NPRA ’11: More US rules are driving capacity offshore

26 March 2011 23:36  [Source: ICIS news]

SAN ANTONIO, Texas (ICIS)--The growing burden of federal and state regulations may drive more US companies to shift manufacturing capacity to foreign shores, a top petrochemicals industry official said on Saturday, warning that another layer of rule-making may be the straw that breaks industry’s back.

Jim Cooper, vice president for petrochemicals at the National Petrochemicals & Refiners Association (NPRA), said that the cumulative effect of regulatory growth was only one factor weighing on US petrochemical and other manufacturing, “but it is a heavily weighted factor, and now they are pouring more rules on”.

Speaking on the sidelines of the 36th annual International Petrochemicals Conference (IPC), Cooper said that the roll-out of the Environmental Protection Agency’s (EPA) new greenhouse gases restrictions is just the latest example among other rule-making that poses operational and business viability challenges for chemical makers.

The EPA in January began implementing its controversial rule to limit and reduce greenhouse gas (GHG) emissions from US refineries, petrochemical plants, electric utilities, cement factories and other major industrial facilities - known as “stationary sources” in regulatory parlance.

The agency’s GHG rule is under attack in the US Congress and has been targeted by as many as 75 federal lawsuits challenging the EPA’s authority to regulate greenhouse gases.

Industry warns that the new emissions programme will dramatically raise the costs of electric power, other energy resources and production in general.

“I think regulators look at things in silos and don’t consider the cumulative effect of what they do,” Cooper said.  “They look at the particular rule that they’re drafting and assess the cost and say that’s not too much.”

“But if you look at it all in cumulative fashion, that rule and yet another one basically add to the overall burden, and at some point it’s enough to break the camel’s back,” he said.

“We don’t know which straw will be the one that breaks the back, but the burden is becoming onerous,” he said.

“Will the rules trigger further capacity flight?  It depends on a lot of factors, it depends on the availability of cheap and dependable feedstock, the availability of a labour pool,

“The regulatory environment is just one factor among others, but it is but it is a heavily weighted factor, and now they are pouring more rules on,” he said.

“All things considered, it may be the factor that leads to a decision to locate capacity elsewhere,” he added.

“I think we as a nation have to decide how much we are willing to sacrifice economically to achieve that last five percent” of environmental improvement.

Cooper said that US emissions of greenhouse gases have been reduced more than the reductions in European nations, even though those countries are signatories to the Kyoto Climate Treaty and the US is not.

“At what cost are we going to sacrifice our manufacturing economy and still not have any impact on the problem” of greenhouse gases emissions worldwide.

“How can anyone say they are following sound science and adopt an approach like that,” he said, referring to EPA rulemaking on greenhouse gases and other recent initiatives by the agency.  “It violates common sense, let alone science.”

Sponsored by NPRA, the IPC runs through Tuesday 29 March and was expected to draw some 2,900 registered participants.

Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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