25 February 2002 00:00 [Source: ICB Americas]Industry officials had mixed reactions last week to President George W. Bush's plan to achieve a 79 percent reduction in power plant emissions of sulfur dioxide, nitrogen oxides and mercury by 2018.
Chemical manufacturers and other US businesses said the "Clear Skies Initiative" unveiled by the White House on February 14 contains some favorable proposals, such as market-based incentives to promote cleaner technologies. But they caution that it could lead to less use of coal to produce electricity, which would increase the cost of power.
"We like the fact that [Bush] wants to use market-based programs to reduce emissions in a cost-effective manner. We support that of course," says a spokesman for the American Chemistry Council (ACC).
He also notes that the White House plan "allows for midcourse corrections to ensure there is a cost-effective means of meeting the goals of the program."
In addition, the spokesman says ACC is pleased that Bush "emphasized that he's trying to keep electricity costs low and wants to maintain a diverse fuel mix that ensures a reliable, affordable energy supply."
The energy-intensive chemical manufacturing industry is the nation's largest industrial consumer of electricity.
The president's proposal calls for a 73 percent cut in power plant sulfur dioxide emissions, capping them at 3 million tons per year. Nitrogen oxides would be cut by 67 percent to 1.7 million tons per year, and mercury emissions would be capped at 15 tons, a 69 percent reduction. These reductions would be achieved by 2018, with interim reductions by 2010.
According to the White House, the electric power industry currently emits 11 million tons annually of sulfur dioxide, 5 million tons of nitrogen oxides, and 48 tons of mercury.
At the heart of the proposal is a cap-and-trade that would set limits for emissions of the three air pollutants. Permits would be assigned for each ton of pollution. By cutting emissions, firms would save up these permits for use at a later date or to trade with other businesses.
The White House believes the cap and trade approach would give companies the financial incentives to reduce emissions in the most economical way.
However, the ACC spokesman says the stringent cuts President Bush is seeking would require high compliance costs which could drive utilities to fuel switch from coal to natural gas. "And that obviously is not good for the chemical industry since we need natural gas as a feedstock," he adds.
The industry official also says the number and types of electric power-generating units that will be impacted are not clear. "Many industries, including ours, have combined heat and power plants that do generate electricity, so they could be impacted by the program," the ACC spokesman says.
Sen. James Jeffords (I-Vt.) introduced legislation in March 2001 that calls for steeper cuts in emissions of the three pollutants than the Bush proposal and would require them to be met by 2007.
Unlike the White House measure, Sen. Jeffords' bill would also require carbon dioxide cuts from power plants to address global warming.
Jerry Jasinowski, president of the National Association of Manufacturers (NAM), says the administration's initiative "appears to recognize the critical importance of more realistic time-frames compared to those in Senator Jeffords' multi-emissions legislation."
He says NAM is also concerned that the president's emissions reduction plan might cause electricity generators to switch from coal to natural gas. "This could dramatically raise the price of both electricity and natural gas," Mr. Jasinowski says.
"Such price hikes, in turn, could threaten a number of backbone industries in the US and hit the pocketbooks of almost every business and homeowner," he adds.
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