Monday, March 23, 2009

House Hearing On Avoiding Job Losses With Climate Change Bills

Mar 18: The House Energy and Commerce Committee, Subcommittee on Energy and Environment, Chaired by Representative Ed Markey (D-MA) held a hearing titled, “Competitiveness and Climate Policy: Avoiding Job Losses and Global Warming Progress in International Business Competition.” The hearing addressed potential domestic legislative provisions to prevent the loss of jobs and carbon emission reductions from the United States to countries that do not take similar action to curb heat-trapping carbon pollution.

Witnesses testifying at the hearing included representatives from the: Energy Intensive Manufacturers Working Group on Greenhouse Gas Regulation; American Electric Power; Pew Center on Global Climate Change; Resources for the Future; Industrial Energy Consumers of America; and American Council for Capital Formation.

In an opening statement Chairman Markey said, "Global warming does not recognize national borders. CO2 emitted in California has the same warming effect as CO2 emitted in China, Europe, or India. Rising sea levels threaten millions of people across the globe, in places as far apart as Bangladesh, Boston and Shanghai. Global warming highlights that we are, in fact, 'one world.' And just as we are connected environmentally, so too are we connected economically. The actions we take in the United States to curb global warming pollution and create jobs cannot stand alone."

Markey said, "Once you drill down on the facts it's clear that a relatively small number of industry sectors are highly energy-intensive and directly vulnerable to international competitive effects brought about by carbon limits. Those industry sectors include iron and steel, aluminum, cement, glass, paper and pulp, and basic chemicals. . . These important industrial sectors interestingly constituted a little more than 3 percent of America's gross domestic output in 2005 and accounted for less than 2 percent of our jobs."

To avoid shipping jobs or emissions overseas, one suggestion is requiring that energy intensive products imported into the United States be accompanied by some kind of fee or surcharge, unless the product comes from a country with carbon pollution limits. Thus, putting imported, carbon-intensive products on the same footing as American made goods and thus "level the playing field." American Electric Power testified on the tariff/allowance proposal the company co-authored with the International Brotherhood of Electrical Workers.

Another way of dealing with potential competitive effects is to take some of the allowance values from the carbon market and give them to the "trade exposed" industry sectors to aid in their transition to a low-carbon economy. The Energy Intensive Manufacturers Working Group testified in support of such an approach. Markey said, "Finally, we should remember that in order to stop global warming, it will be necessary for virtually all countries, particularly industrialized countries, to limit their emissions of carbon pollution."

Ranking Member Fred Upton (R-MI) submitted a letter from former U.S. Trade Representative Susan Schwab which indicated, “we have serious concerns… particularly the enthusiasm for using import provisions that might be perceived as unilateral trade restrictions directed against other countries to push them to move rapidly to reduce their emissions of greenhouse gasses. This approach… will take us down a dangerous path and adversely affect US manufacturing, farmers, and consumers… and even [cause] an all-out trade war where no one wins and everyone loses.”

Upton said, "What happens to our National Security when we don’t manufacture anything? What happens when we need to order all of our steel and aluminum from China? If we take the wrong legislative path dealing with climate change; we run the real risk of permanently destroying our manufacturing and defense supply chains. In times of crisis, we will be helpless, at the mercy of others. . . By design, a cap and trade scheme works by adding to the cost of energy and through that an increase in production costs for energy intensive industries and manufacturing. There are cost containment mechanisms that will be discussed this morning that may help mitigate some of the increases, but at the end of the day, they won’t be enough to save these jobs. And when factories move overseas, the environment is worse for it. . ." Upton said that American steelmakers emit 1.2 tons of greenhouse gases (GHG) per ton of steel compared to Chinese steel emissions estimated to be in the neighborhood of 4 to 5 tons of GHG per ton of steel.

He continued further stating that, "To reach the lofty goal of 80% [GHG] reduction, emissions from the entire transportation sector would have to drop to zero; emissions from all electricity generation would have to drop to zero; and then we’d need to reduce the remainder by 50%. Think about the industries and jobs we’d have to lose to meet those goals. Can America remain a power on the world stage if we shed these industries? Can our economy recover without those jobs?"

The Markey Energy and Environment Subcommittee has also held additional hearings in recent weeks on various aspects of climate change legislation including: The Role of Offsets in Climate Legislation (March 5); The Future of Coal Under Climate Legislation (March 10); and Consumer Protection Provisions in Climate Legislation (March 12).

Access the hearing website and link to all testimony and a webcast (
click here). Access an overveiw and opening statement from Representative Markey (click here). Access the opening statement from Representative Upton (click here). Access links to the recent Energy and Environment Subcommittee hearings (click here). [*Climate]