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Cleveland-Cliffs appears poised to lock its Middletown Works steel mill into using fossil fuels for at least the next two decades.
The steel manufacturer had already abandoned its plan to replace a coal-based blast furnace at the southwest Ohio plant with cleaner, hydrogen-ready technology and electric furnaces. That project, which won a $500 million federal grant during the Biden administration, was meant to mark America’s entry into the global race to make greener steel.
Now, Cliffs seems ready to refurbish its old Middletown blast furnace so that it can keep running on coal, and to add a cogeneration plant that makes electricity and steam from waste gas. The company has not ruled out the possibility that it might pay for part or all of the work using money from the grant — which Congress required the Department of Energy to spend for the purpose of accelerating industrial decarbonization.
Cliffs described the project in an air-permit application submitted in late February to the Ohio Environmental Protection Agency, though the steelmaker hasn’t yet publicly announced the initiatives.
The filings represent the latest twist for the Middletown steel mill, the longtime economic engine of Vice President JD Vance’s hometown.
Cliffs’ plans have been murky ever since the company ditched its hydrogen ambitions last year. In a July earnings call, CEO Lourenco Goncalves said only that Cliffs was working with the DOE to develop a new scope for the federally funded project, in a way that will “preserve and enhance” Middletown’s use of coal and fossil gas. Goncalves later confirmed that Cliffs’ grant remained intact, having been spared from the Trump administration’s sweeping cancellation of other DOE-backed efforts to decarbonize U.S. industrial facilities.
It is unclear whether the company and energy agency will come to any agreement on revamping the project, and if they do, how much of the federal funding the company might use for the work now planned at Middletown. The DOE has not responded to Canary Media’s repeated requests for comment.
Cliffs received its award in 2024 through the $6.3 billion Industrial Demonstrations Program, which was primarily funded by the 2022 Inflation Reduction Act. In appropriating those dollars, Congress stipulated that the DOE should help companies deploy “advanced industrial technology” that is “designed to accelerate greenhouse gas emission reduction progress to net zero” at U.S. manufacturing facilities.
The steelmaker’s plan to adopt hydrogen-ready technology could have eliminated roughly 1 million tons of greenhouse gas emissions per year from Middletown Works. It was also expected to create 170 new permanent jobs, in addition to safeguarding 2,500 positions at the facility. Cliffs’ latest proposal, which focuses on energy-efficiency improvements, is unlikely to deliver anywhere near the potential emissions reductions that would have resulted from the original project.
For green-steel proponents, Cliffs’ effort to squeeze more life out of its existing coal-based capacity is a missed opportunity to invest in cleaner and modern alternatives.
Relining blast furnaces is typically done about every 20 years, while building cogeneration plants is a fairly standard way for heavy industry to boost energy efficiency and improve the performance of older factories. Neither step represents the sort of transformative solutions that the federal awards were meant to support, according to former energy staffers who worked on the industrial-decarbonization initiative.
The DOE program’s goal “was to invest in early-stage, commercial-scale deployments of next-generation industrial technologies that can help plants be more efficient — and also to reduce emissions and make air and water cleaner for the people who live around these facilities, and the workers who work in them,” said Ian Wells, a senior advocate for the Natural Resources Defense Council.
Wells said he was concerned about the possibility of federal grants “being used to double down on more legacy technologies, instead of using public funding to take the risk on new approaches that could be better in the long term.”
The Ohio Environmental Protection Agency will have until mid-August, or 180 days from the filing of the application, to either approve or deny a permit to Cliffs. The company has not received funding from the Ohio EPA for any part of the project, said Anthony Chenault, a public information officer for the agency.
Cliffs intends to start construction on its so-called Energy Recovery and Advanced Efficient Ironmaking Project on Sept. 29, according to its application. As for its federal grant, any DOE money provided through the Inflation Reduction Act must be obligated by the end of this fiscal year, on Sept. 30, and spent within five years.
Cliffs’ pivot away from hydrogen in Middletown is a major about-face for a company that previously won recognition from the DOE for cutting its U.S. operations’ greenhouse gas emissions by nearly a third.
In March 2024, the energy agency chose the steel mill as the place to unveil its broader effort to decarbonize and modernize key U.S. manufacturing sectors for steel, cement, chemicals, and even food processing. “What you do here in Middletown, we’ll be looking at how we can replicate that in places all across the country,” then–Energy Secretary Jennifer Granholm said at the 2,800-acre site.
At the time, Cliffs planned to replace Middletown’s old blast furnace — a hulking facility that melts iron ore with purified coal, or “coke,” and limestone to make molten iron. About 70% to 80% of the planet-warming emissions that result from conventional steelmaking are associated with using coke and coal in blast furnaces.
In its stead, Cliffs intended to build a “direct reduced iron” facility that could be fueled by fossil gas, which would reduce the carbon-intensity from ironmaking by more than half. The plant would also be able to use a mix of gas and hydrogen, or hydrogen alone. If the hydrogen was made using renewable electricity, then it could have reduced the facility’s carbon-intensity by over 90%.
The steelmaker also planned to install two electricity-powered melting furnaces that would feed iron from the new DRI facility into an existing basic oxygen furnace — a heated vessel that blows oxygen over iron to produce steel. Cliffs said it expected to invest $1.3 billion, on top of the $500 million federal grant, and complete the project by 2029.
That was all before President Donald Trump took office in January 2025 and began gutting federal investments in clean domestic manufacturing.
To be sure, shifting to hydrogen-based production was always going to be challenging for Cliffs and other steelmakers, in large part because green hydrogen is expensive and in scarce supply. The Swedish firm SSAB backed out of its own $500 million DOE grant during Biden’s term after the company’s green-steel project in Mississippi ran into hydrogen supply troubles.
Still, the Trump administration canceled several of the hydrogen hubs meant to boost domestic production of the fuel and bring down its cost. The Mid-Atlantic Clean Hydrogen Hub, which would have supplied Middletown Works, remains approved but in limbo. Nonetheless, Cliffs decided to call it quits.
“It’s clear by now that we will not have availability of hydrogen,” Goncalves said during that July earnings call. “So, there is no point in pursuing something that we know for sure that’s not going to happen.”
Cliffs’ application with the Ohio EPA proposes replacing and repairing major equipment at the 73-year-old No. 3 blast furnace. Cliffs said the fixes could lower energy consumption and reduce the amount of coke that’s used for every ton of hot metal the furnace produces. The steelmaker is separately preparing to reline a blast furnace at its Burns Harbor facility in Indiana in 2027, which will likely cost hundreds of millions of dollars.
Cliffs’ new plan for Middletown also include installing a cogeneration plant with four industrial boilers that would primarily burn blast furnace gas — a by-product of ironmaking that is otherwise flared — to supply high-pressure steam and drive turbines that can generate about 70 megawatts of net electricity for use at the steel mill. The company already produces power this way at its Burns Harbor and Indiana Harbor sites, which get 75% and 100% of their electricity from by-product gases, respectively.
Cliffs isn’t the first to contemplate cogeneration for the Middletown mill. AK Steel, which owned the site before Cliffs acquired the company in 2020, considered installing such a system in 2010, which would have also harnessed blast furnace gas to produce electricity and steam. But AK Steel and its partner, Air Products, later determined their $315 million project wasn’t economically viable and canceled it in 2012.
It’s hard to say how the latest plan will affect the significant amounts of carbon dioxide and air pollution that stem from the Middletown facility. Among more than 600 major emitters in Ohio, the steel mill ranked ninth for its output of ozone-causing and lung-irritating nitrogen oxides (NOx) and health-harming particulate matter (PM2.5), according to a 2024 analysis by the decarbonization advocacy group Industrious Labs.
The new cogeneration plant will improve the mill’s energy efficiency, according to Cliffs. It should also offset greenhouse gas emissions that otherwise would have been released by buying electricity from the grid.
Still, in its filings, Cliffs indicated that Middletown could possibly see elevated emissions of NOx, PM2.5 and other pollutants, owing largely to the increased use of its renovated blast furnace.
The overall plan might ultimately be more financially feasible for the steelmaker than a dramatic overhaul in its operations. But the newer projects fall far short of what might have been achieved under Cliffs’ initial DOE grant proposal, said Ariana Criste, the deputy communications director for Industrious Labs.
“This was supposed to be a blueprint for how the industry can move beyond coal and transition an existing facility, without leaving its workers behind,” she said.
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