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Energy Intensity Improvements In Steel Minimills

Author

Listed:
  • GALE Boyd
  • STEPHEN H. Karlson
  • MARK Neifer
  • MARC Ross

Abstract

Over the past 20 years, U.S. steel manufacturing has experienced an episode of creative destruction. Iron‐ore based plants closed, and new electric arc furnace (EAF) plants–the “minimills”–opened. The steel industry is an energy intensive segment of manufacturing, and the changeover causes major change in energy use. The analysis here links a plant‐level database from the Bureau of the Census with publicly available sources and obtains measures of the best practice energy use in minimills. The analysis examines how technical efficiency, vintage, and capacity utilization affect plant‐level electricity use per ton of steel. This measure of electricity use gives a plant's “energy intensity.” Plants in the sample keep operating even during deep recessions, suggesting that energy, e.g., BTU, taxes may fall short of the fullest potential for reducing energy use. During recession, plants actually may continue to operate at lower output rates and higher energy intensities rather than close down. Substantial potential exists for energy improvements of as much as 1 billion kWh per year. New facilities exhibit energy intensity improvement of 6.2 kWh/ton per year. This finding is consistent with engineering estimates. Realizing this potential among all plants would require policies that assist capital turnover.

Suggested Citation

  • GALE Boyd & STEPHEN H. Karlson & MARK Neifer & MARC Ross, 1993. "Energy Intensity Improvements In Steel Minimills," Contemporary Economic Policy, Western Economic Association International, vol. 11(3), pages 88-100, July.
    • Handle: RePEc:bla:coecpo:v:11:y:1993:i:3:p:88-100
    DOI: 10.1111/j.1465-7287.1993.tb00394.x
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    References listed on IDEAS

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    1. Ross, Marc, 1987. "Industrial energy conservation and the steel industry of the United States," Energy, Elsevier, vol. 12(10), pages 1135-1152.
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    Cited by:

    1. Boyd, Gale A. & Lee, Jonathan M., 2019. "Measuring plant level energy efficiency and technical change in the U.S. metal-based durable manufacturing sector using stochastic frontier analysis," Energy Economics, Elsevier, vol. 81(C), pages 159-174.
    2. Sanstad, Alan H. & DeCanio, Stephen J. & Boyd, Gale A. & Koomey, Jonathan G., 2001. "Estimating bounds on the economy-wide effects of the CEF policy scenarios," Energy Policy, Elsevier, vol. 29(14), pages 1299-1311, November.
    3. Ruth, Matthias & Amato, Anthony, 2002. "Vintage structure dynamics and climate change policies: the case of US iron and steel," Energy Policy, Elsevier, vol. 30(7), pages 541-552, June.
    4. Truett, Lila J. & Truett, Dale B., 1997. "The Korean metals industry and economic development," Journal of Asian Economics, Elsevier, vol. 8(2), pages 333-347.

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