Trump turns $500M grant for clean steel into funding for coal furnace

A $500 million Biden-era grant to decarbonize steelmaking has been refashioned by the Trump administration to upgrade a coal-fueled blast furnace in southern Ohio.

On Friday, Cleveland-Cliffs confirmed that the U.S. Department of Energy had changed the scope of the previously awarded funding for Cliffs’ Middletown steel mill — the longtime economic engine of Vice President JD Vance’s hometown. Vance and Energy Secretary Chris Wright visited the plant on Friday to tout the federal investment.

“The DOE’s support for this project is a testament to the importance of preserving the blast furnace route to produce automotive-exposed grade steels in the U.S.,” Cliffs CEO Lourenco Goncalves said in a statement on Friday. The Middletown plant makes steel used in the exposed parts of cars, trucks, and SUVs.

Today’s announcement makes official what Cliffs has been signaling would happen in recent months. The change of plans has drawn pushback from green-steel advocates and some Middletown residents, who say they are dismayed that funding meant to slash industrial emissions could potentially amp up local air pollution instead.

“Cleveland-Cliffs and JD Vance need to get rid of coal and go back to the original project that would clean up the air we breathe and improve our health,” Donna Ballinger, who lives in the shadows of the Middletown steel mill, said Friday in a news release shared by the Sierra Club.

Cliffs initially planned to use its half-billion-dollar award to replace its aging blast furnace with cleaner, hydrogen-ready technology and electric furnaces. In March 2024, the Biden administration’s DOE chose Middletown as the place to unveil its broader, $6.3 billion program for decarbonizing key U.S. manufacturing sectors, which was primarily funded by the 2022 Inflation Reduction Act.

Globally, iron and steel production generates roughly 9% of human-caused CO₂ emissions every year, and the vast majority of that pollution comes from using coal in blast furnaces. Replacing the centuries-old technology is considered key to limiting the worst impacts of climate change, and global efforts to clean up steelmaking are advancing, though in fits and starts.

Cliffs’ original project would’ve replaced coal with natural gas — and eventually hydrogen — eliminating roughly 1 million tons of planet-warming emissions. But after President Donald Trump took office in 2025, the Ohio-based steelmaker recommitted itself to using ​“beautiful coal” at the Middletown steel mill.

Under its current plan, Cliffs says it will refurbish and optimize the 73-year-old blast furnace so that it can run for potentially another two decades. The manufacturer will also install a cogeneration plant that uses waste gases from the blast furnace to generate steam and electricity for the steel mill’s operations. Cliffs said it will invest $500 million of its own money to match DOE’s grant.

Cliffs first outlined the new direction in a February air-permit application submitted to Ohio’s environmental regulator. It wasn’t clear then whether this work would be funded by the DOE, given the nature of the grant program.

However, in July, Goncalves said during an earnings call that the company aimed to redirect the $500 million grant to align with the Trump administration’s priorities. Friday’s announcement cements those plans, with the DOE having ​“established a framework for Cliffs to finalize negotiations and implementation plans” for the Middletown project, Cliffs said.

In a news release, the DOE said the company ​“determined that the business case for the original project scope no longer made sense given customers’ unwillingness to pay a ​‘green premium’ for steel. Working with the DOE, Cleveland-Cliffs identified a viable alternative that will upgrade and improve the efficiency of its existing coal-fired blast furnace” while also capturing waste gas.

A former DOE official noted that Congress legally mandated that the grant funding be used to, in the words of the Inflation Reduction Act, enable ​“advanced industrial technology” — defined as something ​“designed to accelerate greenhouse gas emission reduction progress to net-zero at an eligible facility.”

The Middletown project’s revised scope will move the steel mill away from achieving net-zero emissions, not toward it, the former official said.

As Cliffs sees it, the steelmaker is ​“going above and beyond a standard blast furnace reline, to include the most advanced technology available,” Goncalves said in Friday’s statement, referring to the cogeneration plant and other planned energy-efficiency improvements.

“Cleveland-Cliffs is making a decisive investment in the future of American steelmaking and manufacturing,” he said.