'China has to be a part of the solution': U.S. Steel CEO on transitioning to net zero
U.S. Steel CEO Dave Burritt joined Yahoo Finance to break down U.S. Steel's aspirations to transition to net zero and what companies and countries alike need to do to help preserve the earth.
Video Transcript
AKIKO FUJITA: David it's great to have you on today.
DAVE BURRITT: for having me.
AKIKO FUJITA: You've made the announcement today of US Steel reaching, or at least aspiring to get to, net zero by 2050, which is pretty much in line with the Paris Accord, how the Paris Agreement has laid this out. You know, there's going to be a lot of people who hear this and say there are other companies that have set this goal way before US Steel has. Why do it now? Talk to me a bit about the timing.
DAVE BURRITT: There's a whole host of things that have happened to help get our minds right around this. Some of it was, is it real? Is it even possible? And now that we've done some modeling and we see that the technology that's out there, we obviously have to figure out how to get the costs down, how to scale it, how to commercialize it. But it's definitely doable.
And I have to say, we're largely influenced by the works most recently of Bill Gates. I think he lays out a compelling vision for the future, for the planet so we do things that not just are good for our customers and our employees and the communities where we live and work, but also the entire planet. So we're incredibly excited to be able to announce what we call a BHAG, the Big, Hairy, Audacious Goal of Jim Collins' book back in the '90s, because this is the biggest challenge, certainly, humanity has ever taken on. We're delighted to be finding those steps to get us to that goal.
AKIKO FUJITA: So the next question is, how do you get there? When you talk about steel, certainly you're having to tackle this on two fronts, one from where you source your materials. The other part being the factories themselves, who have been huge emitters.
DAVE BURRITT: Yeah. Well, I think there's a-- I really look at it as kind of a three-step kind of approach. There's the steel making process. There's the partnering process. And then there's also the capital allocation process. So the steel making process, we are moving quickly toward electrification. It wasn't that long ago where we had zero electric arc furnaces. Now in the last year we have three.
And with our purchase of Big River Steel, this is the only LEED-certified steel mill on the planet that we know of. And so with that green steel and our launch of our new product line, verdeX, with our existing capabilities and our finishing lines, we believe that gives us a leg up. So that's the first thing, the steel making capability.
But we also have to partner. We have to partner with our suppliers, the people that supply the energy. We have to partner, of course, with our customers, who are setting these targets. And to your point earlier, everybody is moving forward in this direction. And being on the World Steel board, the executive committee and talking with Edwin Basson, he basically says there's been a big shift in this last year, that that's the lead item for all of us, to basically say we've got to go green.
And then of course, the third one is, how do you allocate the resources towards those things that save the planet? And that's where this aspiration comes in, where we can work together-- if we learned anything from COVID-19, what did we learn? That the pharmaceuticals, the competitors worked together. That's what we need to do. We need to partner with countries and companies, suppliers, even competitors to find solutions that are right for the planet, and in the same way, find profitable solutions. So we're getting pretty excited about the innovation possibilities here.
AKIKO FUJITA: And when you talk about partnerships, particularly with countries, the steel industry has to deal with what many industries do, which is the big footprint that exists in China. How do you make a dent as an industry when so much of that is concentrated in one country?
DAVE BURRITT: Yeah, that is another great question, Akiko. You know, certainly, China has to be part of the solution. Obviously, they have a goal that's a little slower, 2060. But they probably have a much better-- bigger challenge than what we do.
And when you look at the steel making processes, they're mostly loaded with the blast furnaces. So that conversion that they're going to have to make, and the hydrogen capability, it is absolutely immense. But that shouldn't keep us from actually partnering with them.
But in the United States, we actually have an advantage over Asia. We have an advantage over Europe, because we're well down the path on electrification, with a lot of electric arc furnaces here already. So you know, we're excited about the infrastructure bill, Building Back Better, for President Biden and the communities where we are. We think making the steel here that's more green will serve us well.
But China, their big challenge-- there's no doubt about it, in terms of the way they approach business, the challenges they have creating the right types of partnerships. But they've got to be a part of this too. And I think as we unify people around a common goal, I mean, we just-- we see instances in history when Gorbachev and President Reagan came together on Star Wars with the whole idea. The breaking point was that time where they were walking to Camp David where Reagan asked, you know, if we were attacked from outer space, would you support us? And they found that common ground.
This is another one of those common grounds. Or like the BHAG of getting a man on the moon and getting him back again. All that technological innovation, all that improvement-- I get pretty pumped up and excited about the possibilities that we can do collectively when we unify, when we collaborate. And it's going to have to be all-in everybody. We've got to get this.
AKIKO FUJITA: What does this mean from a cost perspective? You're dealing with new technology that isn't scaled in the way that traditional methods are. How much more are customers going to have to pay as you look to adapt this on a larger scale?
DAVE BURRITT: Well, I think that's where the innovation comes in, because it is expensive. Any time you do the conversion, the cost will be higher. Because of course, everybody's modeling what these costs are. Customers will have to pay more. Governments will have to pay.
The populace, if we're going to solve this problem, it will become more expensive. But together, the longer-term value is so much bigger. And it's our job is to figure out, how do we get to these profitable solutions?
AKIKO FUJITA: How much more expensive are we talking about, though?
DAVE BURRITT: It will be billions of to make the transition to a net carbon neutral world. There is no doubt about it. Over the next 30 years, billions and billions of dollars have to be spent. But I'll bet you this. Along the way, we'll find some cost savings and better ways to do work. Just like the history of what we've seen, the standard of living today-- which fossil fuels created-- fossil fuels need to solve that. And they'll be able to do it more cost effectively when we get to 2050, 2060.
I mean, if there's anything we've learned about this pandemic, is the innovation when people come together and create, like the vaccine, who nobody would have believed could have been solved. But every one of these pharmaceuticals worked collaboratively together to get a solution, and did it cost effectively. And here we are. It looks like we're in the midst of a supercycle. And clearly, people are getting unified, are making investments in those things that matter for the planet. The planet is now the number one priority.
AKIKO FUJITA: How are you looking at the value proposition in all of this? No question, a lot of companies are looking at the risks that are mounting from climate. Is there a number that you can point to that says, if you don't make these changes and reduce your impact, here's the value that will decline for US Steel?
DAVE BURRITT: Well, as far as a precise number, I don't have a precise number. But I will tell you this. If we don't meet those challenges, if we don't make improvements, it's kind of in the category of better pray for us, because climate change is real.
[MUSIC PLAYING]
