It's clear that the world needs to address climate
and energy initiatives, but the best way to accomplish that
mission remains in a fog at best.
Advocates for a comprehensive energy/emissions bill
caution that the failure to implement such a plan could result
in worldwide catastrophic damage, and environmental groups like
the Sierra Club stress that the United States must take the
lead in reducing carbon emissions.
But critics of proposed U.S. cap-and-trade emission
legislation say that such a program would amount to little more
than a tax that would unfairly disadvantage
high-energy-intensive industries such as steel.
While the President might wish for a comprehensive
climate and energy bill by the end of the year, there are many
on both sides of the issue who believe that timetable is
unrealistic at best. The Obama administration, pushing for a
bill to cut greenhouse gas emissions, favors a cap-and-trade
program that would let companies trade pollution allowances on
an open market.
The first climate change draft bill in the 111th
Congress was written by Rep. Henry Waxman (D., Calif.),
chairman of the House Energy and Commerce Committee, Rep. Ed
Markey (D., Mass.), chairman of the Energy and Environment
subcommittee. It is an ambitious plan to reduce carbon
emissions by 80 percent below 2005 levels by 2050 while giving
certain rebates to energy-intensive industries such as steel.
In addition to a cap-and-trade plan, the American Clean Energy
and Security Act also promotes renewable energy.
Energy Secretary Steven Chu said that slicing
carbon emissions by 80 percent by mid-century is possible, but
he acknowledges that it is an ambitious goal. He said at an
energy conference in Washington that he believes new technology
will be a key component for implementing the reduction of
carbon emissions (AMM, April 9).
The 648-page Waxman-Markey climate bill says that
high-energy-intensive industries, including steel, must have
tradeable federal permits, called allowances, for each ton of
pollution emitted into the atmosphere, according to a summary
of the bill. Yet two of the most important elements for
manufacturers remain unanswered How will the tradeable emission
allowances be allocated? And although the bill states there
would be a certain amount of free allowances-"rebates"
available to energy-intensive industries-it doesn't state how
At an Energy Information Administration (EIA)
energy conference in April, key House and Senate aides
discussed what's ahead for climate legislation. A Waxman aide
said the congressman intends to keep to a tight deadline and
pass it through committee by Memorial Day. While many expect
the Waxman-Markey bill to win House approval, it is expected to
face an uphill battle in the Senate. At the EIA conference, an
aide to Sen. Barbara Boxer (D., Calif.) said it was likely that
there wouldn't be a climate bill on the Senate side until the
House made progress on its own legislation.
Many senators have expressed the need for fiscal
stability first and stressed that a cap-and-trade program could
injure an already damaged manufacturing base-a view that is
shared by many industry executives.
There is a provision for coal in the Waxman-Markey
draft bill promoting carbon capture and sequestration (CCS)
technologies and includes incentives for the commercial
deployment of CCS, a plan that Hal Quinn, president of the
National Mining Association, and Chu endorse, stressing the
need for the technology because 50 percent of U.S. electricity
is generated from coal. Yet Chu believes the CCS technology is
at best eight years away from low-cost commercial
What does steel want? While the Waxman-Markey bill
has received some support from manufacturing groups,
particularly for the coal provision and possibility of free
allocations, trade groups stress that more work needs to be
Scott Paul, executive director of Washington trade
group Alliance for American Manufacturing, cautions that as the
legislative process moves forward, it should retain rebates and
border adjustment features strong enough to hold other
countries accountable for their greenhouse gas emissions.
Eric Stuart, director of environment and energy for
the Steel Manufacturers Association (SMA), stressed the need
for discussion on any cap-and-trade bill. And as talks move
forward, he said, any climate bill should include global
participation with no exemptions for any nation, which would
address the issue of carbon leakage and international
competitiveness. He added that there should be adjustments for
globally competitive energy-intensive industries for indirect
emission costs passed downstream to energy consumers through
utility rates, such as electric-arc furnaces. "It provides
protection against having to pay for more than direct emissions
under a cap-and-trade program," he said.
SMA president Thomas Danjczek said he is very
concerned with any unintended consequences of a climate bill.
"We have to be careful, for example, of driving up the cost of
natural gas by switching to natural gas for power generation,
which is a relatively inefficient use of the resource," he
said. "Whatever the legislation, reasonable economic evaluation
needs to be done."