New Factories Key to Democrat's Clean Energy Plan

Representative Ro Khanna believes that an investment in America's steel industry would not only be symbolic of the nation's manufacturing power, but that it would also propel the U.S. closer to its climate objectives.

"It would be incredibly powerful for communities that have lost steel plants to have new steel plants come there," Khanna told Newsweek in an exclusive Friday interview. "They would be far cleaner than in China—one-third of the climate emissions. It is good for the climate."

Khanna, a fourth-term congressman who represents the wealthiest district in the U.S., has been making his pitch for his "New Economic Patriotism" plan over the last year. He's traveled across the Rust Belt, thousands of miles away from his home in California, to call for a production renaissance that would put the U.S. in a trade surplus by 2025.

"We watched places like my district prosper, while other places were abandoned economically," Khanna, whose district includes parts of Silicon Valley, said. "In my district, we have $10 billions of market value—that's a third of the S&P in my district. Yet, in factory towns, rural communities, people don't feel like their kids are going to have a better life."

"This was a failure of American leadership," he said.

Once a trademark of America's position as a global economic superpower, the steel industry has suffered a significant decline since its peak in 1973. The U.S. went from the world's largest exporter of steel to the world's largest importer of steel in a matter of decades.

Now, Khanna argues the U.S. needs to do for the steel industry what the CHIPS and Science Act did for the semiconductor chip manufacturing industry. A year ago, President Joe Biden signed the bipartisan bill into law, investing $280 billion in U.S. production of chips that are essential to cars, smartphones and medical equipment.

A May 2022 report from the progressive think tank Data for Progress estimated that the CHIPS Act would create or preserve over half a million jobs over the next five years and contribute to more than $60 billion to GDP. But analysts from Goldman Sachs have anticipated that the legislation will be unlikely to reduce U.S. reliance on China since U.S. production costs are still significantly more expensive than overseas production.

The long-term promises have yet to be actualized and it's unclear how soon that could be since the semiconductor industry is still waiting for the windfall. Democrats, however, are still hopeful that it's going to improve American lives.

Khanna, who helped author the CHIPS Act, is preparing to introduce a modern steel bill to fund research, offer grants and provide tax incentives to companies choosing to adopt steel-making processes and equipment while pushing back on China's trade practices.

"I'm for global trade, but the country should have some self-reliance," he said. "With new technology, we have the opportunity to reindustrialize and lead in that and do it in a way that is clean. America should have that opportunity to become a manufacturing superpower again and say, 'No, we're not going to allow China to be the best in the world.'"

Figures from the American Iron and Steel Institute show that steel production in the U.S. comes at a much lower environmental cost than China's. In China, every metric ton of steel production leads to an average of two tons of Carbon Dioxide emissions. In the U.S., those emissions are under one ton.

"The old factories had a lot of pollution, they were tough places to work in, people were exposed to chemicals," he said. "We're thinking of clean, new, modern factories that have less CO2 emissions, that use the incredible technology and allow America to lead in the new age of industrialization."

At the center of Khanna's plan is the American worker. His drive to bring back the U.S. steel industry is fueled by his desire to reestablish steel jobs in both rural and urban areas that have been decimated by deindustrialization. Khanna pointed to places in Pennsylvania, Ohio and Michigan and potential points for the industrial resurgence.

"For me, a progressive means being for the working class and the working-class agenda," Khanna, said. "It is to put forward an economic justice and economic-possibilist agenda that reindustrializes America and prioritizes the working class."

Part of the decimation of the steel industry is due to the increased efficiency of the mills where steel is produced. In the 1980s, it required 10.1 man-hours to produce one ton of steel, Joe Innace of S&P Global Platts told the Associated Press in 2018. Now, it only requires 1.5 man-hours and some mini-mills can do it with just 0.5 man-hours. So, it's possible a future boom in steel mill jobs will look significantly different from what it once was.

Khanna noted that although the more advanced, climate-friendly plants would require advanced machines and artificial intelligence to run smoothly, he's focused on listening to steelworkers on how those jobs should look.

"People say they deserve a chance, but for 40 to 50 years, they've just watched their communities be hollowed out, their jobs led to depression," Khanna said. "Imagine the loss of pride, the loss of dignity of someone who loses their job... These communities deserve a chance to come back and instead of telling them what we're going to put there, we should ask them, 'What is it you want?'"

Along with helping American workers and the environment, Khanna's revitalization plan for steel factories is about planning for the future. When war breaks out, steel factories that are already up and running can be mobilized for rocket manufacturing, Khanna said.

During WWII, President Franklin D. Roosevelt was able to quickly convert factories that were used to produce automobiles, home appliances and children's toys into manufacturing plants for weapons and military equipment. A fact sheet from the Department of Defense illustrated the magnitude of the transition by noting that before the war, the U.S. manufactured 3 million automobiles.

"During the entire war, only 139 additional cars rolled off the assembly lines," the department stated.

Similar efforts were seen in Ukraine after Russia invaded the country February 2022. Ukraine's iron- and steel-producing factories, which had long been an economic pillar for the country before the war, have been largely credited being a driving force behind the nation's stronger-than-expected resistance.

Even if everything goes according to plan, Khanna isn't trying to sell Americans on this being a quick fix. It's going to take time—and a lot of it.

"It took 40 years to unravel. It's going to take a decade to rebuild," Khanna said.