Deloitte and WWF Australia issued the warning on Wednesday as part of a study into green iron production in Australia, which it said had the potential to generate up to $295 billion a year.
The findings come less than a fortnight after federal government announced a $1 billion Green Iron Investment Fund, to be split between transforming the Whyalla steelworks in South Australia and green iron projects.
Deloitte's study, called Forging Futures, found Australia had a significant opportunity to decarbonise steel production worldwide due to its natural advantages such as "iron ore reserves and renewable energy potential".
Steelmaking is responsible for between seven and nine per cent of global emissions, the report found, but green iron produced with environmentally friendly energy sources like hydrogen could cut those emissions by up to 90 per cent.
Australia would need to make changes to seize the green iron opportunity, however, and Deloitte Australia partner Georgine Roodenrys said renewable energy projects would need to be fast-tracked.
"At the current pace, it would take over 100 years to deploy the necessary renewables to replace 10 per cent of Asian steelmaking with green iron," Ms Roodenrys said.
"Australia needs to accelerate the deployment of renewables and establish pragmatic policies that support both economic and environmental goals."
Other recommendations in the report included working with Asian countries to develop a regional carbon price, creating standards for green steel production, and introducing government incentives for green iron projects with conditions that protected the environment.
If the reforms were followed, WWF Australia industry decarbonisation manager Nicole Wyche said, Australia could secure a future for its minerals sector while also helping to cut pollution.
"Australia can be the key that transforms Asia's steel industry and construction sector," she said.
"This is a chance to future-proof our largest industries."
The report came days after the federal government released a $1 billion fund to transform the Whyalla steelworks plant and invest in green iron projects.
Those projects should include "commercial scale deployments of first-of-a-kind technology" for green iron production, Climate Energy Finance director Tim Buckley said, that could build on Australia's natural advantages.
But transforming the South Australian steel plant into a green iron production facility could also give Australia a fresh advantage, he said, and allow it to join the global race to cut steel emissions.
"Whyalla might prove to be a pivotal moment for Australia to actually give us a chance to get back into the race," he said.
"Plenty of countries are in the race – China's sprinting – and Australia hasn't even got our shoes on or got to the start line and it's about bloody time we do."
Existing green iron projects in Australia include Fortescue's Christmas Creek mine and a facility being investigated by Quinbrook Infrastructure Partners in Gladstone.
