How a large polluter can drive the sustainability transition

A heavily polluting Canadian steel producer can qualify as a credible transition investment because its large-scale shift to electric arc furnaces is expected to cut emissions and improve financial flexibility.

• The company’s 2024 carbon intensity was 2.05 tonnes of CO₂ per tonne of steel, above the global average of approximately 2 tonnes and far above electric arc furnace producers below 0.5 tonnes.
• Osmosis estimates that the producer deployed approximately C$1.64 billion in capital expenditure over the past five years, with about two-thirds directed to its green transition.
• The company committed C$1 billion to a near-complete conversion to electric arc furnace steelmaking, which uses electricity to melt recycled scrap instead of relying on coal-fired blast furnaces.
• The conversion is projected to reduce annual emissions by 70% and eliminate pollutants including benzene and sulphur dioxide.
• Electric arc furnaces should replace iron ore and coking coal with scrap steel, reduce carbon-tax costs, and allow production to adjust to demand rather than requiring continuous full-capacity operation.

Takeaway: An emissions-based exclusion screen would likely reject the company, while Osmosis’s framework views its completed capital-intensive transition as supportive of long-term financial health, subject to steel-market conditions and execution risk.