Thought Leader -- Steel's Struggle for a Sustainable Future

July 15, 2010
AISI CEO Thomas Gibson is beaming about steel's environmental strides, but views forthcoming EPA regulations as a major threat.

As a voice for the North American steel industry, there's never a dull moment. That's certainly been the case for Thomas Gibson, who became president and CEO of the American Iron and Steel Institute (AISI) during one of the worst global economic downturns in history. Since taking his post in September 2008, Gibson has been advocating for the steel industry on a number of important fronts, from proposed climate-change legislation to China's protectionist policies to steel's inclusion in the stimulus bill. He acknowledges that it's been a challenge, expressing frustration, for example, that President Obama's $787 billion American Recovery and Reinvestment Act (ARRA) of 2009 didn't provide much benefit to the steel industry.

"I think the only steel I've seen has been in the big ARRA signs, and half of those are probably made out of wood," Gibson quips. "The rules around the stimulus bill really encouraged the fast spend of dollars and not investment in long-term projects. That favored maintenance over capital construction, and that was not good for steel."

Gibson and AISI believe that EPA's push to regulate greenhouse gases from stationary sources is flat-out bad for steel. New EPA rules, which are scheduled to take effect in January, subject facilities with greenhouse gas (GHG) emissions above certain thresholds to Clean Air Act permitting requirements. AISI maintains that the new regulations would stunt the already fragile recovery of the steel industry and other manufacturing sectors, possibly halting construction of new plants and shifting production overseas.

For example, Gibson points out that Nucor Corp., the nation's largest steelmaker, is holding off on the construction of a new facility in the New Orleans area because of the uncertainty created by the forthcoming EPA rules and proposed climate-change legislation in Congress.

"So it's already having an effect on the industry even though the regulations technically aren't in effect yet," Gibson tells IndustryWeek.

AISI is doing everything in its power to stop the regulations from taking effect. In February, the institute filed a petition in a federal court challenging EPA's "endangerment finding" -- the agency's formal declaration that GHGs pose a threat to human health and the environment -- "on the grounds that EPA's analysis of the evidence before it and its process for reaching its findings were fundamentally inadequate," in the words of AISI. At press time, the outcome of the litigation was pending.

Because the tougher EPA regulations do not address the global dimension of climate change, Gibson explains, the new rules fit into a larger "tapestry" of threats to the steel industry that Gibson classifies as "unfair competition."

"We believe that any solution to climate change has to be global, and has to include the developing economies, like China," Gibson asserts. "China clearly has no intent to undertake significant domestic programs to reduce its greenhouse gas emissions. If we [regulate GHGs] unilaterally under the Clean Air Act without any method to adjust for the competitive disadvantage that it will place us at, that will be a very large problem for the industry."

Despite its outcry against tougher environmental regulations, the North American steel industry has made significant strides in reducing its carbon footprint over the past two decades, Gibson notes. AISI data expected to be released in late July indicates that the industry has reduced its energy intensity per ton of steel by approximately 30% and carbon dioxide emissions by 35% from 1990 to 2009.

"The North American steel industry is the most energy-efficient industry in the world," Gibson declares.

Gibson adds that steel is the most recycled material on earth, pointing out that roughly 60% of the steel produced in the United States today is made via the electric-arc furnace process, which uses virtually 100% recycled steel.

Gibson explains that it will be impossible for the steel industry to continue to wring out 20% and 30% reductions in emissions until new technologies are available and deployed. That's precisely the goal of the institute's C02 Breakthrough Program, in which AISI members are partnering with universities on long-term projects such as steelmaking by molten oxide electrolysis and hydrogen flash melting -- both of which promise near-zero C02 emissions if successful.

"We're not saying we're not going to continue to improve while we challenge these [EPA] regulations," Gibson says. "But we are saying that the imposition of ridiculous Clean Air Act requirements on the industry that can't be met, that could only be met by us purchasing allowances or shutting down operations here and transferring production somewhere else, are just going to harm jobs in the U.S."

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