US chemicals, other manufacturers warn on climate bill

16 July 2009 19:59  [Source: ICIS news]

WASHINGTON (ICIS news)--US chemical producers, other energy intensive manufacturers and small business owners on Thursday warned a Senate panel that climate change legislation will raise energy costs and reduce employment.

In testimony provided to the Senate Environment and Public Works Committee, the American Materials Manufacturing Alliance cautioned that the massive climate bill recently passed by the House of Representatives would trigger “large increases in the cost of electricity, natural gas, biomass and coal”.

The Senate hearing was called to consider what impact climate change legislation might have on US employment and competitiveness in the global marketplace. 

The Senate is using the House-passed bill, HR-2454, the American Clean Energy and Security (ACES) Act, as the starting point for its own climate change deliberations.

The materials manufacturing alliance, which includes the American Chemistry Council (ACC) along with aluminium, iron and steel and paper products trade groups, noted that the expected increases in power costs from a federal climate change mandate would hit energy intensive manufacturers doubly hard.

Increased costs for natural gas, an increasingly preferred generating fuel for US electric utilities, would both increase power costs and feedstock prices for chemical makers, the alliance noted.

US petrochemical manufacturers and downstream chemical producers are heavily dependent on natural gas as a feedstock.

Noting that chemical industry products play a major role in improving energy efficiency, emissions reductions and alternative energy production, the alliance argued that increased power and feedstock costs resulting from climate change legislation would undermine industry’s ability to produce energy-saving materials and create jobs.

“To contribute solutions to climate change, we must be able to successfully operate our US manufacturing facilities and continue to directly and indirectly employ millions of Americans in well-paying jobs,” the alliance said. “As written, HR-2454 will make it exceedingly difficult to achieve those objectives.”

The Senate panel also heard testimony from Harry Alford, president of the National Black Chamber of Commerce, who warned that climate change legislation “will negatively impact the most vulnerable of our society”, including small and minority-owned businesses.

Alford said that a CRA International study commissioned by his chamber found that the House-passed cap-and-trade emissions reductions mandate would burden households with higher energy and transportation costs, causing income losses and reducing consumer spending.

Those results would in turn lower investment, US productivity and employment, he argued.

Alford pointedly warned the panel that “when those consumers lose their jobs as a result of cap-and-trade legislation, they will come looking for someone to blame - and that someone could be their elected officials”.

The Environment and Public Works Committee is one of at least four Senate panels that are expected to hear testimony on and make changes to the 1,500-page House bill.

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