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Published December 16, 2007 12:40 PM

North American Steelmakers Endorse Global Approach to Addressing Climate Change

WASHINGTON - Responding to the International Iron and Steel Institute's (IISI) address on climate change delivered during the UNFCCC COP-13 meeting this week in Bali, the American Iron and Steel Institute (AISI) endorsed the global sectoral approach to address climate change, agreeing that "this type of global approach is required if a future emissions regulatory regime is to deliver meaningful reductions in greenhouse gas emissions worldwide."

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"We are a strategic industry, essential to the world's economic growth and stability and fundamental to all manufacturing," Andrew G. Sharkey, III, president and CEO of AISI said. "That's why we see global steel consumption at well over 1 billion tons."

"The steel sector is part of a climate change solution," Sharkey said, "both globally and in the U.S. America's steel industry has reduced its energy intensity per ton of steel shipped by 29 percent since 1990. American steelmakers lead the way in recycling and environmental performance. We're ahead of Kyoto greenhouse emission goals by 240 percent, and we're committed to research necessary to develop innovative technologies to continue this trend."

"The U.S. steel industry today is helping achieve global climate change goals through its own process improvements, as well as the development of innovative new products that help our customers and end-use consumers reduce greenhouse gas emissions," he said, citing the increasing use of advanced high strength steels in automobiles, certain steel products that result in more efficient buildings and infrastructure, and pressure vessels for electrical power generation and energy transportation. "Steel is an essential product in the global attack on climate change, and we must allow the most energy efficient sectors of the industry the ability to continue developing new products and production technologies."

Sharkey said the global sectoral approach favored by both IISI and AISI will encourage a "race to the top" where manufacturers world-wide compete to meet established performance standards. He echoed IISI's criticism of national/regional schemes, such as the EU Cap and Trade System, because they encourage a "race to the bottom" in which manufacturers have an incentive to make the product in countries with the least restrictive standards.

"This type of regime distorts competition in the EU, fails to effectively reduce emissions, fails to reward improvements and leads to huge and unjustified inflation of electricity costs," he said.

At the core of the new steel sector approach unveiled at the COP-13 meeting is the collection and reporting of carbon dioxide emissions data by steel plants in all major steel producing countries. The information collection will lead to benchmarking improvements based on actual performance data and then reporting and setting of commitments for implementation during the post-Kyoto period.

"The key advantage of the IISI approach," Sharkey said, "is that it is supported by its members in both the developed and developing countries, including China, which accounts for approximately 50 percent of total steelmaking CO2 emissions."

"We're hopeful that if and when legislation is passed in the United States and a climate change regime is developed, that it will incorporate a global sectoral approach," he said. "Such an approach will also need to acknowledge the significant emissions reductions that the American steel sector has already achieved to date."

"Because of American steelmakers' environmental leadership among global steelmakers, we have grave concerns about a U.S. cap and trade system's ability to give worse environmental performers a leg up in this market," Sharkey said, "thus increasing global greenhouse gas emissions by pushing production to countries with the least restrictive standards. "

"We will continue to advance the need for a sectoral approach that would require foreign competitors who sell in this market to live up to the same best practices and highest standards in terms of the carbon performance of their manufacturing operations. This type of approach would have the effect of actually lowering global emissions without creating market distortions."

In that regard, Sharkey said to achieve further reductions in North America it will require significant additional investment in research and development of new steelmaking technologies. He pointed to the CO2 Breakthrough program in which the international steel industry, including AISI, is actively engaged, which seeks to develop and put into practice new ways of making steel with little or no CO2 emissions.

Sharkey urged North American governments to support the global sectoral approach to climate change and:

-- To work closely with the steel industry on a global approach by adopting a sector specific framework that involves all major steel-producing countries;

-- To work toward the adoption of an emissions regulatory regime that supports the expansion of efficient steel companies and the decline or replacement of the least efficient companies;

-- To work with AISI to adopt and support a new methodology that will measure and analyze emissions data from its member companies' plants in all major steel producing countries;

-- To work with the steel industry to invest in the next generation of breakthrough technology CO2 programs to bring about the next major advancement in steelmaking.

AISI serves as the voice of the North American steel industry in the public policy arena and advances the case for steel in the marketplace as the preferred material of choice. AISI also plays a lead role in the development and application of new steels and steelmaking technology. AISI is comprised of 31 member companies, including integrated and electric furnace steelmakers, and 130 associate and affiliate members who are suppliers to our customers of the steel industry. AISI's member companies represent approximately 75 percent of both U.S. and North American steel capacity. For more news about steel and its applications, view AISI's Web site at http://www.steel.org/.

Source: American Iron and Steel Institute

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