The bottom line is that fossil fuels are accelerating climate...

The bottom line is that fossil fuels are accelerating climate change which in turn is making parts of the world uninhabitable. Insurance alone is lethal to habitation.
The private sector's reluctance to fully fund green iron initiatives without government support stems from several market failures and structural challenges inherent in the industry. Here’s a detailed breakdown of the key reasons:

1. Market Failures and Externalities

• Carbon Pricing Absence: Currently, polluters (like traditional steelmakers) don’t pay the full cost of carbon emissions, creating an uneven playing field. Green iron, which avoids these emissions, doesn’t receive a financial advantage unless carbon is priced globally 14.

• Negative Externalities: The societal benefits of reduced emissions (e.g., climate mitigation) aren’t captured by private investors, making green iron less financially attractive without subsidies or carbon taxes 17.

2. High Upfront Costs and Technological Risks

• Green iron production requires massive capital investments in renewable energy infrastructure, hydrogen electrolyzers, and new processing technologies (e.g., hydrogen-based direct reduction or electric smelting furnaces). These technologies are not yet proven at commercial scale, deterring private investors 26.

• Early movers face steep learning curves and risks of failure, while later entrants can benefit from their knowledge without bearing the same costs (a classic "innovation spillover" problem) 14.

3. Coordination and Infrastructure Gaps

• Green iron production depends on co-locating renewable energy, hydrogen production, and iron ore reserves—a challenge in Australia, where resources are often geographically dispersed. Private firms struggle to finance shared infrastructure (e.g., pipelines, ports, or transmission lines) without government coordination 14.

• Example: Historical precedents like WA’s Goldfields Water Supply Scheme or the North West Shelf gas project required government intervention to unlock private investment 1.

4. Global Competition and Policy Uncertainty

• Countries like Sweden and Germany are ahead in green steel production, supported by heavy subsidies and carbon pricing (e.g., EU’s CBAM). Without similar policy frameworks, Australian firms risk losing out to cheaper, carbon-intensive imports 27.

• Demand for green steel is nascent, with premiums still volatile. Private investors hesitate without guaranteed long-term markets or offtake agreements 68.

5. Comparative Advantage and Strategic Hedging

• While Australia has abundant iron ore and renewables, transitioning to green iron requires reconfiguring entire supply chains. Government support de-risks this shift, ensuring Australia retains its competitive edge as fossil fuel exports decline 48.

• The $1 billion Green Iron Investment Fund and hydrogen production tax credits aim to "crowd in" private capital by sharing early-stage risks 810.

Why Government Intervention Works

Historical examples (e.g., Japan’s steel industry post-WWII, or Norway’s oil fund) show that strategic public investment can catalyze industries where private capital alone falls short. Green iron aligns with Australia’s "superpower" potential in renewables and minerals, but unlocking it requires bridging the "valley of death" between innovation and commercialization 147.

In short, the private sector isn’t shirking—it’s waiting for policy to correct market failures and reduce risks. As one analyst noted: "Markets don’t build pipelines; governments do" 1.