In September, the White House announced that the federal government will prioritize the purchase of low-carbon materials for federal construction projects. That is likely to benefit the steel industry in the United States, which produces steel with a lower carbon footprint than some international alternatives.

Globally, the steel industry, which produces 1.9 billion metric tons of crude steel annually, is responsible for 3.7 gigatons of direct and indirect carbon dioxide emissions, or 10% of the total, mostly by using blast furnaces that burn coal to produce iron and steel. Most domestic steelmakers use electric arc furnaces (EAF) to process recycled steel, accounting for the lower emissions. Decarbonization efforts are ongoing for the steel industry globally, and further innovations, such as using hydrogen as a steelmaking fuel and refining iron ore electrochemically, are on the horizon and could be competitive with EAF technology.

Federal construction spending represents billions of dollars annually. During the 12 months ending August 2022, total federal construction amounted to $25 billion, according to Census Bureau statistics, up 2.8% from August 2021. The Biden administration’s Buy Clean policy will also cover federally-funded projects, such as the $120 billion in infrastructure spending being administered by the Department of Transportation. The program also intends to draw in state and local government construction, which accounted for over $330 billion between September 2021 and August 2022.

Inflation Reduction Act

The Inflation Reduction Act, which passed Congress and was signed by President Joe Biden over the summer, provided $4.5 billion in funding to the General Services Administration, the Department of Transportation, and the Environmental Protection Agency to designate and use construction materials and products that produce lower levels of greenhouse gas emissions (GHG). Besides steel, the Buy Clean program will also impact federal buying of concrete, asphalt, and glass, and additional construction materials and pollutants are likely to be included going forward.

Buy Clean will favor federal steel procurement from domestic manufacturers, according to Kevin Dempsey, CEO of the American Iron and Steel Institute. “Of the major steel-producing countries, the U.S. has the lowest CO emissions per ton of steel produced,” he said.

Seventy percent of U.S. steelmaking uses EAF, processing recycled steel with electricity in a one-step process. Traditional, or blast furnaces, steelmakers, by contrast, which represent 70% of global output, manufacture steel by using coking coal to melt ore into iron and then process that into steel.

A recent study undertaken by CRU Group, a business intelligence firm specializing in metals manufacturing, found that greenhouse gas emissions from EAF steelmaking were dramatically lower than from blast furnaces, 75% lower in emissions intensity at the crude and hot-rolled phases at Scope 1 and Scope 2. Scope 1 refers to direct emissions, such as those made by running boilers and vehicles, while Scope 2 emissions are indirect, such as those produced by the electricity or energy used to heat and cool buildings.

At the crude steelmaking phase, the study concluded, average Scope 1 and 2 emissions for…

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