EPRINC Study Shows Large Job Losses and Refinery Closings from Cap and Trade Legislation
EPRINC has released an economic assessment of the consequences to the domestic refining industry of the American Clean Energy and Security Act (ACES), H.R. 2454, also known as the Waxman - Markey (W-M) energy and climate bill. The purpose of Waxman – Markey is to curtail GHG emissions through a cap-and-trade program, but the legislation will instead create large incentives to move away from domestically produced fuels and replace them with imported fuels.
Washington, DC (PRWEB) November 4, 2009 -- The study shows that as the U.S. enters a period of low growth in gasoline consumption, the combination of new global refining centers and the rising costs imposed by the legislation will distort the competitive position of domestic refiners and could idle and bring permanent closure to as much as 8 million barrels per day (mb/d) of the nation’s 17.5 mb/d of domestic refining capacity. Direct and indirect job losses could rise to 400,000 across the 2015-2030 forecast period.
Capacity at Risk Due to Sub-100% Pass-Through of Product Emission Costs
Rising production costs resulting from stationary emission allowance costs (emissions released at the refinery during the refining process) could idle or shut 1 mb/d – 5 mb/d of capacity in a scenario where allowance costs vary between $15 to $30 per metric ton of CO2. Although importers of fuels into the U.S. will also have to purchase allowances for the GHG emissions that will be released by combustion of the fuels they sell, imported fuels will not include a cost for stationary emissions at refinery sites.
Refiners have been allotted 2.25% of the free allowance pool between 2014 and 2026, however this amount covers less than half of refiners’ stationary emissions and no portion of their product emissions. In addition, as the refined products market experiences a large surplus of worldwide capacity, U.S. refiners will be unable to fully pass through the cost of allowances, over $30 billion annually at an allowance price of just $15 per ton of CO2. Pass-through rates slightly below full pass-through, even 80% - 90%, will place U.S. refiners at a severe competitive disadvantage.
Lucian Pugliaresi, EPRINC’s President said, “It should be noted that under the European Union’s cap-and-trade program refiners have been deemed vulnerable to international competition and the EU is working to alleviate refiners’ allowance cost burden, while under the Waxman-Markey bill the U.S. refining industry is specifically excluded from receiving additional allowances set aside for trade vulnerable industries.”
An executive summary of the report can be downloaded at EPRINC’s website at http://www.eprinc.org/pdf/exec-refiningindustry-waxmanmarkey.pdf
The full report will be available on EPRINC’s website this week at http://www.eprinc.org/pdf/refiningindustry-waxmanmarkey.pdf
About the Energy Policy Research Foundation, Inc. (EPRINC)
EPRINC was incorporated in 1944 in New York and is a not-for-profit organization that studies energy economics with special emphasis on oil. It moved from New York to Washington, D.C. in 2007. It is known internationally for providing objective analysis of energy issues. EPRINC researches and publishes reports on all aspects of the petroleum industry which are made available free of charge to all interested organizations and individuals. It also provides analysis for quotation and background information to the media. EPRINC has been called on to testify before every session of Congress in the last decade. The Foundation briefs government officials, public groups, legislators, and provides written background materials on request. EPRINC does not speak for the industry or any of its segments.
Views expressed in publications, interviews and testimony result from the Foundation’s own analysis and are not meant in any way to represent a consensus of industry views. EPRINC’s supporters recognize the importance of a credible, authoritative and impartial organization that can help industry and government officials, the media, and the general public better understand the petroleum industry and the markets in which it operates.
EPRINC publications are available for free on the foundation’s website: http://eprinc.org/publications.html
###
Post Comment:
Trackback URL: http://www.prweb.com/pingpr.php/VGhpci1TcXVhLVRoaXItU2luZy1FbXB0LVBpZ2ctWmVybw==
Bookmark -
Del.icio.us |
Furl It |
Technorati |
Ask |
MyWeb |
Propeller |
Live Bookmarks |
Newsvine |
TailRank |
Reddit |
Slashdot |
Digg |
Stumbleupon |
Google Bookmarks |
Sphere |
Blink It |
Spurl
|
