Global steel producers are beginning to warm to the challenges presented by climate change.
The topic of climate change—or global warming to those looking to pick a fight—received considerable attention at the annual meetings of the American Iron and Steel Institute and the Metals Service Center Institute. It gained even more steam, and some action, at the annual meeting of the International Iron and Steel Institute (IISI) in Berlin in October.
All three organizations as well as many others—including the Steel Manufacturers Association, the Specialty Steel Industry of North America, the Canadian Steel Producers Association, the Mexican Steel Producers Association and the Latin American Iron and Steel Institute—have raised climate change to a priority challenge for 2008 and beyond.
Members of the six American steel associations met in Miami in October to discuss trade and policy issues and establish an agreement to cooperate in the future on climate change issues. "We support the development of a global sectoral approach to climate change in which all major steel-producing countries, including China and India, contribute to a global solution to the climate change challenge," the organizations said. They also agreed to meet at least once per year to review progress being made on climate change and trade issues.
The IISI made seven climate change policy commitments in March and followed them at its October meeting by endorsing a global approach as the best way for steel to help address climate change. The IISI board of directors approved what it called "the next stage" in the establishment of a Global Sectoral Approach for Steel, including the collection and reporting of carbon dioxide emissions data for steel plants in all major steel-producing countries. The organization of data on a common and consistent basis would be "the starting point" for setting commitments post-2012 on a national or regional basis.
While most people in the steel industry agree that climate change initiatives are crucial to the planet's future, there is disagreement on policies.
John P. Surma, chairman and president of U.S. Steel Corp., Pittsburgh, is opposed to a cap-and-trade program for emissions for U.S. companies similar to what is in place in Europe. Surma and other U.S. steel executives believe that such a strategy would hinder not only steel but other manufacturing industries from being able to compete globally.
Some of the world's biggest aluminum producers take the opposing view, and how that will play out for U.S. steelmakers is anyone's guess at this stage (see related story, page 60).
The IISI said steel is well on its way to success already, noting that major technological advances in North America, Western Europe and Japan have reduced energy consumption per unit of production by 49 percent in the past 25 years. At the same time, there has been a dramatic expansion in global steel production such that the steel industry now accounts for 3 to 4 percent of man-made greenhouse gas emissions. More than 90 percent of steel industry emissions come from nine regions Brazil, China, the European Union, India, Japan, South Korea, Russia, Ukraine and the United States.
In the case of the United States, there are indications that some form of global warming initiatives may emerge from Congress. One industry consultant warned in late October that the U.S. steel industry should prepare for federal legislation, perhaps a cap-and-trade system, some time after the 2008 presidential election.
The IISI maintains that cap and trade is not the answer. "Cap-and-trade regional policies such as those currently used in the E.U. are not effective in reducing carbon dioxide emissions," said Phillippe Varin, a member of IISI's executive committee and chief executive officer of Corus Group Ltd. "Constraining production from the best emission performing plants is not the solution for a globally competitive industry such as steel. An effective approach for the steel industry requires the participation of all major steel-producing countries and a focus on improving emissions per unit of production.
"In the near term, the steel industry's major contribution will be in the wider application of current best practice and technology. For the longer term, the steel industry is investing in research on the development of breakthrough steelmaking technologies. This is still in the context of the essential contribution that steel, the most recycled modern material, now makes in sustainable housing and construction, clean energy and transportation," Varin said.