US Announces $6 Billion to Clean Up Heavy Manufacturing

Ari Natter
·4 min read
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(Bloomberg) -- The Biden administration is awarding about $6 billion in grants to help cut emissions from metals, chemicals and other hard-to-decarbonize industries, including funding to build the first new US aluminum smelter in 45 years.

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Century Aluminum Co., once a central beneficiary of former President Donald Trump’s trade war, is set to receive as much as $500 million in funding for the facility, according to a statement Monday. That would double the size of the nation’s current domestic production of the energy-intensive metal while also reducing emissions by an estimated 75%.

Domestic production of aluminum, used in solar panels, semiconductors and fighter jets, has been steadily declining for years. That’s happened even has demand increased, partly thanks to President Joe Biden’s signature climate law that’s lifted consumption of materials needed for the energy transition.

“It is difficult to overstate the significance of what this award will mean for the domestic aluminum industry,” said Joe Quinn, a vice president with SAFE, a Washington think-tank that advocates for US energy independence.

“A new domestic smelter puts the US back in the game and reverses our dangerous, decades-long decline in primary aluminum production,” Quinn said.

The project is one of 33 set to receive grants worth as much as $500 million each as part of an Energy Department program to reduce greenhouse gas emissions in energy intensive manufacturing industries, as well as revitalize industrial communities and strengthen US manufacturing competitiveness.

Read More: Biden to Award $6 Billion to Decarbonize US Heavy Industry

The money will be aimed at industries that account for nearly a quarter of US emissions, but are challenging and expensive to shift to lower-carbon technologies. Cleaning up these sectors will be critical if the White House wants to meet its goal of cutting greenhouse gas emissions 50% by 2030 and achieve net zero by mid-century.

Difficult-to-Decarbonize Sectors

In all, the Biden administration said, the projects are expected to reduce the equivalent of more than 14 million metric tons of carbon dioxide emissions each year — an amount equivalent to the annual emissions of 3 million gasoline-powered cars.

“These investments will slash emissions from these difficult-to-decarbonize sectors and ensure American businesses and American workers remain at the forefront of the global economy,” Energy Secretary Jennifer Granholm said in a statement.

Chicago-based Century Aluminum is evaluating potential locations for its new smelter project along the Mississippi River Basin, the White House said. Upon completion, the plant would produce high-purity metal used in defense applications and result in 1,000 new direct jobs for United Steelworkers, a union that holds significant support from President Joe Biden and recently endorsed his re-election efforts.

Other grants announced by the Energy Department included as much as $500 million to steelmaker Cleveland-Cliffs Inc. for plans to install equipment that would allow steel to be made using hydrogen and two electric melting furnaces at the company’s Middletown Works mill in Ohio. The company won an additional $75 million to electrify production of a specialized steel needed for electric transformers and other parts of the electricity sector at its Butler Works plant north of Pittsburgh.

Other awards included as much as $500 million to SSAB AB to build the first commercial-scale facility in the world to make fossil-fuel-free steel using 100% hydrogen in Perry County, Mississippi. The funding will also be used to expand the company’s Montpelier, Iowa low-carbon steelmaking facility, the administration said.

Exxon Mobil Corp. got as much as $332 million for a project to replace natural gas with hydrogen for ethylene production in Baytown, Texas, and Kraft Heinz Co. received as much as $171 million to for it’s “Delicious Decarbonization” project to electrify a host of facilities.

Heidelberg Materials AG’s US subsidiary received as much as $500 million to construct cement decarbonization project, and Eastman Chemical Co. received as much as $375 million for the construction of a first-of-a-kind plastic molecular recycling facility.

“If done right, these projects can put us on the path to cleaner production of core products of the modern economy, while spurring the creation of good jobs,” said Christina Theodoridi, industrial policy director at the Natural Resources Defense Council.

Brazilian mining giant Vale SA received as much as $283 million to build a plant on the US Gulf Coast that makes iron ore briquettes with less industrial heat than traditional pellets.

--With assistance from Joe Deaux and James Attwood.

(Adds Vale iron ore project in last paragraph.)

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