Federal investment to help cut GHG emissions at Algoma Steel
The federal government has made a significant investment in Algoma Steel with the aim of helping the manufacturer make a significant dent in its greenhouse gas emissions.
Prime Minister Justin Trudeau was on hand in Sault Ste. Marie on July 5 to announce funding of $420 million for the steel manufacturer. The company will use the money to retrofit operations and phase out coal-fired steelmaking processes at its Northern Ontario headquarters.
"Investments in clean technology benefit the environment and our economy,” the Prime Minister said. “Today's announcement will help Algoma Steel create good middle-class jobs and cut pollution, while positioning Canada as a leader in cleaner and greener steelmaking.”
Specifically, Algoma will use funding to purchase state-of-the-art equipment to support its transition to Electric-Arc Furnace production. This electricity-based process is expected to cut emissions by more than 3 million metric tonnes per year by 2030. This is equivalent to taking more than 900,000 passenger vehicles off the road—almost the number of passenger vehicles in Toronto. It is also the equivalent of approximately 11 percent of Canada’s 2030 Paris industrial target.
"The 70-percent carbon reduction resulting from Algoma's proposed transformation to Electric-Arc Furnace technology represents one of the lowest cost-per-tonne opportunities to achieve large-scale sustainable GHG reductions in Canada,” said Algoma Steel CEO Michael McQuade. “The world can't get to net-zero without steel. The combination of an Electric-Arc Furnace with Ontario's low carbon electricity will give our customers and infrastructure investments a green steel advantage."
The investment will create 500 well-paying jobs, through the project's construction phase and subcontracting, and will create over 600 new co-op placements for students. Additionally, 75 employees at Algoma will be trained for high-skilled jobs in the science, technology, engineering, and mathematics fields.
Algoma Steel currently employs approximately 2,600 people. The company is Canada's only fully integrated producer of steel plates, making it a leader in the production of hot- and cold-rolled steel sheet, strip, and plate.
The money comes to Algoma from two funds. It will receive up to $200 million from the Strategic Innovation Fund's Net Zero Accelerator initiative and $220 million from the Canada Infrastructure Bank. The total cost of Algoma's project is $703 million.
For its part, the Canadian Steel Producers Association (CSPA) welcomed the federal funding.
“Today’s announcement is a significant step forward in achieving Canada’s greenhouse gas emissions target while ensuring a strong and sustainable steel operation in Sault Ste. Marie,” said CSPA president and CEO Catherine Cobden. “It is also an important illustration of the partnership envisioned through the CSPA’s Climate Call to Action and is an indication that the government is a supportive partner in the Canadian steel industry’s climate plan.”
In 2020, the CSPA outlined a plan to reach an aspirational goal of net zero greenhouse gas emissions by 2050. The CSPA’s call to action identifies the need for a comprehensive approach to reducing emissions from the steel industry including policy, regulatory and program support.
One of the conditions for success is financial support for the industry’s green transformation over the long-term for research, development and deployment of emission reduction technologies.
Globally, steel is a large contributor of greenhouse gases. The industry currently accounts for 7 percent of global GHG emissions from the energy industries – equal to global aviation, shipping and chemicals emissions combined.
Featured image: Steel rolls. (Algoma Steel)