US climate bills said to threaten refining, petchems, security

28 October 2009 19:44  [Source: ICIS news]

Climate bills could hurt petchemsWASHINGTON (ICIS news)--Refining and petrochemical officials on Wednesday warned that climate change bills pending in Congress will devastate their industries, and a leading US Army scholar charged that they will weaken the military and raise war risks.

In testimony before the Senate Environment and Public Works Committee, Valero chief executive Bill Klesse warned that cap-and-trade climate measures under consideration would be “devastating for the American people and for the American refining and petrochemical industries”.

Klesse, testifying as chairman of the National Petrochemical & Refiners Association (NPRA), said that the House and Senate climate bills would raise energy and other operating costs for US refiners.

“One of our chief concerns is that this legislation provides foreign refiners and petrochemical operations a competitive advantage to American businesses,” Klesse said.

He cautioned that the legislation would impose costs and limit fossil energy resources before alternative and renewable technologies would be commercially able to make up the difference.

“This legislation attempts to raise oil product prices so that other less economic energy sources look better by comparison,” he said.  “Is this really fair to the American consumer or to our industry?”

Cal Dooley, president of the American Chemistry Council (ACC), warned that the Senate bill “truly jeopardises our ability to compete globally, will cost US jobs and lead to higher net global greenhouse gas emissions as manufacturing production shifts to higher-emission countries”.

He said that a federal cap-and-trade mandate - which is the core of both House and Senate climate bills - will force US electric utilities to switch from coal to natural gas to fuel their generators and consequently lower their costs for emissions permits or allowances.

“Because chemistry companies rely on natural gas for heat and power and as a raw material or feedstock, we will pay more for allowances, fuel and feedstock,” Dooley said. “This ‘triple whammy’ of higher costs will make us significantly less competitive with producers overseas, costing US jobs and increasing global emissions," he added.

Retired US Army major general Robert Scales told the committee that a cap-and-trade mandate “will over the decades slowly diminish the ability to produce fossil fuels in the strategic confines of American territory”.

He said the bills also would force the US to increase its imports of refined petroleum products - gasolines, diesel and aviation fuels - by as much as 20% as domestic output declines.

Scales, former commandant of the US Army War College, challenged climate change advocates who argue that a cap-and-trade mandate will trigger more alternative and renewable energy technologies and make the US less dependent on foreign oil.

Instead, he argued, the legislation would increase US dependence on foreign oil and refined products, and “the ability of the US to surge its wartime energy production might well be held hostage to foreign interference”.

To counter that level of vulnerability, he said, “our young men and women might well find themselves permanently stationed in areas of great danger and volatility in order to secure American access to foreign oil”.

“Nothing in this bill will either reduce the likelihood of American involvement in future wars, nor will it improve America’s war-making capabilities,” he added. “Indeed, over the decades the consequences of this bill might well reduce American influence and retard our ability to deter and fight wars in the future."

The Senate Environment Committee is in its second of three days of testimony on S-1733, the “Clean Energy Jobs and American Power Act”.

The Senate is not expected to complete work on the measure before the end of November.

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