The Inflation Reduction Act (IRA) introduced by the US government to spur the economy, although not steel-specific, provides a good basis to support cleaner steelmaking, several global experts find.
The IRA was a key theme at worldsteel’s Open Forum – Climate Action in Antwerp earlier this month, during a session titled “Heterogeneity of steel decarbonisation pathways”, featuring the heads of international steel associations. IRA was brought up by Philip Bell, president of the Steel Manufacturers Association (SMA), who said: “I wish more governments would use that incentive-based approach.”
His wish was echoed from the EU side by Axel Eggert of Eurofer. “The EU’s steel industry is jealous of that programme; overall, it is a positive move to incentivise decarbonisation in the USA,” Kallanish heard Eggert say at the conference. He was more sceptical on the EU’s Carbon Border Adjustment Mechanism (CBAM), which he said is “going in the right direction, but is a drop in the ocean”.
The effect of IRA was put into figures by Kwasi Ampofo of BloombergNEF, who found that efforts to make green steels “get a bit cheaper with the US’s IRA subsidies”. Concretely, he assessed that using carbon capture and storage would cost on average $613/tonne, and using hydrogen on average $653/t with IRA credits. Without the credits, both methods would cost around $50 more.
One participant in the discussion highlighted the complexity of steel pricing if too many political tools are involved. “The steel markets will be confused,” said Hiroyuki Tezuka of the Japan Iron and Steel Federation (JISF). Mechanisms like subsidies already create trade disputes and dilute basic steel pricing. “And soon we are facing CBAM, too, which will be adding confusion,” he noted.
The discussion panel also included Kevin Dempsey of the American Iron and Steel Institute (AISI), Huang Dao of the China Iron & Steel Association (CISA), and Alok Sahay of the Indian Steel Association (ISA).
Christian Koehl Germany