Canadian Potential to Lead Global Green Iron Production

A new report by Lund University, commissioned by the climate and industry watchdog SteelWatch, highlights Canada’s potential to become a global leader in green iron production—a critical building block for decarbonizing the steel industry at home and abroad.

Titled “Strategic Decarbonisation of the Canadian Iron and Steel Industry,” the 65-page study outlines a transformative opportunity for Canada to pivot from traditional iron ore and metallurgical coal exports toward high-value, near-zero emissions green iron. Using green hydrogen and Canada’s abundant renewable energy, this shift could cut up to 105 million tonnes of CO₂ annually from global steelmaking—equivalent to 16% of Canada’s territorial emissions.

With rich high-grade iron ore reserves in Québec and Labrador, extensive hydropower capacity, potential for wind expansion, and an experienced industrial workforce, Canada has the ingredients to scale production of “green Hot Briquetted Iron” (HBI)—a cleaner alternative to conventional blast furnace iron.

“Steelmakers who want to meet ambitious climate targets will need a reliable supply of low-emissions green iron, and Canada can provide that,” said Caroline Ashley, Executive Director of SteelWatch. “This is a win-win: Canada captures more value from its resources while helping global partners decarbonize.”

Canada exported over 44 million tonnes of iron ore in 2023, much of it to markets like the EU, Japan, South Korea, and the U.S.—regions expected to pivot rapidly to green steel production. The report suggests Canada could become a trusted supplier of premium green HBI, feeding the electric arc furnaces now replacing coal-based steel plants.

The report projects that building a green hydrogen-based iron industry could:
– Add up to $25 billion CAD in annual economic value,
– Create over 14,000 direct jobs plus additional employment in renewables and infrastructure,
– Make Canada the second most competitive green iron producer globally—after the U.S.—with estimated costs of $430–520 USD per tonne

In contrast, the outlook for metallurgical coal—central to British Columbia’s Elk Valley economy—has a shelf-life that is undefined and uncertain. Demand is expected to decline as global steelmakers reduce reliance on coal-based blast furnaces.

Dr. Chris Bataille, co-author of the report and researcher at Columbia University’s Center on Global Energy Policy, emphasized the urgency of a coordinated strategy: “Canada is well placed to lead. But success depends on international diplomacy, domestic investment, and ensuring workers aren’t left behind in the transition.”

The report urges federal policymakers to align export policies, industrial investment, and Indigenous engagement with Canada’s 2050 net-zero commitments. Already, international frameworks like the EU’s Carbon Border Adjustment Mechanism (CBAM) and clean procurement initiatives are driving up demand for low-carbon inputs like green iron.

While green iron presents a promising future, it also foreshadows transition pains—especially for coal regions. The report acknowledges that metallurgical coal exports from Alberta and B.C., currently vital to global steel, will decline under every scenario studied.

While the report presents a forward-looking vision for green iron and steel, it’s important to recognize that metallurgical coal will continue to play a significant role in global steelmaking for decades to come. The primary barrier to widespread adoption of near-zero emissions steel technologies—such as hydrogen-based direct reduction—is the substantial capital investment required. Existing coal-based infrastructure is deeply entrenched, and transitioning to green alternatives demands major financial, technical, and regulatory support that many producers, especially in developing economies, are not yet equipped to manage.

As such, metallurgical coal remains the default input for over 70% of global steel production, particularly in Asia, where demand is still rising. This underscores the need for a dual-track strategy: advancing green innovation while supporting responsible, lower-emissions practices in traditional steelmaking during the transition period.

Sources: Algers, J., & Bataille, C. (2025). Strategic Decarbonisation of the Canadian Iron and Steel Industry. Lund University / SteelWatch

For full access to the report click here.