Race to set car­bon record straight

The Weekend Australian - Review - - Steel -

T HE global steel in­dus­try faces a ma­jor chal­lenge to re­duce its car­bon foot­print, but seems in­creas­ingly un­likely to do so be­cause of the large growth in its Chi­nese and other de­vel­op­ing world op­er­a­tions.

New ev­i­dence given to the US Congress by the Amer­i­can iron and steel in­dus­try claims that the largest global steel pro­ducer, China, is emit­ting as much as four to five tonnes of green­house gases for ev­ery tonne of metal it makes rather than the 2.5 tonnes claimed in in­ter­na­tional re­ports.

The Amer­i­can Iron & Steel In­sti­tute and the Steel Man­u­fac­tur­ers As­so­ci­a­tion have told the US House of Rep­re­sen­ta­tives en­ergy and com­merce com­mit­tee that global steel in­dus­try emis­sions now av­er­age 1.7 tonnes per pro­duc­tion unit, held down by their mem­bers achiev­ing an av­er­age of as lit­tle as 1.2 tonnes.

But the Chi­nese steel­mak­ers, the lob­by­ists say, are still re­ly­ing on many older, in­ef­fi­cient plants for pro­duc­tion.

China is of­fi­cially re­ported to be re­spon­si­ble for more than a bil­lion tonnes of green­house gas emis­sions a year from steel pro­duc­tion — which to­talled more than 420 mil­lion tonnes in 2006 — and the Amer­i­can in­dus­try claims, if cor­rect, would set the true level at more than 1.5 bil­lion tonnes ( or nearly tre­ble the to­tal Aus­tralian emis­sions from all sources).

The sit­u­a­tion, it claims, is go­ing to get worse be­cause Chi­nese steel pro­duc­tion is in­creas­ing at fran­tic pace — last year Chi­nese op­er­a­tors in­stalled 61 mil­lion tonnes of new steel­mak­ing ca­pac­ity and are ex­pected to bring an­other 55 mil­lion tonnes of ca­pac­ity on line this year. The en­tire US steel in­dus­try is able to pro­duce 100 mil­lion tonnes a year.

The US pro­duc­ers have dou­ble- edged rea­sons for push­ing their ar­gu­ment: they are seek­ing to ward off do­mes­tic car­bon charges and they are com­pet­ing with the Chi­nese steel­mak­ers for US sales. Chi­nese com­pa­nies are the sec­ond largest source of US steel im­ports.

There is an added im­pe­tus for the Amer­i­can pro­duc­ers in the move by the Chi­nese gov­ern­ment to en­sure that older, more in­ef­fi­cient blast fur­naces are re­placed by larger, tech­no­log­i­cally ad­vanced ones in a mas­sive ex­pan­sion of steel­mak­ing ca­pac­ity over the next few years. The US iron and steel lobby ar­gues that its mem­bers have been in the fore­front of Amer­i­can busi­ness ef­forts to be more ef­fi­cient users of en­ergy and to re­duce the growth of the coun­try’s green­house gas emis­sions. They point to cut­ting back emis­sions from their ac­tiv­i­ties from more than 86 mil­lion tonnes a year in 1990 to about 46 mil­lion tonnes an­nu­ally to­day even though their out­put is 7 per cent higher. It at­tributes the gains prin­ci­pally to the high rate of re­cy­cling it has achieved.

The steel in­dus­try ac­counts now for about 2 per cent of US green­house gas emis­sions.

The Amer­i­can in­dus­try ar­gues that a move to­wards do­mes­tic charges will send some of its pro­duc­ers out of busi­ness, leak­ing’’ pro­duc­tion to less ef­fi­cient steel­mak­ers over­seas in China, Rus­sia and Brazil and have ex­actly the op­po­site global emis­sions re­sult from the one sought by sci­en­tists, en­vi­ron­men­tal­ists and the UN.

The in­dus­try is push­ing for the US to em­brace a sys­tem of car­bon in­ten­sity stan­dards’’ that would set an up­per limit on the green­house gases emit­ted for ev­ery tonne of steel con­sumed in the US, whether do­mes­ti­cally pro­duced or im­ported. Crit­ics claim such a sys­tem may lead to global trade ten­sions be­cause for­eign steel pro­duc­ers would see it as pro­tec­tion­ism mas­querad­ing as en­vi­ron­men­tal­ism.

The in­dus­try is also us­ing its high re­cy­cling rate as an­other ar­gu­ment against puni­tive car­bon charges, claim­ing that the US steel sec­tor re­cy­cles its prod­uct at a higher rate than the alu­minium, pa­per, plas­tic and glass man­u­fac­tur­ers com­bined. There is vir­tu­ally no end, it ar­gues, to steel be­ing re­cy­cled, re- melted and re- used. In any emis­sions trad­ing scheme, says the Amer­i­can Iron and Steel In­sti­tute, its mem­bers should re­ceive bonus per­mit al­lo­ca­tions to recog­nise ex­ist­ing re­cy­cling. The In­sti­tute says its mem­bers are be­ing dis­ad­van­taged in global com­pe­ti­tion by the sharp re­cent in­creases in US elec­tric­ity prices, as are the Euro­pean steel­mak­ers by the EU emis­sions trad­ing scheme.

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