The future of innovation in American steel

David Brasington, PhD, economics professor at the University of Cincinnati's Carl H. Lindner College of Business, spoke to the BBC on why the company’s decision reaches beyond the loss of funding. “One of the biggest [reasons] was they didn’t have an industrial source of hydrogen,” he explained.

Brasington, who also serves as the James C. and Caroline Kautz Chair in Political Economy, told the BBC that even though the previous administration promised $500 million for the upgrade, the total cost of the project would have totaled closer to $1.6 billion. 

“They just didn’t think it was economically viable,” he added. Brasington said that the conversion to renewable energy would not have been profitable for the company regardless of if the Department of Energy rolled back its funds.

He mentioned economies of scale: Hydrogen power could become a viable business model the more companies adopt it. But the early stages would be costly, and go against the boom American steel manufacturing currently has. 

“Given current technology, this is the set of choices we face. But it’s always good to try to advance technology. Because we want to have our cake and eat it, too,” he said. “What we really want is to produce a lot of steel, and no pollution. And given current technology, that's not possible, but with technological advances, we may get there.”

As for what that means for funding innovation, Brasington said that more of the advances in technology are likely going to have to come from the private sector instead of government initiatives. “It seems like there’s less government willingness to fund a lot of new technologies that might be green, and if you just look at the cost-benefit from a firm’s perspective, a lot of the green initiatives just don’t pay — yet,” He said. 

For now, these companies “need taxpayer money to make them profitable, to make them make sense,” he said.

Listen to the full episode on the BBC’s website.