From the Daily Caller
Nick Pope
Contributor
The Biden-Harris administration gave a major steelmaker $500 million in funding to go green in March, but the company's chief executive told Politico the company may have to give up the money.
The Department of Energy (DOE) announced in March that Cleveland-Cliffs was selected to receive $500 million in funding to help the company produce “green” low-carbon steel. However, CEO Lourenco Goncalves told Politico that his company may have to give up the funding because buyers appear to have no interest in spending more for the company's “green” steel, And Cleveland Cliffs still has to pay more than $1 billion to convert one of its coal-fired facilities to hydrogen.
“There are only two ways to solve this problem: One is that they change their mind and pay. So far, it hasn't been very successful. The other way is that I go back to where I was before and put in more,” Goncalves told Politico , he was referring to buyers’ reluctance to pay a premium for greener steel. “It was a decision I had to make very quickly.” (Related: Biden vows to protect U.S. steel — but another of his efforts could destroy it)
The U.S. Department of Energy also designated Cleveland Cliffs for another $75 million grant to help the company replace two natural gas-powered furnaces at its Butler, Pa., plant, Politico reported. The $500 million grant is intended to cover some of the costs of converting a plant in Middletown, Ohio, to hydrogen.
However, Goncalves told Politico that even with a $500 million infusion of government capital, the economics of the Middletown redevelopment may still not make sense for the company. Cleveland-Cliffs is one of the largest steel suppliers to the auto industry, which faces its own green issues as automakers lose significant money from ramping up electric vehicle (EV) production and Biden-Harris The government has actually imposed strict requirements to increase electric vehicle (EV) production.
“I'm still trying to figure out whether the grant makes sense because the grant is $500 million and the whole package is $1.6 billion. I still have to pay $1.1 billion,” Goncalves told the media. “I wouldn't do it if there wasn't real support from the government and the public.”
Goncalves added that he was worried his company would lose market share to rivals in India and China, which have relatively lower production costs and less stringent environmental standards, Politico reported. . So far, buyers have proven that they would rather buy cheaper, less environmentally friendly steel than pay high prices for “green” products.
According to Politico, it’s unclear how much more the company’s “green” steel will cost buyers, but one estimate from BloombergNEF puts the premium at about 40%.
The company has received part of the $75 million grant and is still negotiating terms with the Department of Energy for a $500 million grant for the Middletown facility, Politico reported. If the company ultimately decides to abandon the Middletown grant, it would be a major setback for the administration's broader push to make the industrial sector of the U.S. economy more climate-friendly.
Neither Cleveland-Cliffs nor the Department of Energy immediately responded to a request for comment from the Daily Caller News Foundation.
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