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HomeIndustriesAAM Statement: New Buy Clean Guidelines Will Incentivize Cleaner Steel Production

AAM Statement: New Buy Clean Guidelines Will Incentivize Cleaner Steel Production


Washington, D.C. – The General Services Administration (GSA) announced “Buy Clean” pilot requirements Tuesday for the procurement of substantially lower embodied carbon construction materials, including steel. These requirements will apply to 11 GSA projects funded by the Inflation Reduction Act (IRA), valued at more than $300 million.

Alliance for American Manufacturing President Scott Paul said:

“America’s steel companies and workers are already leading the way in transitioning to a cleaner economy, making major investments to lower greenhouse gas emissions and doing their part to address climate change.

“A Buy Clean policy built upon existing Buy America requirements has the potential to boost American manufacturers and workers who are doing the hard work to build a cleaner industrial sector. The details are critical to ensuring that our nation addresses its climate goals while simultaneously strengthening the industrial base.

“By adopting a bifurcated approach to integrated and electric arc furnace steel production, GSA got the first of many key details correct. GSA’s announcement ensures that no American steelworkers are aimlessly excluded from supplying government procurement markets. At the same time, it creates powerful incentives to accelerate the capital investments necessary for clean energy and climate innovation throughout the American steel sector.

“Both EAF and integrated steelmakers are necessary to meet the needs of U.S. economic and national security, but their operations are fundamentally different. A successful Buy Clean policy will include incentives for cleaner steel produced by all steelmakers. Favoring one process over another in the broader steel sector would be a losing proposition for our economy, our efforts to address climate change, and for workers. Such an outcome would fail to recognize the inherent benefits of both the EAF and the integrated steel production methods and would needlessly exclude certain operations, communities and union workers from the positive influence of the federal government’s Buy Clean policy.

“GSA’s announcement is just the beginning. Moving forward, it is critical that Buy Clean builds upon existing Buy America policies, accurately accounts for emissions throughout the supply chain, and relies on trusted verification tools.”

Background:

The Inflation Reduction Act (IRA) appropriated funds for GSA and the Federal Highway Administration (FHWA) at the Department of Transportation (DOT) to spend on materials and products “that have substantially lower levels of embodied greenhouse gas (GHG) emissions.” This announcement is consistent with congressional intent in the IRA that GSA use its purchasing power to incentivize all steelmakers to invest in technologies that lower embodied carbon.

On Sept. 15, 2022, Deputy National Climate Advisor Ali Zaidi, Transportation Secretary Pete Buttigieg, and U.S. General Services Administration Administrator Robin Carnahan announced the federal government will prioritize the purchase of certain low-carbon construction materials at a Cleveland-Cliffs’ Direct Reduction plant in Toledo, Ohio, whose employees are represented by the United Steelworkers (USW). This $1 billion Cleveland-Cliffs Direct Reduction plant is representative of the future of U.S. clean manufacturing. It produces a lower-carbon intermediary feedstock product that is integrated into steel plate and other steel products used in a wide variety of products purchased by the federal government and used in federally assisted infrastructure projects, including automobiles, bridge decks, offshore wind platforms, naval submarines, and rail cars. This facility is an example of U.S. investment in the steel industry to produce American-made, lower-carbon construction materials.

To successfully boost U.S. manufacturers and their workers, Buy Clean will be implemented on top of existing domestic content preference policies. This includes Buy American and Buy America laws that require the use of American-made steel and other inputs in federal procurement and for federally assisted infrastructure projects, respectively.

The American steel sector consists of electric arc furnaces (EAFs) and integrated mills that use basic oxygen furnaces (BOF). Integrated (BOF) producers create steel from iron and alloying elements while EAFs manufacture steel from post-consumer steel waste (aka steel scrap).

  • BOFs make certain types of steel that cannot be made in EAFs.
  • There is not enough existing steel waste to rely solely on EAFs for America’s needs.
  • BOFs have significant employment effects, including many union jobs throughout the production process. This includes upstream raw materials, downstream steel production, finishing, and fabrication.

GSA’s Buy Clean announcement recognizes the importance of both production processes to America’s economic and national security. At the same time, it appropriately establishes a bifurcated framework that will drive innovation and investments in more efficient technologies across the broader U.S. industry by all market participants.

You can find AAM’s most recent formal comments on “Buy Clean” here.

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