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Industries Employing 4.1 Million Workers at Risk Under Climate Bill
Legislation Must Address Lack of Climate Regulations Abroad;
50-State Breakdown, Industry Breakdown
Washington – Industries employing more than 4 million workers could be at risk nationwide under climate change legislation now pending in the Senate unless lawmakers adopt and strengthen key provisions contained in the House version of the bill.
Legislation should include a steady and sufficient supply of emission allowances for energy-intensive, trade-sensitive industries to rebate the cost of compliance, as well as a border adjustment fee on the carbon content of goods from countries that fail to regulate greenhouse gases (GHGs) emitted in the production of goods, the Alliance for American Manufacturing (AAM) said in reaction to a new study, “Climate Change Policy,” released today by the Economic Policy Institute (EPI). The full report can be found at http://www.epi.org/publications/entry/bp241/.
“A well-designed climate policy can support the economic recovery, and green investments can support millions of new jobs, starting with the creation of over 1 million new jobs in the next two years,” the study concludes.
However, the EPI report strongly cautions that any economic recovery could be slowed and significant segments of U.S. manufacturing could suffer increased outsourcing if the climate legislation does not include a comprehensive program to avoid carbon and job leakage. It identifies the most vulnerable U.S. manufacturing industries in terms of carbon intensity, and details the extent of employment in these industries and their supply chains in each of the 50 states.
If the United States develops climate change policies that only apply to domestic companies without regard for their effects on trade, the report’s author, Robert E. Scott, predicts two bad outcomes:
“Production of energy-intensive manufactured goods, especially price-sensitive manufactured products that already face high levels of import competition, could rapidly be outsourced to countries like China and India that do not restrict Green House Gas (GHG) emissions. This could lead to job losses in manufacturing and related industries, and to a growing trade deficit.
“Worse yet, increased production of energy-intensive goods such as iron and steel, pulp and paper, basic chemicals and glass products in developing countries would be likely to increase net global GHG emissions,” a process known as carbon leakage.
The report highlights the significant impact of cap and trade policies that fail to address a lack of climate regulations abroad on energy-intensive, trade-sensitive manufacturing and related industries, which employ as many as 404,000 people in California and 425,000 in Texas. The jobs in industries potentially affected in Ohio, for example, represent nearly 3.7 percent of the state’s workforce.
AAM Executive Director Scott Paul said the report “shows that emission allowances, border adjustment and other competitiveness provisions are essential to achieving the goals of carbon emission reduction worldwide and job creation in America.”
“The stakes are simply too great, and the potential damage to the economy and environment too large, if we fail to adequately address the trade-related implications of climate change,” he said.
In June, the House of Representatives approved H.R. 2454, “The American Clean Energy and Security Act (ACES),” which would cap emissions of GHGs beginning in 2012 and seek to reduce them 17 percent by 2020, relative to emissions in the base year of 2005.
Ten key Democratic senators, led by Sen. Sherrod Brown of Ohio, recently signed a letter to President Obama calling for measures in any climate change legislation to ensure the U.S. domestic manufacturing base remains strong. Specifically, the senators called for “a package of initiatives, including a border adjustment mechanism, to ensure the viability and effectiveness of any climate change policy.”
Joining Brown in signing the letter were Sens. Evan Bayh (Ind.), Debbie Stabenow and Carl Levin of Michigan, Al Franken (Minn.), Bob Casey and Arlen Specter of Pennsylvania, Robert Byrd and Jay Rockefeller of West Virginia and Russ Feingold (Wis.).
The EPI report also cites potential job losses to businesses that employ as many as 2.9 million workers in the supply chains and service industries supported by manufacturing if legislation fails to include such a comprehensive package of initiatives.
AAM, a partnership of the nation’s major industrial companies and the United Steelworkers (USW), acknowledges a well-designed climate policy is capable of supporting the economic recovery and creating more than 1 million new jobs in a clean energy economy.
The impact on the steel industry would be especially acute. According to the American Iron and Steel Institute, the U.S. steel industry has become 33 percent more energy efficient since 1990. In contrast, the Chinese steel industry generates much more carbon per ton than the global average. Though it produces about half of the world’s steel, China nonetheless generates well greater than 50 percent of the carbon emitted by global steel production.
According to the International Iron and Steel Institute, Chinese steel production generates 2.5 tons of carbon per ton of steel, while U.S. steel production generates less than half as much—1.2 tons of carbon per ton of steel. And some industry sources estimate Chinese emissions are much higher, at around four or five tons. “Thus,” the EPI report projects, “if Chinese steel is substituted for U.S.-made steel on a ton-for-ton basis, global carbon emissions would rise if domestic production were simply displaced by Chinese production.”
The top 10 carbon-emitting industries in the United States account for 13.8 percent of the country’s carbon emissions, employ 1.2 million workers and support the jobs of nearly 3 million more in their supply chains and in services industries.
Manufacturing industries are desirable, among other reasons, because they historically have been the primary source of middle-class jobs with good wages and benefits, especially for workers without college degrees, who still comprise about 70 percent of the U.S. workforce.
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The Alliance for American Manufacturing is a unique non-partisan, non-profit partnership forged to strengthen manufacturing in the U.S. AAM brings together a select group of America’s leading manufacturers and the United Steelworkers to promote creative policy solutions on priorities such as international trade, energy security, health care, retirement security, currency manipulation, and other issues of mutual concern. For more information: www.americanmanufacturing.org.
