Few materials are more essential than steel, yet steel mills are among the leading polluters. They burn coke, a derivative of coal, and belch millions of tons of greenhouse gases. Roughly two tons of carbon dioxide rises into the atmosphere for every ton of steel made using blast furnaces.
With climate concerns growing, a crunch appears inevitable for these companies. Carbon taxes are rising, and investors are wary of putting their money into businesses that could be regulated out of existence.
None of this has been lost on the giant steel maker ArcelorMittal.
For half a century, Lakshmi Mittal devoted himself to building and running what became the world’s largest empire of huge steel mills, employing nearly 170,000 people.
Now his son, Aditya Mittal, 44, who recently succeeded his father as chief executive, says the industry that has made the family’s name and fortune needs to change its polluting ways.
Europe’s carbon trading program and other measures will rise rapidly in the coming years, cutting into steel makers’ already slim profits.
“Everyone expects the regulations to be imposed to be very strict,” said Akio Ito, a senior partner at the consultants Roland Berger in Munich.
Mr. Ito said that in a few years, the carbon tariff might increase to as much as €150 per ton of steel, around 20 percent of the current price of a ton of the metal. If so, it could become too costly to make steel in Europe, he said.