US chemicals, manufacturers slam climate bill

03 June 2008 19:33  [Source: ICIS news]

WASHINGTON (ICIS news)--US chemical producers and other manufacturers warned on Tuesday that climate control legislation being considered in the Senate would sharply raise energy costs, force more US production offshore and cut 4m jobs.

 

The American Chemistry Council (ACC) and the National Association of Manufacturers (NAM) were among many US industrial and commercial organizations to raise an alarm as the Senate began consideration on Tuesday of S-3036, the America’s Climate Security Act.

 

The Natural Gas Council (NGC) charged that if approved the legislation would put the US on an energy collision course by dramatically increasing demand and prices for natgas while limiting and even reducing the country’s ability to develop domestic gas reserves.

 

If approved, S-3036 would impose a mandatory limit or cap on emissions of carbon dioxide (CO2) and other greenhouse gases (GHG) by chemical producers and other manufacturers, electric utilities, the transportation sector and natural gas production and consumption.

 

Those emission caps would be reduced annually until, in theory, by 2050 US emissions would be about 75% below the nation’s 2005 emissions level.

 

In addition to emissions caps, the bill would raise as much as $7,000bn (€4,480bn) in federal tax revenue from emissions permits that would be sold to US manufacturers, refiners and utilities to cover emissions that exceed allowed limits.

 

ACC senior vice president Thomas Gibson warned that under the Senate bill “significant supplies of natural gas will be diverted into the utility sector at a significant cost and disadvantage to American manufacturing”.

 

US chemical producers are heavily dependent on natural gas as a feedstock, and manufacturing in general uses gas as a power source.

 

Gibson noted that the bill makes no provision for increasing domestic US natgas production.  “As a result, natural gas prices will climb to a level that will force many energy-intensive manufacturers to shut down their plants and relocate overseas, continuing an already apparent trend of job losses in our industry,” he said.

 

NAM executive vice president Jay Timmons also cautioned that the bill would increase natgas demand, prices and industrial job losses.

 

“If adopted, the legislation by 2030 could lead to net national employment losses of up to 4m jobs, electricity price increases of up to 129%, gasoline price increase of up to 145% and a loss of household income of up to $6,752 per year,” Timmons said.

 

An earlier study said that the climate control bill would reduce US natural gas production by as much as 40% by imposing emission costs on exploration and development operations that would make many marginal gas fields too costly to produce.

 

The Senate is expected to debate S-3060 through this week.  A similar bill is pending in the US House of Representatives, but neither measure is expected to pass this year.  Another effort to pass climate control legislation is expected after a new administration is sworn in next year.

 

($1 = €0.64)

 

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By: Joe Kamalick
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