Public Utilities And Technology Committee Hears Concerns About Carbon Taxes

October 21, 2009
UMA reporting from the Utah Legislature

Seeking a local example of the impacts of a national carbon tax on Utah industry, the legislature’s interim Public Utilities and Technology Committee this morning heard from Nucor Steel Executive David Smith list the ways a carbon tax would impact the steel industry in Utah and the United States. Smith carefully explained that there is good reason why some manufacturers in the U.S. are strongly opposed to a carbon tax and why others may actually be supporting imposing such a tax.

He noted that Nucor Steel is an American company that makes steel in the U.S. and competes with other nations, especially China. He explained that steel production in China has grown exponentially in the last few years, in part because they have tipped the balance for production and trade in their favor by artificially manipulating the currency as well as largely ignoring environmental concerns. According the Smith, the U.S. steel industry is producing at 50% capacity while China is at full production.

Smith told the committee that an important distinction they need to understand between strictly U.S. companies and multi-national companies is the multi-nationals benefit from the manipulation of the Yuan and a weak dollar. He said, things we buy from China are very cheap and things China buys from the U.S. are artificially inflated because of currency manipulation.

In response to a question about cost of production of steel in the U.S. verses China, he noted that even with the cheap labor in China and very competitive wages in the U.S. steel industry Nucor’s difference in costs are less than the freight from China to the U.S.