The global steel industry is responsible for approximately 11% of worldwide CO2 emissions. Within Canada, the steel industry contributes 2% to national emissions, equating to over 2.4 billion Canadian dollars to the GDP, while employing over 23,000 workers directly.
The current transition towards a decarbonized steel industry represents a dual challenge of maintaining economic value while adhering to stringent environmental targets. Canada’s abundant natural resources and current infrastructure place it in a unique position to leverage these opportunities. However, the ambition to shift from a high-emissions to a near-zero-emissions steel industry presents complicated logistical and strategic challenges, particularly around the integration of green hydrogen technologies and the mechanization of production processes.
The transition from conventional steelmaking processes, primarily using the blast furnace-basic oxygen furnace (BF-BOF) route, to low-emission pathways involves intensive re-evaluation of current practices. The BF-BOF technique, which accounts for 70% of the world’s steel production, emits nearly 3 tonnes of CO2 per tonne of steel. This has precipitated the search for alternative methods such as the hydrogen direct reduction of iron (H2-DRI), which substantially reduces emissions to about 53 kg CO2 per tonne of steel.
Canada is particularly well-suited for the H2-DRI transition given its low-emission electricity mix and vast reserves of high-quality iron ore. Quebec, for instance, with its extensive hydroelectric resources, stands out as an ideal site for utilizing green hydrogen in steelmaking. This strategy not only cuts emissions but also transforms Canada into a global leader in green steel production, cutting emissions significantly while tapping into the growing green steel market.
The production of green Hot Briquetted Iron (HBI) presents a direct economic benefit by capturing additional value from existing Canadian iron ore exports. If Canadian iron ore exports, amounting to 57 million tonnes in 2023, are fully converted to HBI using domestic hydrogen, the added value could exceed 18 billion US dollars annually. Such a transition not only aligns with Canada’s environmental targets but creates substantial economic incentives by moving up the value chain.
Despite Canada’s potential, transitioning involves overcoming significant challenges. The need to retrofit or build new facilities, potential delays in infrastructure projects (such as those observed with the Dofasco site), and the shift in labor skill requirements are substantial barriers that necessitate strategic planning.
The strategic positioning of Canada’s iron ore resources near existing transmission lines and potential hydrogen production sites provides an infrastructure advantage. This facilitates a cost-effective transition to low-emission steelmaking, especially when aligned with political support and environmental mandates.
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