President Biden is facing fresh pressure to block Nippon Steel’s takeover of flagship US Steel, this time from environmental groups that say the tie-up would undermine America’s efforts to curb climate change.
In interviews, environmental activists working to reduce greenhouse gas emissions say the merger would unite two steel giants that have been slow to move away from fossil fuels.
Researchers at Industrious Labs, a nonprofit that pushes for the decarbonization of steel and other heavy industries, used both companies’ public disclosures to estimate that Nippon and US Steel are relatively high emitters of heat-trapping gases from production steel. Both companies rely heavily on coal-fired blast furnaces and have been slower to transition to cleaner fuels than some international rivals. Three US Steel plants – in Pennsylvania, Indiana and Illinois – combine to emit more greenhouse gases in a year than a comparable number of coal-fired power plants, researchers estimate.
Officials from Nippon and US Steel say they are pursuing multiple strategies for decarbonization by 2050, including producing high-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 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 steel industry’s existence and growth.” .
Concerns about the deal’s climate impacts add to the growing political backlash over 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, urged the administration to review and halt the takeover.
Lawmakers cite potential harm to American workers and the nation’s defense industrial base if Nippon closes some of US Steel’s American plants. The company says it has no plans to do so. The Steelworkers Union has also objected, fearing job losses. Nippon officials said they would honor existing labor agreements.
Former President Donald J. Trump, the presumptive Republican presidential nominee, told reporters last month that he would block the sale “in an instant” if he were in office.
White House officials have said the administration is reviewing the takeover, 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 scrutinized by the Committee on Foreign Investment in the United States, known as CFIUS and headed of the Secretary of Finance.
Administration officials declined to confirm that an audit is underway.
“CFIUS is committed to taking all actions necessary within its mandate to protect the national security of the United States,” Treasury Department spokeswoman Megan Upper said this week. “As a matter of law and practice, CFIUS does not comment publicly on transactions it may or may not be reviewing.”
Asked by reporters last month about the merger, Ms. Brainard said that Mr. Biden “continues to strongly believe that steel is an important industry as the backbone of the transformation we’re leading in the economy, in terms of the energy transition. advanced manufacturing infrastructure’ and national security.
Environmental groups say the deal could block that energy transition. If the deal is allowed to go forward, these groups say, it could keep emissions at US Steel’s coal-powered plants much higher than they would be if the company were sold to another buyer — one more committed to electrification. and other advanced emission reduction technologies.
Both Nippon and US Steel aim to effectively stop the release of heat-trapping elements into the atmosphere by 2050, a goal known as “net zero,” relying heavily on technologies that have yet to be developed or scaled up. Environmental groups have pushed for more ambitious and concrete action.
“Their ambitions are very modest,” Yong Kwon, senior policy adviser at the Sierra Club’s Living Economy program, said in an interview.
Mr. Kwon said environmental groups were concerned that neither Nippon nor US Steel seemed likely to retire coal-fired blast furnaces soon and were raising the issue with lawmakers and the administration.
“What is important is that we have a steel industry that is committed to making the transitions that will improve the domestic steelmaking process, preserve jobs, grow domestic jobs and also minimize the harm to public health that are currently committed by this steel. industries,” he said. “The best we can do is to make sure the government understands this – and its wider importance to 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 strategies to reduce emissions. This includes US Steel’s partnerships with universities and the Department of Energy on efforts to capture and store emissions from coal-fired plants.
Some CFIUS experts say it would be very difficult for the administration to block the sale of a U.S. company, for essentially economic reasons, to a competitor from a strong U.S. ally like Japan.
Blocking the sale due to climate concerns would represent an even bigger hurdle, a reality even some environmental activists acknowledge. The law establishing CFIUS’ analyzes of the risks of a sale to a foreign-owned company directs the review to consider “an assessment of the threat, vulnerabilities, and consequences to national security associated with the transaction.”
Some analysts critical of Nippon Steel’s climate commitments say the proposed sale could otherwise benefit American workers, injecting Japanese expertise and capital into a company that has often struggled to compete despite decades of federal government aid.
“To be honest, US Steel is a bit of an older, underinvested, underrated company,” said Chris Bataille, a research fellow at Columbia University’s Center for Global Energy Policy. “When you look at global steel companies, if you’re not worried about carbon, Nippon Steel coming in and investing in US Steel and helping bring their technology back to the best globally” would be good for the company.
But, he added, “Nippon is fair – it’s not that committed to climate.”
Other analysts say the deal could backfire on American workers by not pushing US Steel to compete in a growing global market for so-called green steel, which is produced without fossil fuels. They say such a failure could ultimately jeopardize American manufacturing and jobs.
“They have no immediate plans to clean up their coal-based facilities, which are these blast furnaces, and that’s on the 2030 timeline,” said Hilary Lewis, the director of steel at Industrious Labs. He said “2030 is not that soon, and even if you look at their 2050 timeline, they are falling short of the investments I think they should be making today.”
“It’s not just missing an opportunity,” Ms Lewis said. “It’s about the trajectory of these companies and making sure they’re fit for the next century.”
