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US Steelmakers Say Senate Climate Change Bill Is Unacceptable

DOW JONES NEWSWIRES

U.S. steelmakers warned Tuesday that the Senate's revised climate change bill would lead to further erosion of America's manufacturing base unless significant changes were made before it was enacted.

"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," said Thomas Gibson, president of the American Iron and Steel Institute, in a statement.

After months of delays, Democratic Sens. Barbara Boxer of California and John Kerry of Massachusetts unveiled Friday a more detailed version of their climate legislation. The version of the bill, which would seek to cut greenhouse-gas emissions by 20% below 2005 levels by 2020, includes new provisions intended to hold down costs to consumers and certain industries.

Democratic Sens. Arlen Specter of Pennsylvania and Amy Klobuchar of Minnesota have worked to increase the percentage of allowances available to energy- intensive industries in the first two years of the cap-and-trade emissions program and for creating an allowance reserve for intensive energy industries, but Gibson said it wasn't enough.

Steelmakers would still face stiff competition from their peers who produce steel in countries where environmental rules are less stringent; U.S. steelmakers would face a barrage of cheap imports as a result, he added. Furthermore, the cap-and-trade emissions program would lead to higher energy costs for steelmakers since utilities and energy companies are likely to pass on the additional emission costs to their customers.

"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" House of Representatives bill.

He said much more work needs to be done to make the bill acceptable.

"If we don't get climate legislation right, the economic burden would be borne by American manufacturers and American workers," Gibson said.

The cap-and-trade provisions of the House climate bill would cut the nation's gross domestic product by as much as 0.75% by 2020 and between 1% and 3.5% by 2050 and lead to substantial job losses in energy-intensive industries, the AISI said, citing comments from Congressional Budget Office Director Douglas Elmendorf who testified before the Senate Energy and Natural Resource Committee.

AISI's members represent about 75% of U.S. and North American steel capacity and include steelmakers such as the US Steel Corp (X) and Nucor Corp. (NUE).

Company Web Site: http://www.steel.org

-By Alex MacDonald, Dow Jones Newswires; 44 20 7842 9328; alex.macdonald@ dowjones.com

(Ian Talley in Washington contributed to this story.)

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  10-27-091646ET
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