CAUTIOUS FUTURE: One Metal Producer Doubling Down On Carbon

SMOKE ‘N’ SEE MILLS (AMY CLARK, OR), RAPID CITY, SD – DECEMBER 18: Shown is a train yard at Smokies’ steel mill December 18, 2008 in Rapid City, South Dakota. Smokies Steel manufactures medium and high strength, non-magnetic steel bars, and heat treated bar and plate produced from steel scrap. Source: Appleton Steel Company

Steelmakers across the Americas are expanding their market for high-performance “green” steel as carbon taxes on coal threaten to chip away at demand and prices.

Although environmental advocates have promoted carbon emission restrictions for years, the reality that carbon pricing will hurt demand for steel has only begun to sink in. The World Economic Forum has estimated that annual economic impacts from carbon taxes could reach $190 billion by 2050. The economic impacts of higher carbon tariffs threaten to be much higher: Canadian steelmakers announced late last year that proposed tariffs on U.S. steel would lead to 13,000 direct and indirect job losses in Canada. Canada is expected to raise metal tariffs by 15 percent in early July.

The financial benefits of investing in advanced steel for more environmentally friendly products is also gaining more support. Late last year, GM revealed that a new vehicle designed with advanced sensors and controls would use no gasoline at all. It would require only 1.8 liters of fuel per hour to operate. Other automakers are following suit, although they have yet to come up with a new fuel cell vehicle.

Why is increased use of carbon-cooled steel important? Because carbon technology – offering the same quality steel and safety as traditional steel – is creating new markets that were once ignored.

First introduced over a decade ago, carbon cooled steel has caught on in the aerospace, oil and gas, and automotive industries, where it lowers heat loss, improves energy efficiency, and reduces the emissions of pollutants such as carbon monoxide, nitrogen oxide, and sulfur dioxide. With advanced alloy steel, carbon captures heat transfer losses at a much higher rate than conventional stainless steel. Rather than react, molten carbon hardens into solid slab when the application takes heat. A global standard for carbon steel was established two years ago.

Today, many automakers are now investing in carbon-cooled steel for cars. GE Ventures has invested in two carbon steel-producing companies in Finland, while General Motors recently formed a company to manufacture carbon-cooled steel for its Corolla and other models. Carbon steel appears to be particularly suited for the high-end China market.

Despite the increasing use of carbon steel, the real benefits have been driven by government mandates and other government support. Under the European Union’s Emissions Trading Scheme (EU ETS), manufacturers pay for emissions from energy used in making steel. This compensates the European steel industry for the higher costs of energy used to produce its product.

According to the World Steel Association, a research group based in Europe, the EU ETS has led to significant investment in steel, gas, and coal projects. The EU is also developing a carbon tax tied to automobile emissions.

Despite the fact that the U.S. and Canada are among the world leaders in carbon-cooled steel technology, manufacturers are excluded from the European and Canadian carbon exchange programs. Banned from the EU ETS in 2015, U.S. steelmakers were left without a home. When the Trump administration announced a plan to introduce carbon taxes, it was awarded $2.1 billion in carbon credits as compensation.

Over the long term, the efforts to reduce emissions and increase environmental protection will take more effort and funding than just taxing carbon. Carbonated drink manufacturers see the issue as an opportunity to reposition their products as healthful, and soda companies are developing their own carbonated mixers. The same can be said of the companies that produce the cars, smartphones, clothing, and athletic equipment that these lifestyle choices use.

Of course, all the companies mentioned are using renewable carbon fuels to power their operations. That’s the way it should be. Climate change should not require sacrifice. In any case, the truth is, lower carbon prices have led to higher profits for the companies that can keep customers happy.

To do business in today’s energy rich but climate challenged world, it’s wise to distinguish between technology, alternative fuels, environmental regulations, and markets. Our growth does not depend on Carbon Tax Man; it depends on effective energy management and smart technologies.

Amy Clark is the director of communications at Rock Hill, S.C.-based Sec

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