Steel plant in Vance's hometown trades clean future for more coal

E&E News

2 days ago

A year ago, the Rust Belt hometown of Vice President JD Vance represented a new era of climate-friendly steelmaking, set on that course by the clean energy policies of the Biden administration.
Now, six months into President Donald Trump's second term, the Cleveland-Cliffs steel plant in Middletown, Ohio, looks very much like its past, doubling down on coal and relying on steel tariffs to help turn a profit.
The Middletown plant that employed Vance's grandfather and lifted his family out of poverty was supposed to be the future of manufacturing, boosted by former President Joe Biden's climate and infrastructure laws. By repowering a blast furnace with hydrogen and natural gas and cutting its reliance on coal, the facility would have been on its way to cranking out steel and reducing its climate pollution.
Advertisement
On Monday, Cleveland-Cliffs CEO Lourenco Goncalves declared the experiment over. Instead, he told investors on an earnings call that he was now working with the Department of Energy to 'enhance Middletown using beautiful coal, beautiful coke,' echoing Trump's claims about one of the nation's most-polluting fuels.
'It's clear by now that we will not have availability of hydrogen, so there is no point in pursuing something that we know for sure that's not going to happen,' Goncalves said. 'We informed the DOE that we would not be pursuing that project.'
The journey of the Middletown plant traces the Trump administration's rapid dismantling of Biden's vision for a lower-carbon future that was designed to create jobs and grow the economy while boosting American clean tech innovation and shifting the economy away from its reliance on fossil fuels. The Biden plan to transform the clean energy economy relied on hundreds of billions of dollars in subsidies and incentives, which in turn would help generate additional private investment.
The Trump administration has almost completely reversed that approach, undercutting both the Inflation Reduction Act and the bipartisan infrastructure law — and pledging to increase the nation's reliance on coal and other fossil fuels.
A Vance spokesperson did not respond to a request for comment on the Cleveland-Cliffs plan for the Middletown plant. But the White House said its policies are helping American steel.
'After languishing under a Biden-era stranglehold — plagued by unfair foreign competition, job losses, and weakened national security as imports flooded the market and domestic production stalled — the steel industry is quickly roaring back to life,' the White House said in a statement on Tuesday.
Under Biden, the Middletown plant was supposed to receive a $500 million federal grant to repower a coal-fired blast furnace in order to produce steel with clean hydrogen and natural gas. For decades, a mist of black soot has blanketed the cars and homes of the people who live closest to the plant. Had the hydrogen plan been implemented, it could have transformed one of the dirtiest steel plants in the country into one of the cleanest. It would have created an additional 200 permanent jobs and 1,200 construction jobs at the plant that now employs about 2,500.
The Biden administration wanted the Cleveland-Cliffs plant to spark a new Industrial Revolution in cleaner technologies.
'Clean steel is the future, everyone knows that, and to pretend otherwise is sticking your head in the sand,' said Leah Stokes, professor at the University of California, Santa Barbara, who advised the Biden administration on clean energy policy. 'We can either lead globally and claim a big part of the future of clean industries or we can be laggards and continue to lose to countries like China.'
But the market for greener steel in the U.S. has yet to take off at scale.
The Biden administration invested in the plant to drive a hydrogen-based manufacturing hub in the region. That's because there is not a viable large-scale clean hydrogen market that could supply multiple industries working to cut carbon pollution.
In the Biden administration, Goncalves said he could 'make the hydrogen hub viable.'
By Monday, he sounded like Trump in his praise for coal, telling investors his company relied on 'American iron ore and American coal and American natural gas as feedstock, all produced right here in the United States of America.'
While Goncalves did not specify how the administration was helping his company with the coal it purchases, Cleveland-Cliffs' bottom line has been boosted by a 50 percent tariff that Trump imposed on imported steel last month — doubling the rate from 25 percent. As with other tariffs, that's a cost largely borne by customers, and the hike already has shown up in the price tag for some vehicles.
Trump has leaned heavily on tariffs in his second term, claiming they will lead to a rebound in American manufacturing and create jobs throughout the country. It's a strategy he also tried in his first term — though it did not yield a manufacturing boom.
Where the Biden plan used tax incentives and grants — funded through taxpayer dollars — the Trump plan relies on steep tariffs passed along to consumers, said Scott Lincicome, vice president of general economics at the conservative Cato Institute. The U.S. steel industry is the fourth largest of any country in the world, he said, and has long leveraged 'cronyism' to get more government incentives and generate higher profits rather than relying on a free market.
'We have the fourth-largest steel industry in the world, so the idea that this industry needs government help is pretty fantastical,' he said. 'The reason that tariffs are so universally derided is because they're just a really inefficient, distortionary and indirect way to protect or boost domestic industry.'
He said the Cleveland-Cliffs decision to avoid increasing its reliance on natural gas and clean hydrogen was another backward-looking move to keep using a more expensive and dirtier fuel source that drives up pollution and prices at the same time.
'It's the worst-choice policy and worst-choice energy source,' he said.