ENERGY INTENSITY IMPROVEMENTS IN STEEL MINIMILLS

Over the past 20 years, U.S. steel manufacturing has experienced an ep isode of creative destruction. Iron-ore based plants closed, and new e lectric arc furnace (EAF) plants-the ''minimills''-opened. The steel i ndustry is an ene?gy intensive segment of manufacturing, and the chang eover causes major change in energy use. The analysis here links a pla nt-level database from the Bureau of the Census with publicly availabl e sources and obtains measures of the best practice energy use in mini mills. The analysis examines how technical efficiency, vintage, and ca pacity utilization affect plant-level electricity use per ton of steel . This measure of electricity use gives a plant's ''energy intensity.' ' Plants in the sample keep operating even during deep recessions, sug gesting that energy, eg., BTU, taxes may fall short of the fullest pot ential for reducing energy use. During recession, plants actually may continue to operate at lower output rates and higher energy intensitie s rather than close down. Substantial potential exists for energy impr ovements of as much as 1 billion kWh per year. New facilities exhibit energy intensity improvement of 6.2 kWh/ton per year. This finding is consistent with engineering estimates. Realizing this potential among all plants would require policies that assist capital turnover.