WASHINGTON The American Clean Energy and
Security Act (ACES) bill passed out of the House Energy and
Commerce Committee, keeping to the stringent time-frame that
co-author and committee chairman Rep. Henry Waxman (D., Calif.)
stressed was necessary-and its progress is a worrisome
development for steel.
Many steel industry executives believe more analysis is
needed before the climate-change bill becomes law, and they are
now looking to the Senate to address many of the issues absent
from the House version.
Concerns raised by industry executives with ACES as written
revolve around proper border adjustments to maintain
international competitiveness, particularly if a global
standard isn't enacted, and a larger pool of free rebates-or
allocations-as steel works to harness technology to reduce
carbon emissions. Under the ACES bill, energy-intensive
industries would receive 15 percent of the free allowances
beginning in 2014 and would continue to receive allowances that
will be phased out after 2025.
"While we are not advocating a continuation of the
status quo, America needs an energy policy that for
the next 30 years includes coal and other forms of energy,
especially nuclear," said Thomas Danjczek, president of the
Steel Manufacturers Association. "Doubling of energy prices via
a massive tax is poor policy. The bill is seriously flawed.
Let's hope the U.S. Senate can do better."
Although Waxman worked hard to ensure that energy-intensive
industries aren't unduly stressed, many believe the bill does
not go far enough even with his provisional checks in place.
ACES includes a provision that says the President will
determine if energy-intensive industries require border
adjustments or a longer phase-out of free rebates in 2025.
The steel industry has argued that the border adjustments
should begin as soon as the emissions cap is implemented, and
says the phase-out of rebates begins too soon. There is not
enough time to put low-carbon technologies in place,
particularly since the technology is years away from commercial
availability, the industry contends.
The ACES bill now will be examined by up to eight different
House committees Agriculture, Education and Labor, Financial
Services, Foreign Affairs, Natural Resources, Science and
Technology, Transportation and Infrastructure, and Ways and
Means. More tweaks or adjustments will be made by various
committees, but not likely enough to pass muster with
House Speaker Rep. Nancy Pelosi (D., Calif.) has asked the
committees to work together to finalize the comprehensive
energy bill and move it to the House floor for a vote, possibly
by the end of the summer.
The Obama administration has been pushing Congress to pass a
comprehensive bill before the global climate talks in December
in Copenhagen, in part to establish the United States as a
leader in climate change.
While many industry sources believe the House will pass a
climate-change bill this year, they question what will happen
in the Senate. "There is no reason at the moment to think that
would happen in 2009-it just isn't on the to-do list; it's not
even on the want-to-do list," said an industry source, who
believes that the bill will stall in the Senate.
The larger debate surrounding ACES is what it will actually
cost. Although previous climate change bills were fully
analyzed, ACES, in its current form, has not undergone the same
level of scrutiny House Republicans and steel executives
Thomas J. Gibson, president and chief executive officer of
the American Iron and Steel Institute, said that the AISI is
currently analyzing the latest version of the ACES draft, but
stressed that there are many variables that could dramatically
"Climate policy will remain at the top of AISI's agenda for
the next five years and beyond," AISI vice president Nancy
Gravatt said. Steel plays an important role in the power grid
and strengthening the transportation and infrastructure systems
and should be part of the green solution, she said, noting the
exemplary record of emissions reductions achieved by the
industry on a voluntary basis.
"We will work with Congress toward balanced policy that
ensures competitiveness while supporting a continued decline in
carbon emissions, which is a common goal," Gravatt said.
Although many involved in energy-intensive industries stress
more analysis is needed, a few groups stand to win under the
ACES bill as written. One of these is coal, which would receive
2 percent of the free allowances for investments in carbon
capture and sequestration technology from 2014 to 2017 and 5
percent of the allowances beginning in 2018. Other investments
in renewable energy will account for 10 percent of the free
allowances from 2012 to 2015.
Sen. Barbara Boxer (D., Calif.) has said that she would look
at the House version of the climate bill as a guide and would
begin a Senate climate bill when legislation had passed in the
House. If House leaders keep to the timetable they have set,
the Senate could begin climate-change discussions by late