For US mills, the main mission now is damage control

Jun 01, 2008 | 12:44 PM |

One of the largest federally mandated programs ever is coming down the pike and it will impact every aspect of U.S. steelmaking.

It's expected to become the law of the land soon after a new president moves into the Oval office. When the law is signed, as most expect it will be in early 2009, U.S. manufacturers will have to cap their emissions, probably at 2009 levels. At that point, depending on the bill's language, they will either be sold or given emissions "credits." The credits will be bought and sold among emitters, and as the price of carbon rises so too will the incentive to accumulate more credits. It will be in the economic interest of manufacturers, therefore, to reduce their emissions and thereby save the planet from the catastrophic impacts of global warming.

While the idea of cap and trade is simple—the system's goal is to reduce carbon emissions, the leading contributor to global warming—drafting the bill, not to mention its implementation, could be a nightmare.

Europe, the first to implement a cap-and-trade program, made significant mistakes right out of the gate. It gave away too many credits for free, and the price of a ton of carbon has suffered as a result. The U.S. Congress would rather get it right the first time, and its main legislative vehicle, the Lieberman-Warner bill, is expected to come up for vote in the Senate in June.....