President Biden is facing new pressure to block Nippon Steel’s takeover of iconic manufacturer US Steel, this time from environmental groups that say the merger would undermine America’s efforts to curb climate change.
In interviews, environmental activists working to reduce greenhouse gas emissions say the merger would bring together two steel giants that are laggards in moving away from fossil fuels.
Researchers at Industrious Labs, a nonprofit organization that works to decarbonize steel and other heavy industries, calculated, based on public disclosures from both companies, that Nippon and US Steel emit relatively high levels of heat-trapping gases from steel production. Both companies rely heavily on coal-fired blast furnaces and have been slower to transition to cleaner fuels than some international competitors. Three US steel mills – in Pennsylvania, Indiana and Illinois – collectively emit more greenhouse gases per year than a comparable number of coal-fired power plants, the researchers estimate.
Nippon and US Steel officials say they are pursuing several strategies to decarbonize by 2050, including producing higher-quality steel in more efficient electric furnaces and using hydrogen injection technology in blast furnaces, and that their merger will advance those efforts.
In a joint statement on Thursday, the companies said the deal would “create a stronger, more competitive global company” and that Nippon and US Steel “recognize that solving sustainability challenges is a fundamental pillar of a steelmaker’s existence and growth.”
Concerns about the deal’s impact on the climate are adding to growing political opposition to the proposed takeover. A bipartisan group of senators, including Republicans Josh Hawley of Missouri and Marco Rubio of Florida, and Democrats Sherrod Brown of Ohio and Bob Casey of Pennsylvania, have called on the administration to investigate and stop the takeover.
Lawmakers cite potential harm to American workers and the country’s defense industry if Nippon were to close some of US Steel’s American plants. The company says it has no plans to do this. The United Steelworkers Union has also raised objections, fearing job losses. Nippon officials have said they will honor existing labor contracts.
Former President Donald J. Trump, the likely Republican presidential nominee, told reporters last month that he would block the sale “immediately” if he were in office.
White House officials have indicated that the administration is reviewing the acquisition, a process that could allow Mr. Biden to block the deal.
Lael Brainard, who heads Mr. Biden’s National Economic Council, suggested in a written statement shortly after the deal was announced that the merger would likely be reviewed by the Committee on Foreign Investment in the United States, known as CFIUS and headed by the Treasury secretary .
Administration officials declined to confirm that a review was underway.
“CFIUS is committed to taking all necessary actions within its authority to protect U.S. national security,” Megan Apper, a Treasury Department spokeswoman, said this week. “Consistent with law and practice, CFIUS does not comment publicly on transactions it may or may not review.”
When asked by reporters last month about the merger, Ms. Brainard said that Mr. Biden “remains firmly convinced that steel is an important industry as the backbone of the transformation that we are driving in the economy as it relates to the energy transition.” advanced manufacturing infrastructure” and national security.
Environmental groups say the agreement could hinder the energy transition. If the deal goes through, emissions at U.S. Steel’s coal-fired power plants could remain significantly higher than if the company were sold to another buyer — one more committed to electrification and other advanced emissions-reducing technologies.
Both Nippon and US Steel aim to effectively stop the release of heat-trapping assets into the atmosphere by 2050, a goal known as “net zero,” largely through the use of technologies they have not yet developed or developed have scaled. Environmental groups have pushed for more ambitious and concrete measures.
“Their ambitions are very modest,” Yong Kwon, a senior policy adviser with the Sierra Club’s Living Economy program, said in an interview.
Mr. Kwon said environmental groups were concerned that neither Nippon nor US Steel would retire their coal-fired blast furnaces soon and had raised the issue with lawmakers and the government.
“What is important is that we have a steel industry that is committed to making the changes that will both improve the steelmaking process domestically, preserve jobs, grow jobs domestically and minimize the harm to public health that is currently caused by this steel industries,” he said. “The best thing we can do is make sure the government understands this – and its wider significance for the green transition it has set out to achieve.”
Executives at Japan-based Nippon and Pittsburgh-based US Steel say they are spending money to pursue multiple emissions reduction strategies. This includes US Steel’s partnerships with universities and the Department of Energy to capture and store emissions from coal-fired power plants.
Some CFIUS experts say it would be excessive for the government to block the sale of an American company to a competitor from a strong U.S. ally like Japan on essentially economic grounds.
Blocking the sale because of climate concerns would pose an even greater hurdle, a reality that even some environmental activists admit. The law, which sets out CFIUS’s analyzes of the risks of a sale to a foreign-owned company, requires the review to consider “an assessment of the threat, vulnerabilities and national security consequences associated with the transaction.” .
Some analysts critical of Nippon Steel’s climate commitments say the proposed sale could otherwise benefit American workers by bringing Japanese know-how and capital to a company that has often struggled to compete despite decades of federal support to pass.
“To be honest, US Steel is a somewhat older, underinvested and run-down company,” said Chris Bataille, a researcher at Columbia University’s Center on Global Energy Policy. “If you look at global steel companies and you’re not worried about carbon, it would be good for the company if Nippon Steel came in and invested in US Steel and helped bring its technology back to global market standards.”
But he added: “Nippon is simple – they are not that committed to the climate.”
Other analysts say the deal could backfire for American workers because it fails to spur US Steel to compete in the growing global market for so-called green steel, made without fossil fuels. They say such a failure could ultimately jeopardize American manufacturing and jobs.
“They have no immediate plans to remediate their coal-based assets, those blast furnaces, on a 2030 time frame,” said Hilary Lewis, steel director at Industrious Labs. She said: “The year 2030 is not that soon and even if you look at their schedule for 2050, they are falling behind the investments that I think they should be making today.”
“It’s not just about missing an opportunity,” Ms. Lewis said. “It’s about developing these companies and making sure they are fit for the next century.”
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2024-02-16 00:49:20
www.nytimes.com
