The Biden-Harris administration awarded the major steelmaker $500 million in environmental protections in March, but the company may be forced to give up the money, its CEO told Politico.
Department of Energy (DOE) Announced In March, it was announced that Cleveland-Cliffs had been selected to receive $500 million in funding to help make “green” low-carbon steel. But CEO Lourenço Goncalves POLITICO The company may be forced to abandon its financing drive because buyers seem uninterested in paying high prices for the company's “green” steel and Cleveland-Cliffs still has to pay more than $1 billion up front to convert one of its coal-fired power plants to a hydrogen-powered plant.
“There are only two ways to solve this problem. One is for them to change their mind and pay up, which hasn't worked very well so far. The other way is to go back to the way they were before and emit more,” Gonsalves told Politico, referring to buyers' unwillingness to pay a premium for greener steel. “This is a decision I will make very soon.” (Related story: Biden vows to protect American steel, but his other initiative could destroy it)
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The DOE also name Cleveland-Cliffs also received a $75 million grant to replace two natural gas-powered furnaces at its Butler, Pennsylvania, facility, according to Politico. The $500 million grant will help cover some of the costs of switching to hydrogen energy at its Middletown, Ohio, plant.
But even with a $500 million government infusion, converting the Middletown plant may not make economic sense for the company, Gonsalves told Politico. Cleveland-Cliffs is one of the top suppliers of steel to the auto industry, which faces its own environmental challenges as automakers lose billions of yen on the rise in electric vehicle (EV) production that the Biden-Harris administration has effectively mandated with tough regulations.
“We're still figuring out if it makes sense with the grant because the grant is $500 million and the whole project is $1.6 billion. We still have to pay $1.1 billion,” Gonsalves told the outlet. “If the government and the public aren't really in support of it, then I'm not going to do it.”
Gonsalves added that he was worried his company would lose market share to competitors in India and China, where production costs are lower and environmental standards are less stringent, Politico reported. So far, buyers have shown they would rather buy cheaper, less environmentally friendly steel than pay a premium for a “green” product.
It's unclear how much the company's “green” steel will cost buyers. estimate The premium is estimated at about 40%, according to BloombergNEF and Politico.
Politico reported that the company has already received part of a $75 million grant and is in negotiations with the Department of Energy over the terms of a $500 million grant for its Middletown facility. If the company ultimately decides not to accept the Middletown grant, it would be a major setback for the government's broader efforts to make the industrial sector of the U.S. economy greener.
Neither Cleveland-Cliffs nor the Department of Energy immediately responded to requests for comment from the Daily Caller News Foundation.
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