IW 50 Best: U.S. Steel Chief Warns Against Misguided Emissions Standards

April 9, 2010
Says 'draconian' proposals threaten American steel industry jobs.

Proposed environmental regulations on industrial emissions could make American steel companies less competitive globally and jeopardize steel-related jobs, said John Surma, CEO of United States Steel Corp. Surma made the comments on March 25 when speaking to the U.S. House of Representatives' Steel Caucus.

Surma expressed concerns that tougher cap-and-trade emissions proposals and EPA regulation of "stationary" sources of greenhouse gases will negatively impact energy-intensive industries, including steel manufacturing.

"The costs associated with a poorly designed cap-and-trade program, a U.S.-only carbon tax, well-intentioned but costly legislation or draconian EPA regulations will place American steel companies at a competitive disadvantage and jeopardize steel jobs," said Surma in a hearing transcript provided by the American Iron and Steel Institute.

The American Clean Energy and Security Act passed by the House in June 2009 and awaiting Senate approval is a concern for the steel industry because it doesn't provide enough emissions allowances for industrial needs and lacks a border-adjustment mechanism, Surma said.

United States Steel Corp.
At A Glance

United States Steel Corp.
Pittsburgh, Pa.
Primary Industry: Fabricated Metal Products
Number of Employees: 43,000
2008 In Review
Revenue: $23.8 billion
Profit Margin: 8.89%
Sales Turnover: 1.48
Inventory Turnover: 8.27
Revenue Growth: 40.78%
Return On Assets: 13.51%
Return On Equity: 38.19%

A border-adjustment provision would help level the global playing field for energy-intensive industries in the United States, say supporters. Senator Sherrod Brown (D-Ohio) sent a letter signed by nine other Democratic senators in August 2009 to President Obama calling for a border-adjustment mechanism in the bill.

Recommendations include holding countries outside the United States accountable for emissions reductions through tariffs if they don't adopt their own greenhouse-gas regulations.

Surma also said he's concerned about the EPA's plan to regulate stationary sources of greenhouse-gas emissions through the Clean Air Act. Under the EPA rules, by 2011 most large industrial facilities will need permits to prove they're using the best available technology to cut pollution.

Surma supports calls for Congress to enact legislation that would pre-empt the EPA's emissions rules for stationary source greenhouse-gas emissions. Senator Lindsey Graham (R-S.C.) expects to introduce such a bill that would remove energy-intensive industries, including steel manufacturers, from the cap-and-trade system until the technology is available to capture carbon, according to a report in The Greenville (S.C.) News.

Surma also questioned proposed national electricity mandates that would require 15% to 20% of supply be generated from nonconventional sources, such as wind, solar and biofuels.

"Today, these technologies are extremely expensive and noncompetitive on their own," he said. "Manufacturers cannot rely on these technologies being subsidized forever, and our products will not be competitive if electricity rates reflect their real total cost. That said, we still support identifying and developing energy sources such as these and believe many opportunities exist to take advantage of industrial waste heat."

Surma suggested that the United States focus on developing clean-coal technologies and natural-gas exploration.

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