Hydrogen and the Decarbonization of Steel Production in Canada: Reaching Economies of Scale

Authors: Mohd Adnan Khan, Michael Powell, Martin Tampier, Emily Thorn Corthay, David Layzell

To convert iron ore into the iron required for steelmaking, the Canadian steel industry primarily relies on coal, coke, and natural gas in large blast furnaces. Currently responsible for approximately 2% of Canada’s greenhouse gas emissions, the steel industry is committed to reaching net-zero emissions by 2050, but reaching those goals will require innovative new approaches to steel production.

Written by ETC regional partner Transition Accelerator in collaboration with the Canadian Steel Producers Association (CSPA), this report looks at the potential solution of using low-carbon hydrogen in processes like direct reduced iron (DRI), thoroughly examining the economic, technical, and logistical challenges this approach would involve. The report finds that hydrogen could pave the way for nearly emissions-free steel production—but only if the current and foreseeable obstacles are addressed, particularly regarding the costs associated with low-GHG hydrogen production and delivery.

In addition to their analysis, the report’s authors propose a suite of recommendations, including reinvesting carbon pricing revenue into the steelmaking sector, developing a regional hydrogen strategy, and building a premium market for low-GHG steel. With planning, coordination, and the support of a broader hydrogen economy, hydrogen can play a major role in the steel industry’s shift toward a sustainable future.