Steel, Chemical Industries Latest to Oppose Senate’s National Energy Tax

Senate Majority Leader Harry Reid (D-NV) recently proposed bringing a four-tiered climate bill to the Senate floor as soon as July 26, 2010.  The bill would include a section placing greenhouse gas caps on utilities—imposing a national energy tax that would be passed through to consumers in the form of higher electricity bills and costlier products.  This strategy represents an attempt to win over support from manufacturers and other industries that would be subject to direct caps under an economy-wide cap-and-tax system (such as Waxman-Markey).  However, it seems that industry is not taking the bait.

On July 15, 2010, the American Chemistry Council stated that a utility-only cap would harm the competitiveness of the U.S. chemical industry and stall economic recovery.  According to American Chemistry Council president Cal Dooley:

We oppose so-called ‘utility-focused’ cap-and-trade programs, which will in fact have far-reaching impacts on the U.S. economy, especially industries such as chemistry that are energy-intensive and exposed to global trade. Such proposals will raise energy prices, including natural gas feedstock costs, and in turn harm the global competitiveness of America’s chemical industry, stall our economic recovery and stifle job creation…Unfortunately, under every version of the proposal discussed to date, utility allowances are insufficient to cover their higher energy costs, which will simply be passed through to industrial energy consumers and other rate payers.

On July 16, 2010, the American Iron and Steel Institute also objected to the utility-only carbon caps.  The industry group argued that the price tag of a utility-focused cap would still be substantial as the utilities pass costs on to consumers (including steel producers).  The president of the American Iron and Steel Institute wrote that:

In our view, such a program would not be limited in its economic impact.  In particular, we are deeply concerned that an electric utility cap-and-trade program would threaten the international competitiveness of the domestic steel industry.  By putting a price on utility greenhouse gas (GHG) emissions, it will increase costs to energy-intensive trade-exposed manufacturers such as the steel industry, undermining our ability to compete in global markets and causing the leakage of jobs and emissions to unregulated jurisdictions.  Indeed, the expected transfer of electric utility compliance costs to industrial customers would likely be just as substantial as under an economy wide cap-and-trade program.

Any climate bill that includes a “utility-only” cap-and-tax system would result in a energy tax ultimately paid for by U.S. manufacturers, families and small businesses.  Over 3 million American jobs have been lost since President Obama was inaugurated in January 2009.  President Obama and Democrats in Congress ought to abandon their rush towards a job-killing national energy tax.  Republicans continue to support an “all of the above” energy plan that offers energy independence, good jobs and a cleaner environment through greater efficiency and the development of more nuclear, renewable and alternative energy, along with oil and gas exploration.