Amidst the chaos of President Donald Trump’s tariff regime so far, there has been one constant — the 25% levies on steel and aluminum imports applied in February, with no country-specific exemptions. I’ve been a bit befuddled as to what these tariffs may, or may not, mean for the companies trying to green these notoriously hard-to-decarbonize sectors. And it turns out, some of them are a bit befuddled, too.
“It’s a mixed bag,” Cody Finke, CEO of the Bay Area-based clean cement and alumina startup Brimstone told me. Brimstone’s core breakthrough is figuring out a way to co-produce cement and alumina — the core material in the critical mineral aluminum — using carbon-free calcium silicates such as basalt rather than limestone, which releases a lot of CO2 when it’s processed.
At least on the surface, a company like Brimstone should fall squarely among the beneficiaries of Trump’s trade policy — the whole point of the tariffs, after all, is to increase demand for domestic steel and aluminum by making foreign metals more expensive. That will likely allow U.S.-based producers to raise prices, too, generating even more revenue.
Then again, green steel and aluminum producers rely on imports of these same materials to build their own plants. Tariffs on these vital construction materials — plus exorbitant levies on all goods from China — will make building new production facilities significantly costlier. (As Keith Norman, CEO of the domestic battery manufacturer Lyten told me last month, “The reality is, the energy transition is a manufacturing transition.”) Not to mention the fact that the auto industry — a heavy user of both steel and aluminum — is facing its own 25% tariffs on imported vehicles and auto parts. That stands to raise the price and thus lower the demand for cars, in turn reducing demand for the materials needed to build them, green or not.
Large industry players such as Nucor and Cleveland Cliffs — both of which have plans to produce green steel — have seen mixed responses since the tariffs were announced. “Nucor recently said on an earnings call that they have huge backlogs, suggesting increased demand. [Cleveland] Cliffs, on the other hand, is idling plants due to low demand,” Hilary Lewis, the steel director at Industrious Labs, a nonprofit advocating for heavy industry decarbonization, told me via email. But it’s difficult to know how much a company’s recent performance is attributable to the tariffs. “The impact of the steel tariffs are uneven and subject to other disruptions in the market,” Lewis said.
Industrious Labs aluminum lead Annie Sartor told me that Trump’s first term tariffs on aluminum failed to revitalize the industry, which she said “saw a continued downturn.” So while the latest tariffs are more robust, Sartor is hesitant to to think that “this will be a real game changer.” As she explained, “The biggest challenge that the industry faces is access to electricity, and specifically renewable electricity.”While the tariffs won’t directly address that, Sartor said that an optimistic analysis would suggest that with their extra revenue, companies that rely on electrification to clean up their operations “could use those additional funds to help them access the renewable energy that they want.”
At least for now, many of the leading companies have expressed strong support for Trump’s trade agenda. Century Aluminum’s CEO Jesse Gary said the tariffs “will help drive the resurgence of domestic aluminum production,” while Cleveland Cliff’s CEO Lourenco Goncalves stated they would “penalize the foreign competitors who have been playing by a different set of rules.” And while Leon Topalian, CEO of Nucor, acknowledged that the tariffs will increase the price of the raw materials for steel, such as iron ore, he told investors that he thinks this will be outweighed by “the overall macroeconomic trends in the industry, a healthy, vibrant steel industry.”
Aluminum giant Alcoa, which has also expressed interest in producing green aluminum, is an outlier among industry leaders in its opposition to tariffs. The company’s CEO, Bill Oplinger, told the crowd at a metals and mining conference in February that the disruption caused by the tariffs could eliminate 100,000 jobs in the domestic aluminum industry. The company operates two smelters in Canada that will be subject to tariffs, while it’s closed down many older smelters in the U.S. that it’s in no rush to reopen. “It’s hard to make a restart decision based on tariffs that could change,” Oplinger said during an analyst call, the Wall Street Journal reported. “We just don’t know whether they will stick.”
Startups focused narrowly on green metals production, however, have generally been more circumspect in their responses. “At this point, we’re trying to just stay steady through all of it — not reacting to the day-to-day,” Adam Rauwerdink, senior vice president at the green steel startup Boston Metal, told me. His company uses renewable power to electrolyze iron ore at high temperatures to create molten iron, the feedstock for steel.
Boston Metal has yet to build its first demonstration plant, and while Rauwerdink told me the tariffs could provide some incentive to site the facility in the states, the increase in domestic materials demand that tariffs will presumably bring is by no means enough to guarantee a U.S.-based facility will be worth it. “Here in the U.S. right now, the challenge is just the grid not being sufficient,” he said.
With electricity demand on the rise, green metals companies are now competing for renewable resources with tech giants that are trying to scoop up as much clean energy as possible to power their artificial intelligence-focused data centers. “Innovations like that, which change the landscape on the grid, can definitely impact some of these other solutions that are going to be competing for electrons and are probably less profitable than an AI data center,” Rauwerdink told me.
Electra, a startup that’s also using electrolysis to decarbonize the ironmaking process, recently landed a $186 million Series B funding round to build its demonstration plant in Colorado. But the tariffs aren’t enough for them to commit to the U.S. market, either. As the company’s CEO, Sandeep Nijhawan, told me, building a facility in an area with easy access to renewables is of paramount importance to them too.
Adding to all of this tariff-related uncertainty is the fact that many of these demonstration plants or first commercial facilities, including Brimstone’s, aren’t even scheduled to come online until the latter half of Trump’s term, if not the next decade. “We don’t know what the policy of the United States will be at that time,” Finke told me. The plan is for the company’s first commercial demonstration plant to be operational in 2030. “Maybe the next president will extend those tariffs, or maybe they will cut them back,” Finke said. After all, Biden mostly kept Trump’s first term tariffs on steel and aluminum in place — although prior to this February, there were numerous country-specific exemptions in place.
At the end of the day, tariffs are only one of numerous policy unknowns plaguing these green producers. Another major one is the status of the funding many of them were granted from the Department of Energy but have yet to see. In Brimstone’s case, that’s a $189 million award from the Office of Clean Energy Demonstrations to build its first plant. While Finke told me the company has started spending that money scoping out potential sites, it hasn’t yet been reimbursed. I asked him if that was concerning. “It’s a good question,” he told me. “At this time, it’s too early to say that.”
Similarly, Century Aluminum and Cleveland Cliffs both have $500 million awards from OCED to produce green aluminum and green steel, respectively. While I reached out to both companies for comment on the tariffs and the status of their funding, neither got back to me. Boston Metal also has a $50 million DOE grant for a facility that would produce chromium, a critical material for many advanced energy technologies. That money is, of course, now mired in “limbo and uncertainty,” Rauwerdink told me.
Green aluminum manufacturers large and small also stand to benefit from the Inflation Reduction Act’s advanced manufacturing production tax credit, which incentivizes the domestic production of critical minerals, as well as certain types of clean energy components. This credit — along with so many others — may or may not be slashed as Republicans look to cut funding for a variety of IRA-related initiatives in the budget reconciliation process.
While Finke told me — as so many other companies did — that Brimstone does not rely on tariffs, tax credits, or the company’s DOE grant for its survival,it sure would be nice to have just a little certainty for once. “What we’d really like is to know what number to put in our financial model,” he told me.
Wouldn’t we all.
Courtesy of Harbinger
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