Cold Hard Cash vs.Greenhouse Gas

18/05/2015

The EPA and the Energy Tax Prevention Act
On the morning of April 7, thousands of steel plant laborers were hopeful that the Energy Tax Prevention Act would ride the momentum passed on through Congress and use it to barrel through the Senate.

Four days later, the White House batted away Big Steel’s hope for change, leaving its employees and groups like the American Iron and Steel Institute and the Steel Manufacturer’s Association fearful of the industry’s economic future.

Had the bill passed through the Senate, it would have halted the Environmental Protection Agency’s ability to regulate greenhouse gas emissions from stationary sources (manufacturing plants, for example, as opposed to diesel trucks), an outcome, the White House said in an official statement would “increase the nation’s dependence on oil and other fossil fuels” while contradicting the scientific consensus on climate change. It also would have increased manufacturing jobs, according to the AISI, and signaled a renewed support of U.S. manufacturing.

Among the most efficient in the world
As it stands, the EPA will continue its efforts started in January to reduce GHG emissions in stationary sources, a noble goal, but one the industry said is a burden unnecessarily placed on them because of the sloppiness of other manufacturing industries. The U.S. market has dropped its total GHG emissions by 35 percent over the last two decades without the governance of the EPA. In fact, among the major steel-producing countries around the globe, the U.S. has seen the largest decrease in the amount of greenhouse gases it has emitted since 1990, a stance supported by the U.S. Department of Energy. In March, the governmental body validated the industry’s claim to be among the most energy efficient in the world, going so far as to exonerate U.S. steel for having “almost fully achieved the energy efficiency and carbon emissions reductions that can be obtained using today’s best available technologies.” Other than South Korea, no other country produces lower amounts of carbon dioxide per steel ton.

The EPA disagreed with the Doe’s assessment that Big Steel was nearly flawless, articulating energy reductions of 27 percent still possible industry-wide.

“Without breakthrough technology development, AISI President Thomas J. Gibson added, “the U.S. steel industry cannot make similar efficiency gains into the future, yet that is exactly what the EPA is mandating that we do.”

The industry’s fears don’t end at higher operating costs or relying on technologies that don’t exist. Even if the U.S. was able to maintain its workforce while spending the money necessary to comply with the EPA’s regulations, they are still looking at a massive disadvantage in operation overhead as compared to China - a disadvantage akin to wearing Oxfords to a 100-yard dash.

“The EPA regulations will make it less-competitive to make steel in the U.S., where we have the cleanest steel industry in the world, instead pushing steel production offshore to higher-emitting nations,” AISI president and chief executive officer Thomas J. Gibson said.

An unnatural growth
Last October, the U.S. launched an investigation on a number of China’s trade practices that have resulted in an unprecedented growth of the country’s steel industry, despite lagging commercial demands. The intervention manifested through subsidies provided by the Chinese government is in violation of its market reform commitments agreed upon after joining the World Trade Organization in 2001. It’s like Barry Bonds’ transformation from 185 pounds of speed to 230 pounds of power and subsequent claim not to have changed his off-season regimen. The growth is unnatural.

With China’s steel industry so heavily subsidized by its government, it isn’t as reliant upon market forces as other countries fending for themselves. Right now, those other countries are boy scouts selling candy bars door-to-door to raise funds; while Chinese steel’s wealthy parents bought up the whole supply without it leaving the house.

Sixty-seven senatorial “yes” votes were required for the bill to pass, only 64 materialized. While some see the relatively close vote as a hopeful harbinger for future manufacturing support, the reality for the immediate future is more plant closings and a production clash conceding China the higher ground.