Within decades, it won't make sense to dig and ship Australia's raw materials and process them in Asia.
"That is the dramatic difference between the zero-emissions world economy and a carbon-based world economy," leading economist Ross Garnaut told a mining conference in Perth on Friday.
Although Australia may be moving from "extreme laggard" on climate policy, he said it could make an even bigger global contribution by using its abundance of minerals, land and renewable energy.
Professor Garnaut said Australian industry received little competitive advantage from the country being richly endowed with gas and coal.
When Australian coal is exported from Queensland or NSW to Kobe, Busan or Shanghai, the cost of that coal is much the same in Japan, South Korea or China as it is here.
But if Australia exported green electricity, which Andrew Forrest and Mike Cannon-Brookes want to do, or liquid hydrogen or ammonia, it would become more expensive to process raw materials in Asia, he said.
"All of the economic pressures will be to process in Australia."
He said the change would require a lot of trust because key trading partners would resist.
Conference host Minerals Research Institute of Western Australia is looking at the viability of an onshore green steel industry using WA iron ore and fuelled by renewable liquid hydrogen.
Although Japan, South Korea and Europe are tipped to move first and accept Australian processing, the long-term opportunities for Australia would be largest from selling steel to China.
Prof Garnaut said he was "not pessimistic" on China eventually accepting foreign-made steel, given Australia built the iron ore trade against stiff resistance.
"One of jobs as ambassador was to explain how much better it would be for Chinese development if they relied on high-quality imported ore."
He also led the landmark climate review 15 years ago to prepare Australia for the economic impact, and has returned as an influencer at the Albanese government's jobs and skills summit.
Speaking from Canberra, Prof Garnaut said more sustainably produced iron ore and local steelmaking offered the greatest opportunity and greatest challenges.
Dr Forrest, BHP boss Mike Henry and WA Premier Mark McGowan were here so the issues were well represented, he said.
But Prof Garnaut warned there would need to be a steady expansion over decades to support value-adding industries, not a return to the "great booms and busts" of the past.
"Capital expenditure of about 5.5 per cent of GDP will be in zero carbon energy and industry will be required between now and 2050 - that is big."
He said it's within the range of mining investment that reshaped the Australian economy from 2000 and delivered the materials that built 21st century China.
The Russian invasion of Ukraine is also changing the dynamics of energy markets, with longer-term impacts unknown on a wide range of refining.
In a report released on Friday, Fitch Solutions saysd high demand for gas in Asia and the loss of Russian supply to Europe meant high energy prices will persist for several years.
Higher energy prices in Europe have hit nickel and zinc smelters and aluminium smelter closures have begun.
