Simulating regional workforce impacts of decarbonizing integrated steelmaking

Abstract

Global efforts to mitigate climate change are increasing pressure on heavy manufacturing industries to decarbonize production. The iron and steel industry is responsible for 7% of CO 2 emissions globally (2% in the United States) and is often a major employer in the regions where iron and steel is produced. Understanding the future prospects for workers in regions with high CO 2 emitting industries—including impacts of phasing out or evolving such industries—will be critical for informing regional economic and clean energy strategies. We simulate the impact of an “in-place” transition that replaces today’s integrated production with direct reduced iron (DRI) used in electric arc furnaces (EAFs), using Southwest Pennsylvania as an application of our generalizable approach. Our results suggest that the integrated steelmaking workforce today has the skills, knowledge, and abilities (SKAs) to fill over 95% of all jobs required by DRI/EAF facilities, but the number of jobs is only 25% of those at integrated plants. We also find that some occupational groups have greater general transferability into the broader job market, while other groups, such as production workers, are ill-equipped today based on current SKAs to transition out of the iron and steel industry. Our methodology further suggests factors that limit transitions: Around 85% of occupations are more limited by missing skills, while 15% are more limited by insufficient wages. These results may help to improve the design of social policy and the targeting of retraining programs, while the simulation approach can be readily adapted for other regions and industries.