"Cap and Trade:" three little words that will instantly get the attention of everyone at a gathering of steel executives. When the cursing and yelling quiet down, tempers cool, fingers stop pointing and dire proclamations cease, the question remains: will environmental legislation be the end of the steel industry as we know it? Or, has the industry always been "ending" and re-inventing itself?

To put it simply, a cap-and-trade system is a mechanism to put an economic price on pollution in order to compel businesses and consumers to emit less. The system creates an emission or energy tax, since almost all manufacturing activities including steelmaking are powered by fossil fuels (coal, oil, or natural gas), a process that emits greenhouse gases.

The legislation would have the biggest impact on integrated steel producers because they make steel from iron ore and coke, which is an energy-intensive process. Steelmakers argue that the industry's carbon emissions have decreased significantly since the 1990's and therefore government controls are not necessary. I'm a strong supporter of the domestic steel industry. But I also believe that the truth is important and in this case it appears that U.S. steelmakers are taking credit for an overall reduction in carbon emissions despite the...