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Steel Industry Hopes To Delay EPA Regulation

Monday, April 5, 2010

By Margaret Kriz Hobson  

Thomas Gibson

president and CEO, American Iron and Steel Institute

Thomas Gibson, president and CEO of the American Iron and Steel Institute, has a long history of involvement with federal environmental policy. Gibson served as deputy staff director and counsel on the Senate Environmental and Public Works Committee. He was also chief of staff at the Environmental Protection Agency under former president George W. Bush. Before joining the steel industry group, Gibson was senior vice president for advocacy at the American Chemistry Council. Now he's helping steel companies navigate Washington efforts to control greenhouse gas pollution. He spoke recently with National Journal. Edited excerpts follow.

NJ: You've worked on environmental legislation in the past when you were on the staff at the Senate Energy and Natural Resources Committee and at EPA. How does the climate change effort compare to other environmental initiatives?

Gibson: With climate change, we're inventing something new. Climate change is more than just an environmental bill, in my mind. It's really an economic bill and a trade bill and an environmental bill. It's bigger than any one committee. It's the biggest thing we've done since the income tax bill. By putting a price on carbon, it means putting a price on energy, and we are an energy intensive economy. That is a big deal.

With an economy-wide cap-and-trade program, we're going to reorder the whole economy in one big bill. We don't have a lot of certainty about what the impacts are going to be or the outcome, either from an environmental perspective or an economic perspective. We don't know what [cutting U.S. greenhouse gas emissions by] 17 percent by 2020 means in terms of environmental outcome or an economic impact. Especially since we have no idea what the rest of the world is going to do. What it's going to do to electricity markets? What will it do to my costs? We have concerns.

NJ: How would the steel industry be impacted if Congress did not pass a climate bill?

Gibson: For this industry, we've improved our energy efficiency and our climate performance by 33 percent since 1990 because we had to. If this industry was going to survive here in the United States, energy is an enormous cost and we had to become more efficient. We became the most efficient steelmaking economy in the world.

What can happen if there's no climate bill? This industry is going to keep doing what it needs to do to remain competitive in a world where the competition is getting better every day. So for U.S. industry group to stay ahead, we've got to remain the most efficient, the least carbon-intensive and most energy-efficient steelmaker in the world. That is our competitive advantage.

NJ: Will lack of a bill impact business certainty for the steel industry?

Gibson: I think so. EPA is talking about regulations. Our assets are very long-lived, whether it's a blast furnace or an electric arc facility. Those are capital assets that are going to see 20, 30 or more years of life. So if you'd be facing an investment decision, it would be good to know what the future regulatory world is going to look like.

If a bill doesn't pass, we still have the EPA regulations -- unless they lose in the courts or something like the Rockefeller bill or the Congressional Review Act bill passes [stopping EPA from regulating greenhouse gases]. Otherwise, EPA is on a path to regulate CO2. But how will EPA do it? Assuming EPA prevails, there's going to be a long process where they must establish standards for different sectors, including steel.

NJ: Other companies have said that they see clean energy investment money waiting in the wings for a climate bill. Is that true in your area?

Gibson: Any of these bills that are going to require or allow new nuclear plants or wind facilities are going to be steel intensive. Right now there's nothing that would require the steel to come from the United States. So with a badly designed policy, we could end up with a higher cost of energy incurred by U.S. domestic producers and the benefits in terms of steel demand satisfied by folks in China, Brazil and India who have lower cost, including lower carbon costs.

NJ: Are you hopeful of the legislation being drafted by Sens. John Kerry, Lindsey Graham, and Joe Lieberman?

Gibson: The bill is starting to get more meat on its bones. But right now it's more of a Rorschach test -- everybody can look at it and see what they want in it. If they're truly wedded to cutting emissions by 17 percent by 2020 and 80 percent in 2050, it's a zero-sum game. If they provide more relief to manufacturers or refiners, it must be coming at the expense of some other industry that did better in Waxman-Markey. And that's going to set off its own dynamic.

NJ: If companies are so opposed to EPA regulating CO2 under the Clean Air Act, why aren't more executives pushing for a climate bill in Congress?

Gibson: Right now with respect to EPA our efforts are focused on helping Sen. [Jay] Rockefeller [D-W.Va.] delay EPA regulations. We also support Sen. [Lisa] Murkowski's [R-Alaska] efforts under Congressional Review Act [to overturn the EPA regulations]. We're in a full-court press on this. We're activating our grassroots and asking people to reach out to their legislators and get in touch with the White House.

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