Statement

ACC: Senate EPW Climate Bill Will Weaken U.S. Competitiveness, Increase Global Emissions

Bill’s Allowance Cap, Reduction Schedules Will Cause Carbon ‘Leakage,’ U.S. Job Losses

ARLINGTON, VA (October 28, 2009) – This week the Senate Environment and Public Works (EPW) Committee is holding hearings on its “Chairman’s Mark” of climate legislation, “The Clean Energy Jobs and American Power Act” (S. 1733). Additional information is available here.

American Chemistry Council (ACC) President and CEO Cal Dooley issued the following statement:

“We support policies to reduce greenhouse gas (GHG) emissions.  We are a ‘green jobs’ industry whose products go into some of the most widely-used energy efficiency and renewable energy applications that help Americans save energy and reduce emissions.  Following passage of the House bill, we had hoped for substantial improvements in the Senate in recognizing competitiveness impacts for energy-intensive, trade exposed industries such as chemistry.  Unfortunately, S. 1733 is a significant step back.  The bill truly jeopardizes our ability to compete globally, will cost U.S. jobs and lead to higher net global greenhouse gas emissions as manufacturing production shifts to higher-emission countries—a process known as ‘carbon leakage.’  We believe Congress must develop and adopt a far different approach to reducing emissions—one that leads to environmental and economic improvement.  The United States can and must do both.

Specifically, we believe the allowance cap and reduction schedules in S. 1733 will put energy-intensive, trade-exposed industries (EITEs) like ours at a competitive disadvantage in global markets.  While some allowances are devoted to EITEs, the bill has an undersized cap and steep rate of decline that will make emissions allowances scarce, resulting in high allowance prices.  High allowance prices will, in turn, will lead utilities to ‘fuel switch’ to natural gas to reduce their compliance costs.  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.  This ‘triple whammy’ of higher costs will make us significantly less competitive with producers overseas, costing U.S. jobs and increasing global emissions.

American chemistry has improved energy efficiency by 28 percent since 1990, and our GHG emissions have fallen 16 percent in that time, exceeding Kyoto Protocol targets.  We can help create the lower carbon economy of the future by continuing to innovate products that save fuel, prevent greenhouse gas emissions, and bring advances in renewable energy such as solar and wind.  To fulfill this potential, we need smart climate and energy policies that enable us to compete in the global marketplace, invest in higher efficiency plants and equipment, and retain and grow one of the nation’s highest trained and most productive workforces.  We urge the Senate to consider new approaches to GHG emissions reduction and look forward to working with lawmakers in that effort.”

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