Ohio steel giant aims to use Biden climate funds for polluting project

Steel giant Cleveland-Cliffs was supposed to use up to $500 million from a Biden administration grant to usher in cleaner steelmaking in southwestern Ohio. Now, the company plans to instead put those funds toward a project that locks in old coal-based tech for decades and amps up local air pollution.

In a July 23 earnings call, Cliffs CEO Lourenco Goncalves confirmed that the company aims to redirect the 2024 grant — which Congress originally earmarked for work that accelerates industrial decarbonization — to align with the pro-fossil-fuel Trump administration’s priorities.

“We have made major progress on the re-scoping of the Middletown project in compliance with the Trump administration’s energy dominance goals,” Goncalves said.

The money from the Department of Energy’s now-dismantled Office of Clean Energy Demonstrations was meant to build a new facility to replace a coke-powered blast furnace at Cliffs’ Middletown Works. Blast furnaces use the dirty, coal-based fuel to purify iron ore into iron, which is then made into steel.

The new ​“direct reduced iron” facility would have purified iron ore without coal or coke by employing ions from natural gas or hydrogen to strip away unwanted oxygen ions. Then, two electric melting furnaces would then have readied the resulting iron for the final steps of steelmaking in the plant’s basic oxygen furnace.

Cliffs had indicated it hoped to eventually use hydrogen at Middletown Works, and the DOE estimated the facility upgrades could have slashed greenhouse gas emissions by up to 1 million tons annually.

But last summer, amid the Trump administration’s clawbacks of Biden-era clean energy funding, Cliffs began reevaluating the plan. A February air-permit application submitted to the state revealed the firm’s new idea: Simply refurbish Middletown Works’ blast furnace so it can run for another few decades, and add a cogeneration plant that uses the furnace’s waste heat to generate electricity and steam for the facility.

It wasn’t clear back in February that this work would be funded by the DOE grant, given that Congress originally allocated the funds for ​“advanced industrial technology,” which is defined as something ​“designed to accelerate greenhouse gas emissions reduction progress to net-zero at an eligible facility.”

Goncalves’ comments in last month’s earnings call confirm that Cliffs does still plan to use the money for the Middletown Works, but to install run-of-the-mill technologies with questionable climate benefits.

“The Middletown blast furnace is due for a reline by 2030,” he said. ​“And this DOE grant will allow us to go further in optimizing the furnace and maximizing energy efficiency by capturing and using blast furnace gas to generate electricity on-site.”

Making electricity from the blast furnace’s gas is better than simply spewing it into the air, and would presumably offset some emissions from producing that power elsewhere. However, the project would still result in many more tons of greenhouse gases than the initial plan.

Goncalves noted that Cliffs would have another public announcement about the project within a month or so. Company representatives did not answer Canary Media’s follow-up questions about the work, its costs, emissions, or other issues.

Climate advocates are lamenting Cliffs’ walkback.

“The original proposal would have cut climate pollution, it would have cut health-harming pollution, and it would have created jobs,” said Hilary Lewis, steel director at Industrious Labs, which advocates for decarbonizing heavy industry.

The cleaner-steel project would also have positioned the facility to compete favorably in markets where buyers still aim to lower their greenhouse gas emissions, she said. 

“This is a horrible trade,” Lewis said.

How much more polluting is Cliffs’ new initiative?

Along with its climate impacts, Cliffs’ U-turn will result in its neighbors breathing in more dangerous chemicals.

Already, Middletown Works ranks in the top 10 polluters statewide for several health-harming contaminants, according to a 2024 report from Industrious Labs.

With the cogeneration plant and related upgrades, the plant is expected to annually emit 534 more tons of sulfur dioxide, 334 more tons of carbon monoxide, 179 more tons of nitrogen oxides, and 12 more tons of chemicals that increase smog, according to a draft permit issued by the Ohio Environmental Protection Agency in June. There would also be nearly 100 additional tons of different sizes of particle pollution.

Yet while projected emissions would be higher than those for almost all times during the past five years, the draft permit concludes net reductions will occur for all those health-harming chemicals except carbon monoxide.

That’s because instead of comparing the projected emissions with those in recent years, the Ohio EPA uses data from 2013 to 2015 as a baseline. Back then, Middletown Works still ran a hyper-polluting facility to make coke on-site. That group of ovens shut down in October 2021.

Comments filed by Industrious Labs and other environmental advocates challenge the Ohio EPA’s use of old data to calculate those offsets. They argue that if the agency had used emissions numbers from the past decade as the baseline, it might have found that the plan surpassed thresholds that would trigger further regulation or pollution limits.

Meanwhile, the Ohio EPA’s offset calculation offer little comfort for some area residents who have long felt plagued by the plant’s pollution.

“The cogen plant will reduce Cliffs’ energy use, saving them money, while they continue to harm [my] family and my neighbors’ health, and [with] even more pollution,” said Donna Ballinger, who lives approximately 1,000 feet from the Middletown Works and spoke at a July 9 public hearing.

Another local, Amy Wray, wrote to the Ohio EPA, ​“If it’s going to increase pollutants then we don’t want it. This town is already a toxic chemical soup.”

Still, Cliffs has substantial support from locals who see the plan as an environmentally sound way to keep the Middletown Works going.

“The proposed improvements to Cleveland-Cliffs will significantly reduce the facility’s carbon footprint while securing high-quality manufacturer and construction jobs for generations to come,” said Brian Kuhbander, who spoke for the Construction and General Laborers’ Local 534 union at the July 9 hearing.

It’s worth noting that the original green steel plan would have had big employment benefits, too. Besides protecting more than 2,000 existing jobs at the Middletown Works, the new facilities would have created 170 new permanent positions in addition to 1,200 construction jobs.

The public comment period on the draft permit is over, and the Ohio EPA expects to make a decision on a final permit by the end of this year, according to Dina Pierce, a public information officer for the agency. Cliffs has 18 months to begin construction once a permit is issued.

How long it may take to finish the project remains unclear. As power demand from data centers skyrockets, waiting lists for turbines needed for the cogeneration plant have grown to five years or more.

Lewis of Industrious Labs said it’s ​“not too late” to switch back to the earlier approach, particularly since the company did a lot of work to develop the cleaner-steel plan. A 2024 press release from Cliffs said it was prepared to invest more than $1 billion in addition to the government funding for that project, which would also have curbed its future production costs.

“They can — and they should — bring back that original plan,” Lewis said.