial electricity demand for hydrogen production that could realistically be met by offshore wind.
"Using hydrogen to produce Bluescope's current steel production would require 5-7.5 Terrawatts per year of electricity.
"We have calculated that within 50 kilometres of the Dapto substation there is the potential for 11 TWh of offshore wind generation if the location is restricted to 30-50km from shore."
Unions called on the government to develop the industry as a way of creating jobs.
With the scale of offshore wind resources found by this research, it is clear an offshore wind industry could play a significant role in creating jobs in regions like the Illawarra," said AMWU NSW & ACT Secretary Cory Wright.
"Government should ensure we manufacture the components using local steel and give workers the training they need to move into this new industry.
"By actively ensuring towers and turbines are produced locally, the environmental benefits would be amplified by delivering economic and social outcomes."
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