How Canadian steelmakers are ‘greening’ their steel amid tariffs, global challenges

Steelmaker Algoma says U.S. tariffs on steel are prompting it to accelerate its transition to electric steelmaking.

Prime Minister Mark Carney met with US President Donald Trump this week in an attempt to get some relief 50 percent US tariff Canadian steelmakers have been struggling since June Global steel prices fall due to excess supply China has been accused of this.

Algoma, in a news release It was announced last week $500 million secured in government loanssaid the tariffs had made its blast furnace and coke oven operations unsustainable, and it would exit those operations as it “accelerates its transition” to electric steelmaking.

Meanwhile, other Canadian steelmakers face similar economic pressures and decarbonization pressures.

Here’s why decarbonizing steel is such a big deal, how it’s being done in Canada and what’s needed to make a successful transition in challenging times.

How big an impact does steel manufacturing have on the climate?

Globally, steel production generates approximately Seven to nine percent of global greenhouse gas emissions Which causes climate change.

Steel production in Canada is approximately 13.1 megatons of CO2 or in 2023 -Equivalent to the emissions of approximately three million gas-powered cars, or two per cent of Canada’s emissions.

Canada’s steel industry is concentrated in Ontario, and the three largest industrial emitters of CO2 in the province are all steel plants. Together, they produce 40 percent of industrial greenhouse gas (GHG) emissions in the provinceHigher than the refinery, forestry, mining and chemical sectors.

The federal and provincial governments have invested $2 billion to convert Ontario plants to low-carbon sources of energy.

Why does steel manufacturing cause so much carbon emissions?

Emissions come from two main sources:

• Fossil fuel (usually a fuel derived from coal called coke), which is burned to generate the high temperatures needed to make steel.
• CO2 is produced as a waste byproduct in the chemical reaction required to make steel (which is 99 percent pure iron, with a small amount of carbon) from its raw materials – primarily iron ore and coke.

Ross Linden-Fraser is a research leader at the Canadian Climate Institute. He said steelmakers in Canada are using “the two most popular pathways” to decarbonization.

Algoma: Electric arc furnaces for secondary steelmaking

Algoma is completely cutting out the CO2-producing chemical reaction part of the equation by not making any steel from iron ore at its Sault Ste. Marie, Ontario, plant – it’s shutting down the blast furnaces and coke ovens used to do this.

Instead, it is switching entirely to “secondary” steelmaking, which recycles scrap steel or relies on refined iron instead of iron ore. It still needs to be heated to very high temperatures, but this can be done without fossil fuels with an electric arc furnace (EAF).

Algoma It was announced last July That it has achieved its first steel production with this technology.

CEO Michael Garcia told CBC North side This is expected to reduce the plant’s carbon emissions by up to 70 percent, while allowing it to increase its production by a third. It requires fewer workers than running blast furnaces and coke ovens, Garcia said.

Last week the company estimated the final cost of the EAF project to be $987 million.

Electric arc furnace technology has been around since the 1960s, but has made great strides, Garcia said. Initially, it could only produce low quality steel such as construction bars. Now, “really, you can make any grade of steel you want to make,” he said, and 70 percent of U.S. steel is produced that way.

One type of steel that is “very challenging” is ultra-clean steel, Garcia said, because it requires very clean scrap or virgin iron as a raw material.

Of course, secondary steelmaking is limited due to access to adequate raw materials such as scrap. Lyndon-Fraser said it also depends on whether a plant’s customers are able to work specifically with secondary steelmaking products.

ArcelorMittal Dofasco: Using natural gas and hydrogen instead of coal

University of Alberta researcher Mohammad Adnan Khan said not all steel demand can be met through secondary steelmaking alone.

One way to continue primary steelmaking from raw materials with a low carbon footprint is to replace coal and coke with hydrogen.

Like coke, hydrogen can react chemically with iron ore to produce pure iron. This process is called direct reduced iron (DRI). In Europe it is already being successfully used to produce thousands of tons pure iron without fossil fuels from 2021,

This is the technology that ArcelorMittal Dofasco’s Hamilton plant is relying on.

Khan is co-author of a 2023 report on decarbonizing steel with hydrogen commissioned by the Canadian Steel Producers Association and Transition Accelerator, a non-profit focused on decarbonization strategies.

Initially, the Hamilton plant will have trouble getting enough affordable green hydrogen, he said. But a “hydrogen-ready” plant could also use natural gas or methane – just with a higher carbon footprint. And hydrogen can be slowly mixed with natural gas.

“Once you have the right economics, you can switch to 100 percent hydrogen,” Khan said.

(In fact, adding the 0.05 to 0.5 percent carbon needed to strengthen steel will always require a small amount of natural gas.)

Originally, ArcelorMittal was the target of Dofasco. Demolish its coke plant to make room for DRI plant in 2023The DRI plant will produce iron for pouring into electric arc furnaces, which will also be installed. The company estimates this will allow it to phase out coal by 2028 and cut emissions by 60 percent, or three million tons per year – the equivalent of taking 725,000 gas cars off the road.

The project was expected to cost $1.8 billion, and the Ontario and federal governments committed to covering half the cost.

However, By the end of August 2024The coke plant was still standing, and the supply of natural gas needed to the plant had not yet been approved. CBC News has contacted ArcelorMittal Dofasco for an update, but had not received an update by the time of publication.

There is also a third large steel plant in Ontario, operated by Stelco in Haldimand County (purchased by US-based Cleveland-Cliffs in 2024). Lyndon-Fraser said it has not yet chosen a decarbonization strategy.

What does it take to keep it going in challenging times?

Lyndon-Fraser said so far the government continues to balance its short-term support for the industry with a long-term focus on decarbonizing the steel industry in challenging times.

He said industrial carbon pricing has encouraged these green steel projects, and both the federal and provincial governments have offered financial assistance.

Additionally, this year, the federal government updated its green purchasing standards Prefer low-emission steel for construction projects.

“This is a huge step forward, given that the federal government is the largest buyer of goods and services in Canada,” Lyndon-Fraser said.

“It seems quite clear that the future of competitive steel is green,” he said. “And so creating policies that keep the industry focused on that long-term goal is really important.”