Climate Bill: What's Hot? What's Not?

Margaret Kriz
June 9, 2009 - Late Friday (June 26), the House passed the Waxman-Markey energy and climate bill, which President Obama said would "open the door to a clean energy economy." Congressional supporters say the historic measure would control U.S. global warming pollution, promote the use of green sources of energy and expand the nation's electric grid. However, critics contend that the legislation will increase energy costs across the nation and hurt the economy, said Margaret Kriz, in the Energy & Environment segment of NationalJournal.com's blog.

What are the best parts of the package? What changes should the Senate consider? What kind of impact is the bill likely to have on the American economy? Did House leaders give up too much to the agriculture and other business interests? Should the bill include tariffs on imports from countries that fail to adopt climate-change policies? Kriz asks.

Donna Harman
In response, and on behalf of the paper and forest products industry, AF&PA's president and CEO, Donna Harman, responded with the following:

"Paper and wood products companies are energy intensive, trade-exposed manufacturers. Energy costs under a cap and trade system will inevitably go up and could potentially harm our global competitiveness. But, paper and wood products companies are also leaders in renewable energy production and utilization. On average we generate two-thirds of our own energy needs from carbon neutral renewable biomass — wood. Wood is also our primary raw material for manufacturing renewable and recyclable products for American consumers. AF&PA has worked hard to minimize the cost burdens of the House energy and climate bill while also maximizing opportunities for the industry to be recognized as a leader in renewable energy.

"The Renewable Electricity Standard in the House passed bill gives credit to the industryís renewable power, which will be essential to a robust supply of credits needed to make the RES function when it begins in 2012. It also ensures that the marketplace, not the federal government, is the determinant of winners and losers in the emerging biomass energy field by leveling the playing field between new and existing renewable energy producers.

"An area of the bill that still needs more work is allocations for energy intensive, trade-exposed industries, and the reliance on sector-wide energy efficiency averaging for determining their distribution. The forest products industry makes a far wider array of products than is generally understood — from recycled paper packaging to coated paper products for advertising to lumber and plywood — and energy requirements and emissions vary widely among products. Therefore, a facility-based allocation determination that is based on historical emissions would be more workable than one that tries to impose artificial commonalities on widely divergent products and manufacturing processes. Additionally, a larger number of allocations are needed for the energy intensive sector. Tariffs are not the answer to ensuring the global competitiveness of our industry, but adequate allocations will help.

"While the House billís definition of biomass has improved significantly from initial drafts, further improvements are worth pursuing to ensure that wood harvested for biomass energy is done according to the same kinds of sustainable forest management practices which are considered best practices in the forest products industry.

"Going forward, the Senate should work to address these and other issues that will ensure a strong U.S. manufacturing base to lead the way in the development of breakthrough carbon reduction and storage technologies. Economic prosperity makes environmental improvements possible and thoughtful legislation by policymakers willing to listen to all stakeholders is the firstóbut most importantóstep to achieving these goals."


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