Energy Consumer Industries Look for Alternatives Under Climate Policy Regulations

Four industries – iron and steel, aluminum, paper and pulp, and chemicals – account for nearly half of the energy consumed by U.S. manufacturing industries and over 10 percent of total U.S. energy consumption, making them highly vulnerable to volatile energy prices. Millennium Institute and High Road Strategies collaborated on three connected study commissioned by the National Commission on Energy Policy, the Environmental Defense Fund and AFL-CIO Working for America Institute (WAI) and developed with support from industry association organizations, to examine how increased energy prices associated with comprehensive and mandatory cap-and-trade climate policy proposals currently being considered by the U.S. Congress would affect the competitiveness of these industries in the long term. The studies also examined the industries’ capabilities and opportunities to mitigate adverse cost impacts and improve their economic performance under different climate policy scenarios.

In short, the findings strongly suggest that over the long-run, technologies are available to enable energy-intensive industries to achieve sufficient efficiency gains to offset and manage the additional energy costs arising from a climate policy. However, the authors also strongly believe that the industries analyzed will need additional measures that both mitigate these cost impacts in the short-to-medium term, and policies that encourage and facilitate the transition of energy-reliant companies to a low-carbon future, while enhancing their competitiveness in global markets.

Findings of these studies being circulated starting from Aril 2009 are substantially contributing to the debate on the introduction of climate regulations, both in the US and abroad.

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