US climate change bill called unfair to chemicals sector

21 May 2009 23:43  [Source: ICIS news]

WASHINGTON (ICIS news)--US chemical manufacturers warned they will be disadvantaged under a major climate change bill that was nearing approval by a key House committee on Thursday.

Mike Walls, managing director at the American Chemistry Council (ACC), said that the climate bill as drafted by the House Energy and Commerce Committee would put greater demands and more stringent criteria on the chemicals industry than other parts of the US economy.

The committee was expected to complete its version of HR 2454, the American Clean Energy and Security Act (ACES Act), late on Thursday.

While the nearly 1,000-page bill includes provisions to stimulate greater energy efficiencies and production of alternative, renewable and biobased power, its core element is a cap-and-trade mandate.

That provision - widely opposed by US business and industry - would cap US industrial and transportation emissions of carbon dioxide (CO2) and other greenhouse gases (GHG) and mandate annual reductions to 83% below 2005 levels by 2050. 

The bill also provides for the auction or distribution of emissions permits that industrial facilities could purchase and trade to cover excess amounts of GHG production they generate beyond the level of a baseline year assigned to each industrial sector.

However, to lower the economic impact of the cap-and-trade mandate - which supporters concede would raise US energy prices - some of the emissions permits are to be distributed at no cost to various industries.

Walls said that the distribution of free emission permits - called allowances in the bill - is unfairly different for chemical makers and other energy-intensive industries than for broader segments of the economy.

He said that under the pending legislation the chemicals industry is assigned 2005 as its base year, the period against which its emissions reduction performance will be measured.

That is unfair, he argued, because in 2005 two major hurricanes struck US coastal areas along the Gulf of Mexico, forcing lengthy shutdowns of the petrochemical and chemical plants that are concentrated in the four-state Gulf Coast region.

As a consequence, he noted, US chemical industry GHG emissions in 2005 were extraordinarily low because so many plants were shut down and offline for months.

In addition to holding the chemicals sector to that unusually low emissions year as a baseline, Walls said the bill allows other industries to select as a baseline the average of emissions levels for any three consecutive years in the 1999-2008 period.

Further, he said, the bill sets a schedule for gradual reduction of emission allowances for the chemicals sector that is more aggressive than that designated for other industries.

These limitations, said Walls, “will have a significant impact on the ability of our industry to compete globally”.

He said the council hopes to work with Congress as the climate bill advances to remedy these and other provisions that disadvantage the chemicals industry.

The bill was expected to win approval late on Thursday by the Democrat majority on the Energy and Commerce Committee.

But the bill faces still more likely revisions as it is taken up by several other pertinent committees before it can be brought up for a floor vote in the full House.

The measure also faces major challenges in the US Senate.

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By: Joe Kamalick
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