Yesterday, a coalition of U.S. manufacturing groups known as the American Materials Manufacturing Alliance recommended changes to the American Clean Energy and Security Act (HR 2454) in a letter to Sen. Sheldon Whitehouse (D-R.I.) of the Senate Committee on Environment and Public Works.
The letter, signed by the American Chemistry Council, the Aluminum Association, the American Forest and Parer Association and the American Iron and Steel Institute, details concerns with the bill as it relates to energy intensive and trade-exposed industries.
The letter supports the idea that emissions-allowance provisions for energy-intensive, trade exposed industries are important in helping American manufacturers remain globally competitive, but argues the provisions in the House-passed bill are insufficient.
Current language, the letter states, only addresses compliance costs associated with emissions, and ignores increased energy costs as a consequence of the legislation. Within the context of emissions costs, bill language limits emissions allowances to 13.5% of the available pool for most of the program. Earlier proposals allocated 15% of allowances to industries vulnerable to foreign competition. The seemingly minor difference, the letter argues, actually amounts to hundreds of millions of allowances valued at billions of dollars over the life of the program. The coalition recommends restoring the 15% allocation in the final bill and extending that allocation to 2030 to allow for the adoption of new low-GHG emitting technologies that are currently unavailable.
The letter also recommends adding further provisions to deal with the increased cost of energy faced by American manufacturers, for example to pay for deployment of new generation and transmission capacity for renewable electricity. Such increased costs, the letter argues, will be incurred by domestic manufacturers and will not impact foreign competitors in regions where weaker or non-existent policies have no energy cost impact. The letter recommends that domestic legislation needs to address potentially large increases in the cost of electricity, natural gas, biomass and coal.
Finally, the letter recommends properly incentivizing combined heat and power technology and would provide alternate allocation methods for sectors that do not fit neatly into NAICS code categories for distribution of allowances.