January 17, 2005

MOU will set GHG reduction targets for steel industry, while ensuring competitiveness, fostering R&D

A Memorandum of Understanding (MOU) signed by the steel industry and the federal and provincial governments and the in Hamilton last week, commits the government to setting targets for reducing greenhouse gas emissions while allowing the industry to remain competitive and take advantage of new technologies.

Under the MOU on climate change, member companies of the Canadian Steel Producers Association (CSPA) have pledged to do their share to help Canada meet its climate change commitments, provided this does not undermine the competitiveness of the industry or result in an unfair burden. The federal government will design emissions reduction targets that reflect this commitment, and has promised $300,000 in funding to support an international research effort aimed at developing new low-emissions technologies for this sector.

The agreement, which sets out both short-term and longer-term plans for government and industry action to reduce greenhouse gas (GHG) emissions, sets out Canada's role as an active player in an international effort organized by the International Iron and Steel Institute, known as the CO2 Breakthrough Program, to develop advanced new processes that minimize, eliminate or capture carbon emissions. The federal funding will be used by this program to seek out promising new technologies.

The members of the CSPA--Algoma Steel, Dofasco, Gerdau Ameristeel, IPSCO Saskatchewan, Ispat Sidbec, Ivaco and Stelco--have facilities across Canada involved in all aspects of making iron and steel. "Canadian steel producers are committed to taking action to address climate change," said Don Pether, CEO of Dofasco and chair of the CSPA. "Industry has demonstrated this commitment by reducing the GHG emissions from a tonne of shipped steel by 30% since 1990 and by committing to do more, both in the short and long run."

The MOU also sets out a work program that includes the examination of near-term opportunities to improve energy efficiency and reduce GHG emissions. The parties will follow up on an energy benchmarking study under Natural Resources Canada's Canadian Industry Program for Energy Conservation (CIPEC). This will complement continuing efforts, in collaboration with NRCan's CANMET Energy Technology Centre, to improve energy efficiency. The federal government has signed similar agreements on climate change with DuPont Canada, the Forest Products Association of Canada and the International Emissions Trading Association.

As a preparatory step, the CSPA has just completed a major study of the potential for increased energy efficiency in the Canadian steel industry, benchmarking itself against leading energy-saving technologies worldwide. Canadian steel producers have already reduced the amount of energy required to make a tonne of shipped steel by 26% since 1990--double the target set by the CSPA under CIPEC-and have lowered GHG emissions by 30%.

The study, whose results will be published in the near future, was undertaken to seek out potential opportunities for energy reduction. Twelve plants agreed to compare their steel mills with a model EcoTech plant developed by the International Iron and Steel Institute (IISI).

The study did not report on actual energy use but rather benchmarked the industry. It compared the technologies used in the Canadian steel plants and the energy intensity of their processes with those of the EcoTech plant. The model facility incorporates energy-saving technologies which are both commercially available and economically attractive, and whose performance significantly surpasses current best practice.

The benchmarking study concluded that processes such as electric arc furnaces and blast furnaces are already characterized by a high use of EcoTech technologies. On the other hand, opportunities for improvement were found in processes such as steel reheating furnaces and the power plants at integrated steel mills.

The study also emphasized the significant benefits that Ontario's integrated steel mills could realize from the development of cogeneration facilities. Cogeneration, using byproduct gas, has the potential to reduce energy requirements and would result substantially offset the demand for electricity production in Ontario.

The opportunities outlined in the study will be further assessed at the plant level, including an evaluation of costs and benefits, and to determine whether they can be retrofitted to a particular plant configuration. Benchmarking the Energy Intensity of the Canadian Steel Industry was undertaken by the CSPA with funding from NRCan's industrial programs division and is part of the division's benchmarking initiative established to help Canadian industry achieve significant energy efficiency gains.

NRCan and the CSPA are also participating in a joint research initiative to explore ways to develop new steelmaking technologies with few or no CO2 emissions. This activity is part of the International Iron and Steel Institute (IISI)'s CO2 Breakthrough Program, which examines technologies that radically minimize, eliminate or capture carbon emissions from the steel industry. In addition to Canada, research projects have been launched in Europe, Japan, Korea, North America, Australia and Brazil.

The CO2 Breakthrough Programme engages the steel industry worldwide on a multi-phased, regionally diverse approach to achieve significant long-run reduction in CO2 emissions. The program pools international resources and expertise and shares benefits with all participating members.

During the first phase of the IISI program, the feasibility of projects that might cost-effectively reduce CO2 will be assessed. In subsequent phases, efforts will converge and focus on the most promising research. These will be further identified and pursued through pilot projects leading to demonstration projects. Commercialization of successful projects can be expected to take from 20 to 50 years.

The initial Canadian project will investigate and evaluate the potential for the use of bio-fuels in current and alternative iron-making processes. This project was approved by the federal government's Climate Change Technology and Innovation Initiative. Future work could look at applications of biomass in alternative steelmaking, or at novel applications themselves.

More information is available from Barry Lacombe, president, or Lynne Ree, senior advisor, environmental affairs, with the Canadian Steel Producers Association, 613/238-6049, Web site www.canadiansteel.ca

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