Steel Industry Says Boxer-Kerry Climate Bill Needs Significant Improvement to Avoid Crippling Domestic Manufacturing

WASHINGTON, D.C., October 27, 2009 – The American Iron and Steel Institute (AISI) said the revised Boxer-Kerry climate bill will still require significant improvements to address competitiveness issues facing the steel industry and other energy-intensive, trade-exposed industries, which if enacted unchanged, would lead to further erosion in America’s manufacturing base.

“We do want to thank Senators Specter (D-PA) and Klobuchar (D-MN) for working to increase the percentage of allowances available in the first two years and for creating an allowance reserve for energy-intensive industries,” Thomas J. Gibson, president and CEO, AISI, said.  “Overall, however, we find the major problems with the House bill remain in the latest Senate version,” Gibson said. 

“Unless the Senate makes important modifications in the areas of emission allowances, energy cost impacts and border adjustment, U.S. steelmakers and our workers will be at a significant competitive disadvantage in the global marketplace, which will result in extensive job loss and emission migration to overseas markets.”   Gibson said this perspective is supported by theCongressional Budget Office’s recent analysis which reveals that a cap-and-trade system of pollution credits would slow the nation’s economic growth over the next several decades, creating significant job losses in the manufacturing sector.    

 “The Senate’s revised Boxer-Kerry bill does not contain sufficient allowances to address the costs associated with emissions that our industry would face under the bill,” Gibson said.  “In fact, the Senate bill provides fewer allowances than in the Waxman-Markey bill, which was itself insufficient from our standpoint and directed at only one of many costs impacting competitiveness—the cost of emissions.    Importantly, the Boxer-Kerry bill also lacks the provisions to deal adequately with the significant increase in energy costs that will occur, adversely impacting energy-intensive, trade-vulnerable industries, such as steel.”

“In addition, the bill does not contain a meaningful border adjustment mechanism and therefore would, without a doubt, be inadequate to ensure that the new costs placed on steel and other trade-sensitive manufacturers would also be borne by competing energy-intensive imports.  This would lead to the substitution of imported products, from higher CO2 emitting facilities abroad, for domestic production – undermining both the environmental objective of the bill and the competitiveness of U.S. products.  We recognize that this issue falls outside the jurisdiction of the EPW Committee, but nevertheless it is an essential component of climate policy that must be addressed by the Senate.”

CBO Director Douglas W. Elmendorf testified recently before the Senate Energy and Natural Resources Committee that the cap-and-trade provisions of the House climate bill would cut the nation's gross domestic product by as much as .75 percent by 2020 and between 1 and 3.5 percent by 2050, significant economic reductions that would result in substantial job losses in energy-intensive industries.

“Clearly, much more needs to be done to make this bill acceptable, and we will be working to address these issues with those Senators who have expressed their commitment to ensuring a level playing field for American manufacturing.  If we don’t get climate legislation right, the economic burden would be borne by American manufacturers and American workers,” Gibson said.

AISI serves as the voice of the North American steel industry in the public policy arena and advances the case for steel in the marketplace as the material of choice.  AISI plays a lead role in the development and application of new steels and steelmaking technology.  AISI is comprised of 24 member companies, including integrated and electric furnace steelmakers, and 138 associate and affiliate members who are suppliers to or customers of the steel industry.  AISI's member companies represent over 75 percent of both U.S. and North American steel capacity.  For more news about steel and its applications, view AISI’s Web site at www.steel.org.

Contact:
Nancy Gravatt
Vice President, Communications
American Iron and Steel Institute
Tel: 202.452.7115