Last week, President Donald Trump announced tariffs on the two most important metals in modern society – aluminum and steel. He set a 25% tariff on imported steel and 10% on imported aluminum.
Immediately, gasps rang out across the markets - we import more steel and aluminum from Canada than from anyone else. The next three biggest suppliers are all our allies – Brazil, South Korea and Mexico.
China, the real target of Trump’s ire, only supplies 3% of our steel. So exceptions to these tariffs will outnumber the rule, and basically erase most of their effects.
Steel production in the United States is just over 80 million tons a year, down from our peak of over 100 million about ten years ago. Domestic aluminum production has dropped to about a third, with three-quarters of our aluminum smelters closing since the peak.
During this time, foreign producers have increased production dramatically, doubling since 2000. Global steel production is now at an historic high of 1.6 billion tons a year. This has deflated prices in the United States, lost us thousands of jobs, and increased American imports. We now import about four times as much steel as we produce.
But these low prices have led to a surge in production of things like cars, airplanes and pipelines, which have produced many more jobs than have been lost in metals production. In fact, even if applied to all countries, these tariffs would lose ten times as many jobs in America as they would add.
When pushed, the Administration cited arguments of national security - reliance on imports leaves us vulnerable to embargoes by our enemies. But most of our imports are from allies – over half of our aluminum comes from Canada alone.
Although this Administration is actively trying to insult our allies, it is still unlikely Canada or Mexico would stop sending us steel and aluminum during national emergencies.
Many analyses have estimated the effects of these tariffs on specific industries like automobiles, but what about the energy industry? Electricity production is heavily dependent on materials like steel, concrete, copper and aluminum, for both producing electricity and moving it around to where it’s needed (see figure).
Wind energy takes the most steel and concrete per MW installed – natural gas takes the least. Nuclear takes the second least amount of steel and concrete. Solar is similar to coal, about twice that of nuclear.
Since many voices say that renewables could produce 80% or more of our and the world’s energy by 2050 in order to limit global warming to 2.5°C, this means a lot of steel. Of course, we would have to develop sufficient energy storage and bring up efficiency and conservation to levels unknown in history.
Wind power is capital intensive, but has no fuel costs. A MW of wind produces about 3 million kWhs per year, about 75 million kWhs over its life of 25 years. It takes almost 500 tons of steel and a 1000 tons of concrete to install a MW of wind energy. Even more to connect them to the grid.
The average high-voltage transmission tower includes about 30 tons of steel and transmission wire contains about a ton of steel per mile.
The United States will be at about 5 trillion kWhs of electricity per year by 2050. For us to obtain 50% of this electricity from the wind, assuming 30% from other renewables like solar, would require 1.6 million MW wind turbines, close to a billion tons of steel including transmission and connection.
This would require over 50,000 miles of new 765-kilovolt (kV) transmission lines, for an estimated price tag of $150 billion for connecting only.
Wind energy produces about 200 billion kWhs each year in America or about 6% of our total electricity. To accomplish this, we used about 50 million tons of steel to build 52,000 wind turbines totaling almost 82,000 MW and costing about $170 billion.
Assuming no inflation or cost increases, being 50% wind by 2050 would cost about 12 times this amount, or about $2 trillion. The remaining 30% from other renewables would cost another $1 trillion, for about $3 trillion over the next 35 years. This is almost $100 billion every year – more than we’ve ever spent on renewables.
We can’t seem to come up with $200 billion in total infrastructure spending, so how are we going to come up with $100 billion a year just for wind?
Since wind turbines only last about 25 years, this volume of steel and concrete will have to be replaced every 25 years or so.
The Department of Energy has less aggressive projections, saying wind capacity in the United States could exceed 400,000 MW by 2050 - making us about 35% wind (Department of Energy’s Wind Vision Study). This is still quite a large percentage.
The world has emplaced about 500,000 MW of wind energy which produced about 900 billion kWh last year, with China and the United States tied for the lead producer.
Coal produces 41% of the world’s electricity with gas and oil bringing the fossil fuel total to 65% of electricity, or about 13 trillion kWhs/year. Non-hydro renewables so far produce about 5% of global electricity despite aggressive policies to install them in the developed world.
Total electricity generation is projected to increase to 35 trillion kWhs/year or so by 2050. It will take almost 10 billion tons of steel to be at 80% renewable, and the total cost for this will exceed $20 trillion.
Wind farms would become the greatest single sink for steel in the world.
The present global steel production of 1.6 billion tons a year may not be enough to keep pace with future demand without significant price increases. Wind turbines won’t be the only thing expanding during the next 35 years. We can expect two billion more cars, four billion more buildings, and a whole lot more stuff to be built with steel by mid-century.
Tariffs will just add another hurdle, and maybe a cent per kWh to our energy bills.
But we have to do a better job of recycling steel than we do now.
