Dow’s Energy Plan for America

Maybe our friend amorris19 got something about Dow Chemical’s CEO Andrew Liveris being a candidate for Energy Secretary after all.

Dow just announced today its own energy plan for America, something like what T. Boone Pickens has been doing before the election but much more expanded to other than just renewable energy.

According to Dow, volatile natural gas price in the past 20 years have resulted in a net loss of 120,000 chemical industry-related jobs in the US and more than 3 million jobs in the manufacturing sector.

“The U.S. is on a course to spend more than $500 billion per year to import oil — nearly the amount authorized one time for the financial rescue package recently passed by Congress,” said Liveris “At Dow, we believe a new comprehensive energy policy is critical to the overall economic health of the nation.”

Here are some of the key points from Dow’s energy plan that seems interesting to me:

  • Voluntary green building programs and long term extension of tax incentives for energy efficiency and renewable energy
  • Congress to allow the nation’s Outer Continental Shelf for oil and natural gas exploration and production.
  • Cost sharing program in the development of alternative and renewable energy. Extension of renewable energy production tax credits. Elimination of ethanol subsidy (in order to use ethanol as alternative feedstock to chemicals and plastics). Making R&D tax credit permanent.
  • Any cap and trade programs should not penalize fossil energy used as feedstock. Prevent movement of US production overseas that do not have adequate climate policies.
  • Accelerate deployment of nuclear power.

Of course most of these benefit the chemical industry, what do you expect? But Dow did admit that something has to be done with the climate change issue, and that carbon cap and trade is not so bad as long as its design will not undermine US companies’ competitiveness to those whose countries do not have strict greenhouse gas emissions regulation. With the economy at the topmost agenda for the new administration, it’s a sure bet that the government will be careful in preventing more US companies going offshore.


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2 Responses to Dow’s Energy Plan for America

  1. Shane Andrew 14 November, 2008 at 7:53 pm #

    I’ve been hearing Liveris’ name tossed about for Energy Secretary, but until reading up on his remarks at the Detroit Economic Club and this most recent energy plan, I pegged him as a super long shot. I understand now why he’s a contender. Real ideas and real accomplishments. He’s got my vote.

  2. Pradeep 17 November, 2008 at 7:01 pm #

    At the CMI Americas conference , I attended a panel discussion on addressing competitveness concerns if US adopts climate change legislation. Among the panel members was a representative from Dow.

    2/3rd of Dow’s sales and assets are outside the US. Dow’s hydrocarbon bill for 2008 is on track to be 32 billion $. The US chemical industry is already a net importer of chemicals, and has shifted many of its production facilities to places with cheap gas (Caribbean, Libya, Middle East etc.).

    Given the extent of Dow’s oil consumption, I don’t see how alternative energy technologies will help it reduce its GHG emissions. New sources of oil will still be priced on the international market, and will likely not do much to lower feedstock prices.

    Biomass-coal blends, corn ethanol were some raw materials/fuels mentioned that could alleviate the pain. In the long-run, however, I think that the industry will move to where the cheap gas is (some of it has moved already).

    Ultimately, competitiveness concerns are an intractable problem. The chemical industry already mostly operates highly efficient processes (otherwise, they stand to lose money!) Unless there is paradigm shift in the way we manufacture chemicals, there are only incremental developments possible. Cap-and-trade legislation brings tough choices for companies and the US government, because if border-correction taxes were levied on goods/chemicals manufactured in countries with no GHG regulations, they could retaliate with tariffs on US-exported goods.

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