News Room - Steel Industry

Posted on 25 Mar 2009

U.S. manufacturers seek protection from climate bill

Production of steel, cement, chemicals and other energy-intensive products could move overseas unless a proposed bill to fight global warming gives U.S. manufacturers tax breaks or other subsidies, an industry coalition told lawmakers on Tuesday.

 

"If the U.S. enacts tough global warming regulation but other key manufacturing nations do not, production of energy-intensive goods may well shift to the unregulated countries," said John McMackin on behalf of the Energy-Intensive Manufacturers' Working Group.

 

The coalition includes steel companies US Steel and Nucor, paper producer NewPage Corp_, aluminum manufacturer Alcoa and chemicals giant Dow.

 

McMackin testified at a hearing in the U.S. House of Representatives to examine the trade implications of proposed legislation to fight global warming by restricting carbon and other greenhouse gas emissions.

 

He told the

House Ways

and Means trade subcommittee his group believed the best way to prevent production shifts would be for Congress to give energy-intensive manufacturers free carbon trading credits or to reduce their compliance costs through a refundable tax credit or some other mechanism.

 

Representative Kevin Brady, the top Republican on the trade subcommittee, said the United States could lose "a stunning $162 billion in export sales" as result of higher costs if Congress does not move carefully on the climate bill.

 

Leo Gerard, president of the United Steelworkers union, said a combination of free allowances and border taxes could be needed to stop jobs from moving to countries like China which are likely to have less stringent controls.

 

"In commodity-based industries like steel, glass, chemicals, rubber and paper, even small differences in production costs can devastate an industry if they are not managed effectively," Gerard said.

 

David Hamilton, director of global warming and energy programs for the Sierra Club, said the world was in a race against time to prevent severe climate change that "will challenge nearly aspect of society."  Border measures, rebates or allocations could help level the playing field for U.S. producers, "but they will not create incentives for developing countries to reduce their domestic emissions or to cooperate in the negotiations" to reach a new global climate treaty in December, Hamilton said.

 

To persuade countries like China to make measurable and verifiable actions to rein in their own emissions, the United States should commit to a goal of reducing carbon emissions by 8 to 14 percent below 1990 levels by 2020, Hamilton said.

 

It should also agree to help developing countries buy clean energy technologies and to protect their forests, he said.