AMMA Expresses Concern over EPA Analysis of Climate Legislation
12/15/2009 - The American Materials Manufacturing Alliance has issued a letter to Senators Bayh (D-IN), Specter (D-PA), Brown (D-OH), McCaskill (D-MO), and Stabenow (D-MI) regarding the U.S. EPA’s analysis of the impact that H.R. 2454 will have on energy-intensive, trade-exposed industries.
The American Materials Manufacturing Alliance (AMMA), a group of energy-intensive, trade-exposed industries (EITEs), has issued a letter to Senators Bayh (D-IN), Specter (D-PA), Brown (D-OH), McCaskill (D-MO), and Stabenow (D-MI) regarding the U.S. Environmental Protection Agency’s analysis of the impact that H.R. 2454 will have on EITEs.
AMMA recognizes that the EPA’s analysis—The Effects of H.R. 2454 on International Competitiveness and Emissions Leakage in Energy-Intensive, Trade-Exposed Industries, also known as the “Interagency Analysis”—“is considered a first step in the Administration’s engagement with stakeholders.” However, the group questions the plausibility of the assumptions used in the study.
AMMA fears that flawed assumptions could lead the Administration to the “flawed conclusion” that any EITE cost impacts resulting from climate policy are nearly or entirely eliminated by H.R. 2454’s emission allocation provisions. The group says that the report’s “faulty suggestion” that U.S. competitiveness issues are solved by measures in H.R. 2454 will only have negative consequences for climate policy and for America’s EITE industries.
The AMMA letter points out the heavy reliance the Interagency Analysis places on “all variables and moving parts built into the design of the (H.R. 2454) program work(ing) exactly right. Design mistakes can have enormous consequences for manufacturers and the millions of Americans whose jobs depend on a competitive and healthy domestic manufacturing sector.”
AMMA also states: “The idea that…EITE allowances are sufficient is the foundation of the conclusion of the Interagency Analysis,” yet “the Waxman-Markey measures for EITEs are inadequate. The absence of consideration of all of the costs that EITEs will confront in a carbon capped economy and the absence of a fair allowance distribution system call into question the ability to properly design an economy-wide cap and trade mechanism.”
AMMA observes that “The Interagency Analysis recognizes the challenges of implementing such a complex emissions trading program have not yet been ‘fully considered’…Enormous work is still needed to devise an allocation distribution system that does not unfairly penalize competitive manufacturers and result in production migration within and outside of the U.S. The potential for a system to unfairly create ‘winners and losers’ in the marketplace must be avoided at all costs.”
The Interagency Analysis admits that more work will need to be done to improve assessments of competitiveness impacts and to address various implementation challenges presented by output-based allocations, and AMMA agrees. The group says that at this point, there are too many “unknowns” to confidently predict the outcomes of this climate policy.
AMMA says that it looks forward to working with the Administration and Congress to ensure climate policy does not negatively impact the competitiveness of domestic manufacturers. To read the full letter, click here.
The American Materials Manufacturing Alliance (AMMA) is a group of energy-intensive, trade-exposed industries that includes The Aluminum Association, the American Chemistry Council (ACC), the American Forest & Paper Association (AF&PA), the American Iron and Steel Institute (AISI), and The Fertilizer Institute (TFI).
