US cap and trade will increase energy costs - economist

17 September 2009 22:28  [Source: ICIS news]

By David Hannon, Purchasing magazine

BOSTON (ICIS news)--A US cap and trade policy would increase the cost of energy derivatives, having a direct impact on the energy-dependent chemicals industry, an economist said on Thursday.

However, adopting such a policy would provide clarity about what the government wants from manufacturers, said Kevin Swift, chief economist for the American Chemistry Council (ACC).

Swift was speaking at the Chemical Purchasing Summit organised by ICIS and Purchasing magazine.

In his presentation, Swift said the downstream impact of cap and trade would not only raise costs for energy and chemicals, but also expedite the ongoing shift of chemicals production capacity to lower-cost regions.

Since such regions have emission standards that are more lax than the US, a cap-and-trade policy could actually increase emissions worldwide, he said.

In the US, energy prices could increase, affecting consumer discretionary spending, which could reduce end-product consumption, Swift said.

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