Materials Manufacturing Alliance Holds Conference on Climate Bill
November 2, 2009
The American Materials Manufacturing Alliance (AMMA) held a press
conference this morning to address concerns over the proposed Senate
bill, S. 1733, a bill to create clean energy jobs, promote energy
independence, reduce global warming pollution, and transition to
a clean energy economy, on which the Senate Environment and Public
Works (EPW) Committee will be holding hearings this week.
We have been constructibly engaged over the past number of
months to craft a climate change policy that would reduce greenhouse
gas (GHG) emissions while protecting our international competitiveness,
opened Cal Dooley, president and chief executive officer of the
American Chemistry Council. We had hoped when this legislation
moved to the Senate that we would see further accommodations that
would assure that we could protect the high paying manufacturing
jobs that are part of our industry. Unfortunately, the draft that
is going to be heard in the Environment and Public Works Committee
as early as tomorrow is a step backwards.
A primary concern for the conference speakers is the emission allowances
in the proposed Senate bill.
The latest version of the bill increases the allowance pool
in some ways over the first two years and increases supplemental
reserves, those are both important first steps. The rest of the
bill takes all that away and more, said Thomas J. Gibson,
president and chief executive officer of the American Iron and Steel
Institute. He added, The bill has a severe last minute reduction
within the allowances allocated to energy intensive industries trade
exposed industries. It also has a steeply declining cap, 20 percent
emission reductions by 2020. All of that adds to decrease the amount
of allowances available to everyone.
Gibson elaborated, The number of allowances dedicated to
energy intensive trade industries in S1733 is cut from the house
baseline from 63 million allowances through 2020 and by over 2 billion
allowances through 2034.
Dooley suggested that the transition period given would not be
You have to have a transition period that allows you to make
accommodations, Dooley said. Youve got to ensure
that were going to have a glide path that allows us to meet
the international competition and 20 percent is too high. We were
much more comfortable with what President Obama introduced earlier
this year at a 14 percent target.
Donna Harman of the American Forest and Paper Association addressed
concerns in energy costs.
This legislation has no provisions to counter an almost certain
rise in energy costs and thats a huge competitive risk for
us, she explained. The allowances to energy producers
such as utilities are going to take a 16 percent cut so energy prices
are subject to an even sharper rise with this bill than even in
the House bill. And those higher energy prices will be borne by
Dooley added, We are very concerned about a number of those
provisions that will not achieve, we think, effectively the significant
reductions in GHG emissions and clearly puts at risk hundreds of
thousands of jobs in the U.S. economy.
The speakers said that U.S. jobs would be at risk as more stringent
regulations in the United States could potentially push more manufacturing
to countries that do not have such regulations.
Climate policy should identify all the costs that will be
imposed on U.S. manufacturers and it should provide mechanisms to
offset those costs until competing countries have equivalent GHG
reduction policies, said Steve Larkin with the Aluminum Association.
The question is, are we going to adopt a climate change policy
that ensures that demand can be met by U.S. companies employing
U.S. workers? Dooley asked. Unfortunately this legislation
will drive many of those companies, many of those jobs outside our
borders and also will result in increases in manufacturing in areas
which will not have as stringent policies in reducing their GHG
gases; it will actually contribute to an increase in GHG gases globally.
Chinese competition was specifically addressed.
Last reporting month, September, we produced about 5.7 million
tons of raw steel in the United States. China produced 50 million.
In the last three years theyve added as much new steel making
capacity as exists in the next two largest steel making countries
in the world, U.S. and Japan. China may be a developing economy
but the Chinese steel industry is not a developing industry. Until
countries such as China are willing to put the same type of controls
and restrictions on their world-class industries were going
to continue to need access to measures that will level the competitive
One listener on the call questioned whether that Chinese-produced
product was in fact being shipped overseas or used domestically.
Weve seen China move into many U.S. markets in the
steel making world, Gibson noted. During the second
quarter the China stimulus was focused on domestic infrastructure
and there was a slight temporarily downturn in China exports. But
last month Chinas export trends have returned to what happened
during the downturn. When we entered the downturn China was producing
about 1/3 of the worlds raw steel. Since the downturn the
rest of the world has throttled back their steel production but
China actually has increased. China now produces more than ½
of the worlds steel.
The overall trend has been to
send more and more overall material to more overseas markets including
Harman added an additional concern about sending manufacturing
overseas. Climate change is a global problem and if production
shifts to China, even if its just to satisfy Chinese consumption,
and theyre not doing anything to restrict their carbon emissions
or reduce their carbon emissions then that will affect us here in
the United States. Its not just about the trade flow, its
also about the environmental impact of the issue, she said.
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