Pittsburgh Business Times - by Beth Murtagh
Published: 12-09-08
President-elect Barack Obama has made his sweeping environmental agenda a priority for his incoming administration.
As major users of energy manufacturers are watching closely to see what the final blueprint to achieve this would be.
“We have a number of concerns” said Terrence Straub U.S. Steel Corp.’s senior vice president of public policy and governmental affairs. “Foremost among those is not to put American manufacturers in a position of obligation to a new regime in the United States in such a significant way that we are tremendously disadvantaged.”
Throughout his campaign Obama pledged to reduce carbon dioxide emissions by 80 percent over the next four decades and invest $150 billion in alternative energy sources.
That multibillion-dollar investment in alternative energy sources could include incentives for manufacturers of all sizes to implement them said Ken Kulak a Philadelphia energy attorney with Morgan Lewis & Bockius LLP.
“It’s a very fine balance. I am optimistic that the rules and regulatory changes can be worked through in a way that creates opportunities and leads to more efficiencies” Kulak said.
A federal climate bill authored by Sens. Joseph Lieberman I-Conn. and John Warner R-Va. was defeated this summer in the Senate over worries of what a system would cost to implement. The legislation included the creation of a cap-and-trade program which would impose emissions limits of electric utility transportation and manufacturing industries at their 2005 equivalent. Over the next four decades those emissions would be reduced about 70 percent. The bill included financial incentives to curb these emissions.
In a cap-and-trade system companies would be able to buy credits in a marketplace to make up for emissions over the allowed rate. For manufacturers there also is skepticism over how such a system would impact competitiveness when global companies would not have the same requirements.
Climate change first of all presupposes assumptions that David Taylor of the Pennsylvania Manufacturers Association says are unproven such as the assumption that climate change is caused by human industrial activity.
Second the costs to implement emissions-curbing technology places a burden on manufacturers resulting in decreased output Taylor said. At the same time India and China do not have similar environmental compliance regulations.
“It’s a major point of discussion that needs to be discussed: What does it do to the overall picture when we are sacrificing and competitor companies are not?” said Taylor executive director of the Harrisburg-based trade association.
Steelmakers are some of the largest consumers of energy Straub said. Such regulations while nonexistent in Russia China and India would create an “unfair” advantage as built-in costs to meet the requirements would raise steel prices.
“If steelmaking just ceases to exist in America and steel was made in China and India their carbon emissions are significantly higher than they are in the U.S.” Straub said. “If that steelmaking capacity ends up being diminished here not only would you have decimated and destroyed an important American industry in effect you’ve made the environmental problem worse.”
U.S. Steel’s objective is to ensure a so-called adjustment mechanism in any legislation to make up for that imbalance Straub said “some way of calculating the cost of a global climate regime on the U.S. steel producers and applying that same obligation to a foreign importer.”
Regional efforts have cropped up independent of the federal government such as the Regional Greenhouse Gas Initiative in 10 Northeast and Mid-Atlantic states where power generation companies will be given annual emission allowances and buy extra credits in an auction.
Some experts on such initiatives have said though a system would result in more cuts the complicated cap-and-trade system would take a long time to organize and be a more bureaucratic method of imposing reform versus something like a flat carbon tax.
The Energy Plan: Obama has many goals for his energy agenda
• JOBS: Help create 5 million new jobs by investing $150 billion over the next ten years to catalyze private efforts to build a clean energy future.
• OIL: Within 10 years save more oil than is currently imported from the Middle East and Venezuela combined.
• HYBRIDS: Put 1 million plug-in hybrid cars on the road by 2015 — cars that would be built in America.
• ELECTRICITY: Ensure 10 percent of our electricity comes from renewable sources by 2012 and 25 percent by 2025.
• EMISSIONS: Implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050.
• Source: barackobama.com
