World

‘Green steel’ catches the attention of Canadian steelmakers

TORONTO – The steel industry is at a crossroads, with government policies like carbon pricing designed to combat climate change impacting producer profits and international commitments having the possibility of seeking further concessions from fossil fuel burning companies.

And Algoma Steel executives hope the company’s costly investment to produce “green steel” will help insulate the company from the kinds of industry-wide downturns that have previously brought the company into bankruptcy.

“I would never say never, but we are certainly doing everything in our power to reduce, if not eliminate, that risk,” said chief executive Michael McQuade.

Canada’s steel industry is now in a strong position as the economy’s recovery from the COVID-19 pandemic dents demand and emerges in 2019 following a period of punitive tariffs imposed by the Trump administration.

This $15 billion industry produces about 13 million tons of primary steel, steel pipes and tube products at more than 30 facilities in five provinces.

Profits are soaring as output mainly for sale in Canada and the US fetches high prices amid strong demand from increased spending on drilling and infrastructure. That doesn’t always happen because competitors have previously flooded the market with lower shipping costs, driving down commodity prices for the metal.

Algoma is leveraging the current situation to pursue initiatives that it says will position it as a future low-cost manufacturer.

Just three months after going public and three years after emerging from court protection from creditors, Sault Ste’s largest employer. Marie, Ont., announced a $703 million plan to generate electricity by converting a blast furnace that spews greenhouse gases into an electric arc furnace.

The move, backed by $420 million from the federal government and $306 million from a merger with Legato, will reduce the 120-year-old company’s carbon footprint by about 70 percent.

The new furnace will primarily convert scrap metal into molten steel using Ontario’s electricity grid, much of which comes from non-fossil fuel sources.

McQuade says electric-arc furnaces are a proven technology that will allow Algoma to tailor production to market demand, something not easily achieved with traditional blast furnaces that heat iron ore with coke at high temperatures. high. Its annual capacity will also increase by more than 50% to 3.7 million tons from its current capacity of 2.4 to 2.5 million tons.

A big driver of this transition is the federal government’s plan to increase carbon pricing to promote reducing Canada’s greenhouse gas emissions. The price of carbon is expected to rise to about $170 per ton of carbon dioxide by 2030 from the current $40.

Spending more now on electricity rather than decommissioning blast furnaces will save carbon costs, improve ESG profiles and become the supplier of choice, he said.

However, the switch to electric arc furnaces is not without concern in the border city, where generations of workers have worked at the factory.

Local workers raise doubts that new technology will further cut jobs, which have already shrunk to 2,500 due to automation. In Canada, direct steel employment has more than halved since the 1970s to about 22,000 people, from 35,000 in 1990.

“There will probably be very little impact if they do it right. The problem is that they didn’t consult with us, and so there are a lot of workers who fear, like me, that they will lose their jobs. ,” Meg Gingrich, assistant country manager Ken Neumann of United Steelworkers Canada.

McQuade would not say how many positions will eventually be laid off, but he noted that hundreds of employees are eligible for retirement. He said the company has been transparent about why the transition is needed, noting that there will be a hybrid phase where existing and new technology will run together and could take as long as 2029 for the transition to take place. complete conversion occurs.

Canada’s second-largest steel producer is not alone as the industry adjusts to what McQuade describes as a new paradigm.

The federal government is also exploring an $8 billion program to support industrial decarbonisation by investing $400 million in ArcelorMittal Dofasco, which is pursuing a $1.7 billion project. billion dollars to phase out coal-fired steel production at its facilities.

Canada’s largest flat coil producer and largest private employer in Hamilton says the project will reduce carbon dioxide (CO2) emissions by up to three million tonnes per year by 2030.

Canada’s steelmakers are already among the greenest in the world but the industry is aiming to go to zero by 2050 when global demand is expected to grow by more than a third above present. The steel industry is currently estimated to account for about 7% of the world’s carbon emissions.

“When you emit 16 million tonnes of CO2 per year and $170 in carbon prices,” said Catherine Cobden, president and CEO of the Canadian Steel Manufacturers Association.

These two transformational projects are part of a journey to net zero that will not be easy, she said.

“I think for us, that’s almost existent. We’re living in a country that has important climate goals and strong carbon pricing and management mechanisms to support those goals. .”

Cobden said achieving net zero would require a lot of investment and additional policy support from the government. That includes procurement requirements that support the purchase of low-carbon steel and stimulate further conversion, she said.

At the recent COP26 environmental summit in Scotland, Canada signed the Industrial Decarbonization Initiative, under which countries will require green factors to be considered when purchasing raw materials, including even steel.

The United States and the European Union also recently announced their commitment to negotiate the world’s first carbon-based sub-sectoral agreement on steel and aluminum trade by 2024. The deal, which will be open to countries other concerns, would limit their market access for steel and restrict access to countries – specifically China – dumping steel and contributing to a worldwide oversupply.

A carbon-based deal is expected to boost investment in green steel production, Cobden said, while a new $1 trillion bipartisan infrastructure deal in the United States promises to boost demand. for years to come, provided there are no restrictions on free trade, Cobden said.

Sarah Petrevan, policy director for Clean Energy Canada, a consulting organization based at Simon Fraser University, said:

“Certainly as the market becomes more and more competitive, there can be a premium offered to whoever can produce the cleanest of the highest quality,” she said in an interview.

Achieving net zero will require the adoption of various clean technologies, especially using green hydrogen, which is in the early stages of technological readiness, says Petrevan.

“Right now, some of the technologies that the steel industry needs are not commercially available or they are commercially available, but they are not commercialized to an easily acceptable level.”

This Canadian Press report was first published on November 21, 2021.

.

Source link

news7h

News7h: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, Sports...at the World everyday world. Hot news, images, video clips that are updated quickly and reliably

Related Articles

Back to top button