Alluding to a recent New York Times op-ed by former Secretary of State George P. Shultz and Ted Halstead, the IECA letter states: “We disagree with those who say that staying in the agreement will spur investment and American competitiveness, create jobs, and ensure access to global markets.”
The IECA is skeptical of climate agreements in general, which typically fail to “provide a level playing field” and actually “create greater uncertainty” for energy intensive, trade exposed (IETE) U.S. firms. IECA President Paul N. Cicio explains:
All costs of reducing GHG [greenhouse gas] emissions, whether imposed on the electric generation sector or the oil and gas sectors, are eventually imposed upon us, the consumer. We are the ones who eventually bear the costs of government imposed GHG reduction schemes. At the same time, we are often already economically disadvantaged, as compared to global competitors who are subsidized or protected by their governments. . . .
IECA is wary of international climate agreements because the U.S. manufacturing sector competes globally, and because other countries do subsidize, and will continue to subsidize and provide advantages to their manufacturing sectors, regardless of any global climate agreements. And, importantly, because the U.S. government does not subsidize U.S. EITE industries, we can become non-competitive in the global marketplace. Global GHG reduction agreements may sound well-intentioned at the macro level, but at the micro level, where we reside, it can create significant uncertainty, risk, and job loss.
The Paris Agreement exemplifies such pitfalls. It will make U.S. manufacturers less competitive vis-à-vis their Chinese and Indian counterparts:
Furthermore, the U.S. commitment under the agreement is significantly more stringent than the commitments undertaken by some of our largest competitors in the global marketplace, many of whom, including China and India, essentially pledged to continue increasing their GHG emissions substantially for the foreseeable future. . . . China’s pledge under the Paris Climate Accord would allow it to actually increase GHG emissions by 117 percent by 2030 before they start reducing.
The IECA also objects to the mode by which President Obama purported to make the United States a party to the Agreement:
Any U.S. commitment to reduce GHG emissions under an international construct should only have been undertaken through the process prescribed in Article II, Section 2, Clause 2 of the Constitution. IECA believes that U.S. participation in any global agreement to reduce GHG emissions, whether such agreements are binding or not, should be submitted to the U.S. Senate for a vote of ratification. Our forefathers made it clear that the checks and balances between the Executive Branch and Congress are essential.
IECA member companies come from a diverse set of industries including chemical, plastics, steel, iron ore, aluminum, paper, food processing, fertilizer, insulation, glass, industrial gases, pharmaceutical, building products, automotive, brewing, independent oil refining, and cement. Lest anyone suppose IECA’s position on the Paris Agreement reflects a lack of commitment to energy efficiency, Mr. Cicio points out:
The manufacturing sector already has an incentive to reduce energy consumption and GHG emissions, it is called global competition. Global competition is relentless and requires EITE industries to reduce energy consumption to be competitive. If we are not globally competitive, we cease to exist. . . .
For a variety of reasons, including a dedication to energy efficiency and energy cost reductions to improve global competitiveness, today’s U.S. manufacturing sector’s GHG emissions are 26 percent below 1973 levels. The industrial sector is the only U.S. sector whose GHG emissions are below 1973 levels.
Learn more about the Paris Climate Agreement here.