INSIGHT: Industry, Republicans hit carbon cap bill

25 October 2007 22:17  [Source: ICIS news]

By Joe Kamalick

 

WASHINGTON (ICIS news)--Chemical and manufacturing officials and top Republican senators raised a protest this week against what they said is an effort by Democrat leaders in Congress to rush a cap & trade emissions bill to approval at the expense of American industry and consumers.

 

Senator James Inhofe (Republican-Oklahoma), ranking member on the Senate Environment and Public Works Committee, complained in a subcommittee this week that the complex and potentially costly cap & trade measure is being rushed forward without adequate hearings for all stakeholders.

 

The bill, S-2191, tilted “America’s Climate Security Act of 2007,” would impose limits or caps on US industrial emissions of six greenhouse gases (GHG) and provide or auction emissions permits to individual companies.  Those companies whose plants emit less greenhouse gases than permitted could sell remaining emission credits to other firms whose facilities exceed allotted maximums.

 

Sponsored by Senators Joseph Lieberman (Independent-Connecticut) and John Warner (Republican-Virginia), the measure is meant to reduce US emissions enough by 2050 “to avert the catastrophic impacts of global climate change”, according to its authors.

 

Senator Barbara Boxer (Democrat-California), chairwoman of the Senate Environment and Public Works Committee, is said to want her committee to wrap up work on the cap & trade bill within a few weeks and before her trip to Bali, Indonesia, in early December for the UN negotiations on climate change.

 

Inhofe charged in the subcommittee hearing that “what should be the beginning of the process of looking at the bill, examining it in-depth, hearing from a wide variety of stakeholders … is getting short-changed. And the full senate and the American people will be short-changed as well”.

 

Inhofe and five other Republican members of the Environment Committee sent a letter to Boxer asking that she allow full and comprehensive hearings on the measure.

 

He also noted that the subcommittee was hearing from only one witness critical of the climate change bill.

 

That witness, representing chemical producers and a range of other energy-intensive manufacturers, warned the hearing that an effort to cap US emissions of greenhouse gases 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 subcommittee on Private Sector and Consumer Solutions to Global Warming that 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.

 

That subcommittee is expected to mark-up or complete its work on S-2191 next week and pass it on to the full Environment Committee.

 

“It also appears that the full committee process will be truncated,” Inhofe charged.  “There will be an attempt to create the appearance of process, but no cooperation in providing committee members the opportunity to examine the substance of the bill,” he said.

 

“In fact, it appears that no analysis of the massive impacts that this bill will impose on the US economy has been conducted. Nor do we have an analysis of what this bill will achieve in terms of reducing global concentrations of greenhouse gases and, consequently, global temperatures - in short, the benefits,” he said.

 

Other critics of cap & trade legislation have argued that even if the US were to reduce its emissions of greenhouse gases, that would not reduce the concentration of those gases in earth’s atmosphere because China, India and other developing countries are overtaking the US and other industrialize nations in GHG emissions.

 

“I fear the bill is all pain and no gain,” Inhofe said.

 

“This bill was released only last week, and we have had little time to analyze this bill and to hear from stakeholders, who themselves are just beginning to understand how it will affect them,” Inhofe added.

 

Speaking for chemical companies and other manufacturers in IECA, Cicio said:  “We have been surprised that the committee has not had hearings on the implications that a carbon cap would have on our constrained domestic supply of low carbon intensive energy and the implications of electric power generation fuel switching from coal to natural gas.”

 

“The implications on energy costs for consumers are enormous,” Cicio said.

 

He noted that US natural gas prices have increased sharply since 2000, a period in which Congress has persisted in maintaining its 26-year-old moratorium on developing available and abundant domestic US gas reserves in 85% of the nation’s offshore waters.

 

Citing Cicio’s testimony, Inhofe said that “the unfortunate answer is that this bill will cause massive fuel switching to natural gas, driving industrial users out of the country.”

 

“At its core,” Inhofe added, “this bill, like all cap and trade bills, tries to obscure the real costs to our economy and the number of jobs we will send to China and other countries. And based on the experience of the Kyoto Protocol, it will not work.”

By: Joe Kamalick
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