Low-carbon steel, environmental requirements hit first federal agency

With the first federal agency, the General Services Administration, now committed to using low-carbon steel in its projects, it needs to figure out just how it will measure the environmental impact of the steel destined for the projects. aprott/iStock/Getty Images Plus

Metal product manufacturers that now have to worry about whether their steel meets domestic content requirements when supplying federal highway, environmental, and housing projects have a new federal requirement to worry about: whether their product was made from low-carbon steel.

That is a requirement for all projects funded with Inflation Reduction Act (IRA) funds. The General Services Administration (GSA) is the first federal agency out of the chute with a lower embodied carbon content metric, which it will apply to 11 projects worth about $300 million. These construction projects consist of a mix of federal buildings and court houses, for the most part.

All products used in these 11 pilot projects—and this will be true in the future for all projects built with IRA funding—will have to show an environmental product declaration (EPD) that will be based on greenhouse gas emissions. However, EPDs don’t exist for steel products. Because of this, GSA will be using an Environmental Protection Agency Interim Determination that establishes the definition of “substantially lower” greenhouse gas emissions based on EPDs.

The GSA appears to have a relatively steep learning curve to come up with solid EPDs, including ones that are realistic for steel manufacturers and their customers. The American Institute of Steel Construction produces EPDs for three steel product classes: fabricated hot-rolled structural sections, fabricated steel plate, and fabricated hollow structural sections. In each of the three classes, the AISC names the steel manufacturers who qualify.

One of the companies in the steel plate category is Cleveland-Cliffs. That company, and presumably its fabricators, are already supplying product for a Cleveland-Cliffs’ plant in Toledo, Ohio. This $1 billion Cleveland-Cliffs plant is representative of the future of U.S. clean manufacturing, according to the GSA. 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.

Other steel industry groups have EPDs, too. The Steel Framing Industry Association has one for cold-formed steel framing. The scope of products in this EPD includes structural and nonstructural framing components for walls, floors, ceilings, and roofs composed of hot-dipped-galvanized cold-formed steel members and flat straps used for bracing. The Steel Deck Institute also has its own EPD.

IRS Boosts Tax Credits for Domestic Steel

We have been reporting on the Inflation Reduction Act’s domestic content requirements and its implementation by different federal agencies such as the U.S. Department of Transportation. Here is a new wrinkle—and a positive one—for steel product manufacturers who can qualify: If you are involved in a project that qualifies for the production tax credit and investment tax credit and you meet the domestic content requirement for steel and iron, you can get a significant 10% increase to either or both the credits according to the Internal Revenue Service, which just released guidelines on May 12.

Notice 2023-38 clarifies that all manufacturing processes with respect to any steel or iron items that are components of an energy project must take place in the U.S. However, metallurgical processes involving refinement of steel additives are not required to be performed in the U.S.

Moreover, only structural construction materials made primarily of steel or iron must meet the domestic content requirement, and not steel or iron parts of other components. There is no domestic content requirement for items that are made primarily of steel or iron but are not structural in function, such as nuts, bolts, screws, washers, cabinets, covers, shelves, clamps, fittings, sleeves, adapters, tie wire, spacers, door hinges, and similar items.