First, the steel industry congratulates Chairman Waxman on his new role; we look forward to working with him. We also thank Rep. Dingell for his service and leadership as Chairman of the House Committee on Energy and Commerce. His policies reflected common sense, encouraged the development of green technologies and an expanded energy supply, and supported American workers and jobs.
Based on developments over the past few weeks that included Chairman Waxman’s election as well as significant new statements issued from President-Elect Obama and EPW Chairwoman Boxer, it is clear that the starting point for the legislative debate has shifted. There appears to be an emerging general alignment among these three key policy-makers in terms of setting targets, timetables and some of key design features such as a preference for auctioning over a phased allocation. This is significant movement from where we ended the policy discussion this year.
We look forward to working with these leaders and others on the climate change issue. The question remains how climate policy will treat manufacturers like steel, who have reduced energy use and CO2 emissions to world class levels over the past twenty years, and who compete globally with manufacturers in other countries that are, in some cases, less efficient. Our industry favors global sectoral agreements as a means of reducing CO2 emissions globally while not altering the global market place. We look forward to exploring these methods with Chairman Waxman.

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As a $664 billion industry employing nearly 900,000 Americans and closely tied to the rest of the U.S. economy, the business of chemistry is keenly interested in key issues facing the Committee, including energy, climate and chemical management. These are not partisan policy matters – these are policies that are fundamental to a healthy economy, plentiful U.S. jobs, and investment in the tools needed to solve critical global challenges. For example, sound energy, climate and chemical management policies can help boost development and deployment of clean energy sources and technologies, improve energy efficiency, reduce greenhouse gas emissions, make our manufacturing sector more globally competitive, and drive economic recovery and growth.

The solution to these critical policy challenges requires the engagement and collaboration of diverse interests committed to advancing the nation's common interests. We are mindful of the complexity of these issues. We look forward to working with Chairman Waxman and other committee members to develop policies that enhance consumer safety and the environment while maintaining the competitiveness of the U.S. chemistry industry.

The business of chemistry supports energy efficiency and conservation. We make many of the products that contribute to those goals. We also recognize a clear need for domestic energy production, particularly reliable access to domestic supplies of energy. Access to U.S. supplies of offshore natural gas will play a crucial role in the transition to a lower-carbon economy anticipated under a climate policy, which only highlights the need to get our Nation’s energy policy right.

Congress may take up legislation to modify the federal chemical management system. We believe that any changes to the system should protect health and the environment and assure that the government has the necessary information to make effective decisions on chemicals. We look forward to working with Congress as those modifications are considered.

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Disincentives to develop new technologies.

In the final entry to my four-part explication of the negative repercussions that will result from the Obama administration’s adoption of the Gang 31’s proposals, (See blogs November 17, 19, and 20) I will briefly discuss the disincentives to the development of new technologies that will inevitably stifle progress and hinder development. To see what makes this outcome highly likely, we need to look at the broader activities of the environmental groups that will ensure that the energy technologies of the future will be even less likely to actually be developed. Specifically, many environmental groups and developing nations are leading the charge to force the developed world and the owners of the intellectual property rights to the technology to allow access to these new technologies for free, or at such a substantially reduced licensing fee such that there would be little incentive to develop much needed technologies.

It has been repeatedly proven, in energy and other sectors, that a lack of protection for intellectual property rights acts as a disincentive to further research and development. A balance must therefore be achieved between patents and developing nation access to climate-related technologies to facilitate technology transfer to developing nations. These groups are simultaneously asking the U.S. to re-engineer its economy to address climate change while also demanding that the U.S. and other developed countries give away any real economic value such re-engineering would generate.

Addressing climate change should be about providing a structure that develops and deploys the technologies that will reduce CO2 concentrations in the atmosphere while at the same time providing the new sources of energy to run the economies of the world. The Gang of 21’s proposal coupled with the environmentalists’ demand for the free transfer of intellectual property to developing countries is a prescription of energy, environmental and regulatory chaos.

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I suspect that any cap-and-trade legislation that gets out of committee will be more aggressive than that from a Dingell-led committee. Therefore, it will have a tougher time passing.

The short answer is: too soon to tell.

Major energy and environmental legislation only passes with significant bipartisan support. Perhaps this is no longer true, but I think it remains the case. Regional and sectoral issues are too important for partisan approaches to succeed. Chairman Dingell understands this. He helped shepherd into law the last major Clean Air Act Amendments in 1990, as well as the Energy Policy Act of 1992 and the Energy Policy Act of 2005.

If the objective is a new law rather than partisan stalemate, Chairman Waxman will have to build bipartisan consensus, keeping in mind not only the perspectives of his home state, but those of the red and purple states. He is eminently capable of doing this, but will he?