Chemical firms, others warn against US cap bill

24 October 2007 21:33  [Source: ICIS news]

WASHINGTON (ICIS news)--Chemical producers and other manufacturers warned Congress on Wednesday that an effort to cap US emissions of greenhouse gases (GHG) could have a frightening impact on natural gas and electricity costs.

 

Paul Cicio, president of the Industrial Energy Consumers of America (IECA), told the Senate Environment Committee that draft legislation to limit and reduce emissions would trigger a wide scale shift of electric power generation to natural gas from coal.

 

“If this occurred, natural gas and electricity prices would rise substantially,” Cicio said.

 

The US chemicals industry is heavily dependent on natural gas as a feedstock and as an energy source, and natural gas prices have increased more than 75% since 2000.

 

Cicio and other chemical industry representatives worry that legislation that would impose limits on US industrial GHG emissions would force increasing reliance on gas instead of coal for energy production.

 

Cicio cited figures from the Federal Energy Regulatory Commission (FERC) that “electricity prices are rising across the country as a direct result of higher demand and price of natural gas by the power sector”.

 

“Further accelerating our concern is that according to EIA [US Energy Information Administration], 73% of all new electrical generating capacity built in 2006 was based on natural gas, and EIA’s 2007 estimate jumps to 78%,” he said.

 

Faced with congressional limits on greenhouse gas emissions, Cicio said, the US power sector could quickly consume natural gas equal to the entire US annual demand level of some 21trn cubic feet (tcf) per year.

 

If Congress imposes a greenhouse gas cap on the US without allowing increased energy industry access to domestic gas supplies, he said, “it would be frightening to see what impact it would have on prices for both natural gas and electricity”.

 

Congress has maintained a 26-year-old moratorium on development of vast US domestic oil and gas reserves that lie off the country’s east and west coasts and along Alaska’s long shoreline.

 

Emissions cap legislation now being advanced by the Democrat leadership in Congress - S-2191 titled “America’s Climate Security Act of 2007” - aims to reduce US greenhouse gas production “to avert the catastrophic impacts of global climate change”.

 

IECA member firms are chiefly chemical companies but include automotive, food processing, paper and building materials manufacturers among others.

By: Joe Kamalick
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