Cap-and-Trade pains

I mentioned about Kimberly-Clark‘s recent prediction that any cap-and-tradebills in Washington will not pass this year as the government is brokeright now and can’t afford to pass a risky (and possibly expensive)legislation.

ICIS Chemical Business (the magazine I work for) actually interviewed Eastman Chemical‘s chairman and CEO Brian Ferguson who is also outspoken and more critical about the cap-and-trade proposal.

“Thecap-and-trade proposal, which would tax US companies using fossilfuels, could be “crippling” to US manufacturers,” Ferguson said.

“Theseare additional costs that foreign competitors who import into the USwouldn’t have to bear. We must have an energy policy that takes thisinto account and does not put us at further competitive disadvantage.”

According to a recent report from the think-tank group the Heritage Foundation,the Waxman-Markey bill (from which the cap-and-trade proposal isexpected to rise) would cut overall manufacturing jobs by 23% and causesome manufacturing industries such as Ohio, Indiana, Kentucky, NorthCarolina, Iowa, Wisconsin, Arkansas, Louisiana and Oregon to lose morethan 50% of their jobs.

“Cap-and-tradeprograms frequently include provisions to protect domestic industriesfrom competition with firms in countries that have not adoptedsimilarly costly mechanisms for reducing CO2. While the intent iscertainly understandable, the provisions create the possibility of a protectionist wolf in global-warming clothes.”

The Foundation cited Indiana as the topmost state at risk from the cap-and-trade bill followed by Ohio.

Indiana’slarge manufacturing sector with more than 600,000 jobs accounting fornearly 20% of all employment – combined with a heavy reliance on coal(94% of all energy) put the state at the top of the group’s nationalManufacturing Vulnerability Index, which reveals which areas of thecountry will experience direct harm under a cap-and-trade scheme.

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