How Congress can support America's manufacturing renaissance

The domestic steel industry has voluntarily reduced its energy intensity by 27 percent since 1990, while reducing its greenhouse gas (GHG) emissions by 33 percent over the same time period.  Despite our world-leading levels of energy efficiency, the steel industry consumes substantial amounts of energy each year primarily in the form of coal, natural gas and electricity.  Energy is typically 20 percent or more of the cost of making steel.

As major consumers of energy, steel companies are negatively impacted by high fuel prices.  Reliable and plentiful sources of energy are essential to our productivity and international competitiveness.  Increasing production of all of these sources is essential for the industry, which directly and indirectly employs more than one million people in the U.S.

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In September of last year, the Consumer Energy Alliance (CEA) released its report, “North America’s New Energy Future: A Roadmap for energy self-sufficiency. If we choose it.” In its findings, CEA notes that, after several decades of preparation, the United States is finally in a place to substantially increase its energy generation and reduce oil imports. Part of this new energy reality for the U.S. includes a sweeping national shale gas boom that has brought economic growth, increases in state and local revenue and a revival for struggling manufacturing sector – including the steel industry. The shale gas revolution has helped to drive up production for many steel plants while reducing operating costs.

To make any further significant improvement in energy use, new breakthrough technologies are also needed.  A decade ago the industry began investing, often in partnership with the Department of Energy (DOE), in the CO2 Breakthrough Program -- a suite of research projects designed to develop new ironmaking technologies that emit little or no CO2 while conserving energy.  We have developed two key technologies to achieve those goals since that time and they are now ready for pilot scale testing.  The research is being done at MIT and University of Utah and both projects are the subject of proposals currently under consideration for DOE cost-sharing.  This successful partnership with DOE, along with the continued support of Congress, will accelerate the development and deployment of these critical technologies.

For our new energy reality, CEA predicts that while “technology will play a leading role in boosting domestic supplies...  the real variable in it all is public policy.”  As such, Congress must:

* Promote an abundant and affordable energy supply by fully developing domestic natural gas, oil, coal, and nuclear power resources; including, harnessing the energy and economic benefits of natural gas from shale formations.  It is also essential that Congress act to ensure the approval of the Keystone XL Pipeline without further delay.

* Ensure that federal regulations do not unilaterally raise the cost of all domestic energy sources.  Several EPA regulations of the utility sector, including for greenhouse gas emissions, could raise the costs of electricity to large industrial customers like steel while potentially lessening the reliability of electricity supply. Proposals to subject shale gas drilling to new federal regulations must maximize the potential economic and environmental benefits of this important domestic resource.

Manufacturing on the whole supports an estimated 17.2 million jobs in the United States—about one in six private-sector jobs. Nearly 12 million Americans are employed directly in manufacturing. Greater development of energy resources means greater demand for manufactured goods, including steel.  That translates into more jobs, and that’s good for everyone.

Gibson is the president of the American Iron and Steel Institute.