Climate Change Bill Ignites Uniform Message From Cement Steel Interests

We took enthusiastic note earlier this fall when the Minnesta Department of Transportation awarded the Interstate 35W replacement bridge contract to a


We took enthusiastic note earlier this fall when the Minnesta Department of Transportation awarded the Interstate 35W replacement bridge contract to a team proposing a concrete design against three remaining bidders who pitched steel alternates.

More recent action on Capitol Hill reminds us that the political environment for cement and steel production Û both global businesses whose mill processes are linked to perceived climate change Û limits the provincial pride that might accompany a concrete success in Minneapolis. Underscoring this caveat is debate on climate change legislation, the most extreme proposals for which might drive bidders on future interstate highway replacement bridge or other public works jobs to confer with overseas cement and steel sources during bid preparation.

The Senate Environment and Public Works (EPW) Committee was educated formally and informally last month on cement and steel industry positions concerning the Climate Security Act of 2007 (S.2191). It sets the stage for a carbon dioxide emissions cap-and-trade system, whereby cement and steel producers, as well as coal-burning utilities, would have limits placed on the amount of CO2 gas they could release (30 percent below 2005 levels by 2012; 70 percent by 2050). Plants generating lower-than-allowable CO2 gas emissions would earn credits, which in turn could be auctioned to producers or operators exceeding their emissions allotments.

As repeatedly noted here, cement milling is a carbon-dioxide-intensive process, with the gas generated in near-equal quantity during the raw material calcining and clinker kiln phases. Sen. Kit Bond (R-MO) referenced this while enlightening fellow EPW Committee members on how the cap-and-trade concept would affect utility, cement and steel operators and their customers: Carbon auctions are unfairly expensive for millions of consumers. Energy prices will rise because families and workers will pay multiple times for what they pay once for now. Consumers will first pay for higher power production costs from higher natural gas prices. Then they will pay for expensive new carbon controls or alternative energy sources. Then, this bill will force them to pay still more for auctioned carbon allowances.

Sen. Bond believes the Climate Security Act’s added costs to consumers could be as much as $50 billion more a year initially, rising to $150 billion per year by 2030. He also referenced the unique situation of cement manufacturing and its dual sources of CO2 emissions. With a roughly $10 per ton of product profit margin, he said, a carbon price of $15 per ton would force domestic cement manufacturing off shore.

Among the 39 states with cement kilns is Bond’s own, Missouri, with five plants and 5.27 million tons of annual capacity, plus 4 million tons’ new capacity as the Holcim Ste. Genevieve plant takes shape toward a 2009 start-up. Ste. Genevieve will contribute to the positive energy efficiency benchmarks Portland Cement Association logs in its annual industry survey, whose most recent installment indicated a 1.1 percent drop in energy consumption per ton of cement produced in 2006 versus the prior year.

Since 1972, PCA notes, the U.S. cement industry has increased energy efficiency more than 37 percent. Cement companies’ counterparts in steel have recorded similar gains, noting a 40 percent reduction in energy used per ton over the past 25 years. In a statement to the EPW Committee, American Iron & Steel Institute President and CEO Andrew Sharkey III expanded on Sen. Bond’s concerns and offered observations that could have come from a PCA member, or were phrased such that cementcould be interchanged with his use of the word steel. Carbon is necessary in the current steelmaking process technologies and unless we undo the laws of physics, it is a reality that must be taken into account, he affirmed.

Advocates of climate-change legislation view construction of ethanol plants, nuclear reactors, wind energy infrastructure, mass transit systems and other cement- and steel-intensive facilities as a ticket to reduced CO2 emissions. It’s unclear those advocates appreciate how much certain industries Û whose output will be critical to curtailing perceived global-warming trends Û have already lowered their carbon footprints.