Chems, other producers warn Congress on climate

19 June 2008 23:05  [Source: ICIS news]

WASHINGTON (ICIS news)--Chemical producers joined other manufacturers and energy industry representatives on Thursday to warn Congress against climate change legislation that they fear could lay waste to US business and commerce.

 

Paul Cicio, president of the Industrial Energy Consumers of America (IECA), told the House Subcommittee on Energy and Air Quality that the five climate control bills pending in Congress unfairly target US production industries and if enacted will drive the manufacturing sector overseas.

 

Climate change bills pending in the House and Senate have in common a federal mandate to cap and then reduce US emissions of greenhouse gases (GHG) in hopes of averting global warming.  The bills aim to reduce emissions by industry to 50-80% below their 2005 levels by 2050.

 

However, Cicio argued that US industrial emissions of greenhouse gases have already been reduced and now stand at 1990 levels while other segments of the US economy have not reduced emissions.

 

IECA, whose member firms include chemical producers and other energy-intensive sectors such as automotive, paper, building supplies and food manufacturers, contends that a mandatory emissions cap would trigger a “massive coal to natural gas fuel switching and will drive up the price of natural gas and electricity nationwide”.

 

“Unless the Congress takes decisive action to increase domestic production of natural gas and bring down the price, manufacturing will accelerate its movement offshore,” Cicio said.

 

John Felmy, chief economist at the American Petroleum Institute (API), told the panel that in addition to driving huge new demand for natural gas, the pending climate control bills would reduce domestic natgas supplies by adding heavy costs to exploration and development, rendering marginal gas fields cost-prohibitive.

 

Those cost pressures, said Felmy, also would drive as much as 20% of US oil refining capacity to foreign shores along with related jobs.

 

Representative Joe Barton of Texas, ranking Republican on the House Energy and Commerce Committee, charged that pending climate control bills will not change global temperatures but “would transform the US economy for the worst”.

 

He warned that with US natural gas prices at $12/m Btu compared with $6/m Btu in early 2007, US consumers are already facing 100% increases in home heating and higher electric utility costs.

 

With additional natgas demand and pricing pressures under climate control legislation, Barton said, “industries that rely heavily on natural gas - including chemicals, fertilizers and other manufacturing - will continue their exodus to other countries”.

 

However, Representative John Dingell (Democrat-Michigan), chairman of the Energy and Commerce Committee, said that while reaching a congressional consensus on climate change legislation “is the most complicated issue I have addressed in my time in Congress”, it must be resolved.

 

“I have no illusions about the amount of effort it will take to build a collation to pass responsible climate change legislation, but pass it we must,” Dingell said.

 

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By: Joe Kamalick
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