climate change
US president Barack Obama’s radical plans for
tough new controls on emissions are causing
deep concern within the country’s chemical
industry, writes Sean Milmo of ICIS
Within two months of his inauguration,
US president Barack Obama
took a radically different stance to
his predecessor on global warming
by announcing plans to introduce
strict curbs on CO ² emissions.
The move considerably raises
hopes of an agreement among
world leaders at the United Nations
Climate Change Conference
in Copenhagen, Denmark,
in December. The meeting is
scheduled to thrash out a deal on a
successor to the Kyoto Protocol on
global warming which the US failed
to ratify.
However, the Obama
administration’s plans for tough
controls on emissions has aroused
deep concerns in the US chemical
industry, which fears it will push
up costs and lead to the energyintensive
manufacture of some
chemicals moving out of the
country.
In his budget statement in early
March, the president revealed
plans for an emissions reduction
programme which would aim to
cut greenhouse gas emissions 14%
below 2005 levels by 2020 and 83%
below 2005 levels by 2050.
The programme will be
implemented through a cap-andtrade
scheme, similar to the fouryear-old
emissions trading system
(ETS) of the European Union but
with the difference that there will
be a 100% auction of all emission
credit. The EU aims to introduce
an auctioning system for its ETS
allowances but with exemptions for
energy-intensive industries such as
chemicals, steel and cement.
The US budget statement says
the 100% auction is necessary to
‘ensure that the biggest polluters do
not enjoy windfall profits’.
Revenues from the auctions
will help to fund investments of
US$150bn in clean energy over 10
years from 2012, including help to
businesses wanting to switch to lowcarbon
energy.
‘It’s vital that any cap-andtrade
programme calls for the free
distribution of emission credits
to energy-intensive industries so
long as US manufacturers are at
a competitive disadvantage,’ says
Cal Dooley, chief executive of
the American Chemistry Council
(ACC), the US chemical industry’s
trade association.
‘Free distribution of credits under
such circumstances could help
avoid emission leakage, unintended
increases in global greenhouse
gas emissions and erosion in US
competitiveness and jobs.
‘A proposal like the one in the
Administration’s budget would
impose more than US$7bn in new
costs on the business of chemistry
� The 100% auction is
necessary to ensure the
biggest polluters do not
enjoy windfall profits
strategic issues US ready to act on
in the US in year one,’ Dooley
continues. ‘Over the 10-year period,
the total costs would be US$68.7bn.
These costs could drive some
chemistry production offshore to
more carbon-intensive economies.’
Officials in the Obama
administration are hoping that
legislation on a cap-and-trade
scheme can be approved by
Congress before the Copenhagen
conference. But political analysts
reckon the idea would not at the
moment obtain the 60 out of 100
votes needed in the Senate.
The biggest concern among
28 Prepared for APIC 2009 by The Chemical Daily and ICIS
REUTERS/LARRY DOWNING
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