When U.S. President Obama announced his Climate Action Plan in June, the American Iron and Steel Institute (AISI) came out right away criticizing it. Said Thomas J. Gibson, president and CEO of AISI, “The regulations proposed by the President today will invariably raise electricity costs and decrease service quality for major industrial customers, like the steel industry.” He added, “The North American steel industry is heavily dependent on affordable and reliable energy, which is typically 20% or more of the cost of making steel. We are the most energy efficient steel industry in the world, having voluntarily reduced our energy intensity by 27% since 1990. However, we compete globally against countries, like China, where the industry is often state-owned, controlled and subsidized, including for electricity costs. Policies, like those proposed by the President today, raise energy costs on domestic companies and threaten our ability to remain competitive in this international manufacturing environment.”
The costs that Mr. Gibson referred to are associated with things like reducing the amount of coal burned to generate electricity by doing such things as switching to natural gas or doing a better job of controlling CO2 emissions, which heretofore hasn’t been addressed on an extensive basis and consequently need to be substantially developed.
That was followed two weeks later by comments from Lawrence W. Kavanagh, president of the Steel Market Development Institute (SMDI), who called the portion of the Climate Action Plan that addresses the reduction of carbon emissions through fuel economy regulations “a sound objective” but added that “the strategy to meet this objective is seriously flawed” because tailpipe emissions are only a fraction of those associated with motor vehicles.
Chart from the “LowCVP PE International Life Cycle CO2 Assessment of Low Carbon Cars 2020-2030” report shows that there are a whole lot more emissions associated with the production of vehicles—including making the materials that go into those vehicles—than in driving them.
Mr. Kavanagh is concerned with the fact that the Climate Action Plan is overlooking the effects of the emissions that are generated by producing the materials going into a car. Presumably, like burning coal. “Many materials used for vehicle light weighting and in alternative drivetrains produce such high emissions when they are made that they may not be overcome by savings during the driving phase. Considering only tailpipe emissions may result in a net increase in vehicle emissions, which is why the only way to ensure a reduction in emissions is to regulate total, or life cycle, vehicle emissions.”
Kavanagh cited studies from the University of California-Davis and University of California-Santa Barbara, which indicate that the emissions from producing materials and from producing vehicles themselves can account for half of a vehicle’s emissions, when considered from the point of view of life cycle. He said that regulatory systems that “ignore this significant portion of a vehicle’s total emissions” may not get the environmental result being sought.
What’s more, according to a study commissioned by the Low Carbon Vehicle Partnership (LowCVP), of which the World Steel Association is a member, looking at the tailpipe CO2 emissions going forward is “almost irrelevant in terms of focusing on true carbon profiles.” That study, conducted by PE International, points out that tailpipe emissions are being managed; it is the emissions associated with producing the materials that go into vehicles that are more problematic.
The World Steel Association argues for lifecycle assessment (LCA) based on this and other analysis. Said Cees ten Broek, director, WorldAutoSteel, “Automakers and others are significantly reducing emissions associated with the vehicle’s use phase through advanced powertrain technologies and fuels. With these efficiencies, the emissions generated during materials production and vehicle manufacturing become increasingly more important and should be accounted for.”
Ten Broek went on to say, “One thing is certain, without LCA, we are not solving the vehicle emissions problem; we are merely shifting it to another vehicle life cycle phase.”
Which goes to the point of reducing the emissions at the point of production of the energy necessary to produce the steel. And by doing that, by reducing the CO2 output from burning coal or using natural gas, based on a LCA, steel will become even more competitive in the automotive market.
Steel can take an even more commanding leadership position when it comes to the transition to “green materials.”
Admittedly, controlling the CO2 emissions from coal-fired power plants will have an effect on the cost of electricity and products made with electricity, but just Google “Chinese pollution” and get a sense of the consequence of its policies vis-à-vis coal.