Cliffs, AISI back Modern Steel Act

Proposed legislation called the Modern Steel Act introduced into the U.S. House of Representatives by a congressional representative from California has received several endorsements from within and outside the steel industry.

“By investing in new steel plants and sustainable practices, we are not only strengthening our industrial base but also bringing communities together,” says Rep. Ro Khanna of California’s 17th congressional district.

A news release from Khanna’s office says the Modern Steel Act would build new iron and steel plants in deindustrialized towns, bring next-generation steel back to America, strengthen domestic manufacturing, create good-paying jobs and retain existing ones and increase U.S. industrial competitiveness globally.

The bill was unveiled in Johnstown, Pennsylvania, in a region Khanna says “has been hit hard by deindustrialization.”

Khanna and other backers of the bill list more than 25 goals embedded in the legislation, including the awarding of up to $10 billion in grants, plus tax incentives and other inducements to achieve zero-emissions energy capacity on-site and offering financing to upgrade existing integrated mills and minimills to employ lower-emissions technologies.

The bill’s authors also say they want to partner with the steel industry and workers to build new, modern facilities producing near-zero emissions iron and/or steel, using cutting edge technologies like hydrogen direct reduction.

Another goal in assigning the funding would be to give priority to existing and legacy steel, iron, coke and coal communities.

Supporters of the Modern Steel Act include the United Steelworkers (USW), Cleveland-Cliffs, the American Iron and Steel Institute (AISI), the Sierra Club, the Alliance for American Manufacturing (AAM), the Rocky Mountain Institute (RMI), the Blue Green Alliance (BGA), ResponsibleSteel and local and regional steel workers, community members and policymakers.

“While the American steel industry leads the world in clean steel production, we still have a long way to go to get to near zero emissions,” says Kevin Dempsey, president and CEO of the Washington-based AISI. “We are pleased to support Rep. Khanna’s bill, which will build a strong public-private partnership to provide the type of tax incentives that encourage continued and increased investment in breakthrough technologies, enable the ongoing innovations of the American steel industry and create jobs.”

“The American steel industry is the global leader in terms of technological innovation and greenhouse gas-efficient production," Cleveland-Cliffs President and CEO Lourenco Goncalves adds. "Congressman Khanna’s Modern Steel Act will provide tools to ensure that our steel sector maintains its clear leadership position, to the benefit of workers, families and steel mill host communities across the industrial heart of the United States.”

“The USW supports efforts to modernize our steel industry and defend good, domestic jobs,” USW President David McCall says. “Rep. Khanna’s bill builds on a simple concept: investing in our steel communities and giving workers a voice creates both stronger communities and a healthier environment.”

Khanna, a California Democrat, has received co-sponsorship support from fellow Democrats Nikki Budzinski of Illinois; Stephen Lynch of Massachusetts; Debbie Dingell, Haley Stevens and Shri Thanedar of Michigan; Alma Adams, Don Davis and Valerie Foushee of North Carolina; Marcy Kaptur of Ohio; and Chris Deluzio and Summer Lee of Pennsylvania.

“I am so proud to introduce the Modern Steel Act, a transformative initiative designed to revitalize our nation's iron and steel industry,” Khanna says. “By investing in new steel plants and sustainable practices, we are not only strengthening our industrial base but also bringing communities together.”

The last sizable steel mill in California was idled in 2020. That recycled-content electric arc furnace (EAF) mill went through a string of owners whose final one was Texas-based CMC.

CMC, before dismantling the mill and selling off the land, cited the mill’s age, high operating costs and burdensome regulatory requirements as reasons for shutting it down.

One of the incentives listed in the Modern Steel Act designed to spur investment in low-emissions steelmaking includes an $89 per ton production tax credit for near-zero emissions ironmaking.

It is among the language in the bill that could be perceived as favoring iron-based steelmaking over recycled-content EAF production. The latter method, according to its backers, has already established itself as a low-emissions steel production methodology.

The Washington-based Steel Manufacturers Association (SMA) is not an initial supporter of the Modern Steel Act, which could be a sign that several recycled-content EAF producers (which comprise the core membership of the SMA) and a different set of steel producers who are AISI members, could be diverging on policy priorities.

Last month, Philip K. Bell, president of the Steel Manufacturers Association, testified before a House subcommittee on highways and transit regarding the U.S. Department of Transportation’s Buy Clean program for steel.

The Federal Highway Administration (FHWA) and General Services Administration (GSA) are considering a dual standard to define clean steel that holds steel made using what Bell calls higher-emissions blast furnace technology to a more lenient standard for “clean” status despite what SMA calls “the significant carbon advantage of steel made in an electric arc furnace.”

“We have serious concerns with the GSA’s implementation of its Buy Clean program and their adoption of a dual emissions standard for steel,” Bell said. “We urge the FHWA to reject GSA’s misguided approach.”

The better approach, he said, is to use a single standard for clean steel.

“A single standard is simple and transparent [and] results in the greatest emissions reductions and will further our global advantage on low emissions steel," he added.

Among the many aspects of the Modern Steel Act are two with cross-border trade implications: one prohibiting funds from being used for projects outside of the U.S. and another excluding Chinese state-owned entities or entities owned in part or whole by the government of any nation of concern from tapping into any incentives.

The full 77-page draft of the Modern Steel Act can be found here.