US House passes massive climate change bill

27 June 2009 00:42  [Source: ICIS news]

WASHINGTON (ICIS news)--The US House of Representatives voted narrowly on Friday to approve a massive climate-change bill that proponents said will create jobs and advance energy independence and opponents warned would drastically raise the nation’s energy costs and eliminate jobs.

After often heated exchanges between Democrats, chief sponsors of the bill, and Republican opponents in more than six hours of debate, the House voted 219-212 along party lines to approve the bill. 

Democrats needed at least 217 votes to win passage. Eight Republicans voted with 211 Democrats to secure passage. Three members did not vote.

The 1,200-page bill, HR-2454, titled The American Clean Energy and Security Act (ACES Act) of 2009, 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.

The legislation had long been opposed by most chemical companies and a broad array of other manufacturers and businesses who argued that the bill would impose a huge cost burden on the US economy without having any measureable impact on earth’s atmosphere or global warming.

A major industry group, the American Materials Manufacturing Alliance (AMMA), earlier this month warned Congress that under the energy and climate control legislation, “all forms of energy could suffer a dramatic increase in cost as a result of climate policy”.

The alliance includes the American Chemistry Council (ACC), the American Iron and Steel Institute, the Aluminum Association and the American Forest and Paper Association.

Many in the US chemicals industry opposed the bill because it is expected to trigger a wide scale shift among the nation’s electric utilities from coal to natural gas for power generation. Such a major fuel change is expected to drive up the cost of natural gas, a principal feedstock for the petrochemical industry and downstream chemical makers.

The manufacturing alliance cautioned that in addition to the direct increases in electric energy costs that the climate bill will generate - as utilities are forced to switch from carbon-rich coal to more costly fuels - there will be further costs that inevitably will burden end consumers of all types of energy.

“Much of the future increased cost of energy will come from the cost of capital equipment related to fuel switching, deployment of waste gas capture and regeneration technology, deployment of carbon capture and sequestration technology and deployment of wind, solar and other clean energy technologies,” the alliance said.

The American Petroleum Institute (API) also warned that the climate-control legislation “will be massively costly” throughout the US economy.

The emissions limits and the anticipated cost of emissions permits “will drive up costs of producing and refining gasoline, diesel and other fuel products while doing nothing to protect fuel consumers”, said institute president Jack Gerard.

He said the emissions-control mandate in the bill will have harsh cost impacts on families, the trucking industry, airlines, the construction sector and other business interests that rely on oil to make or transport products.

Citing an analysis of emission permits costs in a study by the Congressional Budget Office (CBO), Gerard said the legislation is expected to add as much as 77 cents (€0.55) to the price of a gallon of gasoline, which is now around $2.50/gal (€0.47/litre) in much of the country.

Although the bill has passed in the House, it faces an even tougher challenge in the US Senate, which is not expected to consider the climate bill until September at the earliest.

($1 = €0.71)

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By: Joe Kamalick
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