US manufacturers, farmers, unions slam Senate climate bill

29 October 2009 21:24  [Source: ICIS news]

WASHINGTON (ICIS news)--US chemical producers and other manufacturers as well as farming and labour officials on Thursday warned that climate change legislation being considered by the Senate would cripple the nation’s industry and agriculture by driving energy costs higher.

In a hearing before the Senate Environment and Public Works Committee, a spokesman for chemical makers and other energy-intensive manufacturers cautioned that those industries “are deeply concerned that S-1733 will immediately and significantly drive up the demand and price for natural gas and electricity”.

Like a similar bill approved earlier this year in the US House, S-1733, the “Clean Energy Jobs and American Power Act” has as its core a cap-and-trade mandate for US energy use.

Under S-1733, introduced on 30 September, a limit or cap would be imposed on industrial emissions of greenhouse gases (GHG), gradually reducing those limits each year to 2050.

The bill would require reductions to a level of 20% below US emissions of 2005 by 2020 and to a level of 83% below 2005 by 2050.

Paul Cicio, president of the Industrial Energy Consumers of America (IECA), told the committee that such an emissions reduction mandate “would reduce competitiveness, increase natural gas, electricity and transportation fuel costs, increase job losses, lower capital investment in manufacturing, impede production, impede exports and increase imports”.

IECA’s 39 corporate members include BASF, Eastman Chemical, Huntsman, Koch Industries and other chemical producers along with steel, glass, paper and brick makers - all of whom are major consumers of natural gas or electricity or both.

Cicio noted that if US electric power companies were forced to abandon coal as a fuel to comply with S-1733 emissions limits, power generators would have to increase their natural gas consumption by 70%.

“The largest increase in domestic natural gas production was only a 3% increase from 2006 to 2007,” Cicio told the committee. “Clearly, the ability to rapidly increase production of natural gas to meet even a small portion of this potential demand does not exist.”

As that increased demand drives gas prices up, he said, “so will the price of electricity increase to every homeowner, farmer and manufacturer”.

Bob Stallman, president of the American Farm Bureau Federation, echoed Cicio’s concerns, warning that energy cost increases driven by cap-and-trade restrictions “will put our farmers and ranchers at a competitive disadvantage with producers in other countries that do not have similar greenhouse gas restrictions”.

“Increased production costs and lost competitiveness will result in reduced food production and higher food costs domestically and abroad,” he said.

Noting that almost a third of US agricultural output is exported and that growing world populations will need more food, Stallman said that at a time when US farmers would have to produce 70% more food, “the US will actually be producing less” because of energy costs related to the Senate climate bill.

Eugene Trisko, an attorney representing the United Mine Workers of America (UMWA), argued that S-1733 “proposes a very aggressive schedule of greenhouse gas emissions reductions that could lead to large-scale displacement of coal-based generation”, resulting in major job losses among UMWA member miners.

Trisko said that S-1733 advocates who contend that carbon capture and sequestration (CCS) technologies will be developed to maintain coal-fired power generation are not being realistic.

“Any new power plant designed for CCS technologies and scheduled to be in operation by 2020 should be in the design and sitting process today,” he said.

Thursday was the third and final day of hearings this week before the Senate Environment panel, although further hearings and work sessions are likely before the committee’s climate bill will take final shape.

Senator James Inhofe of Oklahoma, the ranking Republican on the committee, said that he and other Republicans will insist on a comprehensive analysis of S-1733 by the Environmental Protection Agency (EPA) before the bill is marked up in final form.

Such an EPA study might take four or five weeks, and Inhofe indicated he would block any further committee work on the bill until that analysis is provided.

Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy
To discuss issues facing the chemical industry go to ICIS connect

By: Joe Kamalick
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