By ROBERT GUY MATTHEWS

A large portion of the U.S. steel industry could be severely hurt under a carbon-emissions cap and trade system, with some companies indicating it could push operations overseas.

U.S. Steel Corp., AK Steel, ArcelorMittal SA and OAO Severstal would be the biggest losers among the operators in the U.S., because of the carbon-intensive way that they produce steel.

These companies, called integrated mills, make steel from scratch, using iron ore and coke to produce the steel. Coke is made of carbon. If the companies are forced to reduce carbon-dioxide output or pay more for their emissions, they would be forced to sell pricier steel or simply make less of it.

The steel industry is lobbying to get credit for the fact that it has reduced carbon emissions sharply since the 1990s. Indeed, the steel industry has steadily reduced the amount of carbon emissions, but that is because of the growing production of steel made by minimills, which melt down scrap steel into new steel.

Re-melting steel emits nearly 66% less carbon dioxide in the production process. Nucor Corp., a minimill, is the largest producer of steel made within the borders of the U.S., having supplanted U.S. Steel.

It isn't feasible to switch entirely over to the minimill process, because some types of steel, such as exposed automotive parts and cans for food, have to be made through the integrated steel process, which is more rust resistant.

While minimills wouldn't be as affected by the legislation as integrated mills, they still oppose the current plan.

The worst-case scenario, the industry says, would be that the integrated steel operations would move to developing nations such as Brazil, where there are large stocks of iron ore in the earth. Set up abroad, they would essentially emit the same amount of carbon -- only without restrictions. The steel industry argues that if that scenario were to pass, the carbon emissions wouldn't be reduced, but U.S. jobs would be lost.

Wall Street Journal