Industry fights emissions bill

Copyright 2006 Business Press
Business Press (San Bernardino, California)

Distributed by McClatchy-Tribune News Service

August 14, 2006 Monday

SECTION: BUSINESS AND FINANCIAL NEWS

ACC-NO: 20060814-BP-EMISSIONS-20060814

LENGTH: 978 words

HEADLINE: Industry fights emissions bill

BYLINE: Corey Washington, The Business Press, San Bernardino, Calif.

BODY:


Aug. 14--Inland Empire manufacturers are joining statewide efforts to defeat proposed legislation that would limit greenhouse gas emissions, which they claim would ramp up production costs.

AB 32, authored by Assembly Speaker Fabian Nuñez, D-Los Angeles, and Assemblywoman Fran Pavley, D-Agoura Hills, would reduce carbon dioxide emissions, believed to be a contributing factor in global warming. The legislation, also called the Global Warming Solutions Act, is similar to the Kyoto Accord, an international treaty that places limits on greenhouse gas emissions among companies in more than 163 countries. The state would become the first in the U.S. to adopt such a measure. .

The Global Warming Solutions Act would require greenhouse emissions decrease to 1990 levels by 2020, or more than 16 percent, according to data from the U.S. Bureau of Economic Analysis.

AB 32 was passed by the state Assembly April 11 and the state Senate Environmental Quality Committee approved the bill June 26. The bill requires approval by the full Senate and Gov. Schwarzenegger.

Schwarzenegger has advocated measures to reduce carbon dioxide emissions. Last year, Schwarzenegger signed an executive order to set targets to reduce greenhouse gas emissions to 2000 levels by 2010 and 1990 levels by 2020, similar to AB 32.

Manufacturers are concerned the passage of AB 32 would jack up energy costs and equipment expenses that control or monitor their greenhouse gas emissions.

California Steel Industries in Fontana, a steel-products manufacturer, believes the company "embraces" environmental concerns and takes sufficient measures to control any emissions its facility produces, said Brett Guge, vice president of administration. However, AB 32 has not "scientifically proven" any standards the state adopts would actually curb global warming, he said.

"We're constantly monitoring everything from an environmental standpoint," Guge said.

"At this time, there is nothing that limits us or requires any reporting. We are [only] required to report fuel consumption, which can be converted into greenhouse gas emissions," with the South Coast Air Quality Management District, Guge said.

The immediate impact of AB 32 is exorbitant energy costs that support the facility's production, Guge said. The bill could cut into the company's profits and significantly affect its employee profit sharing program, he said.

Though Guge is convinced AB 32 could harm California Steel Industries' finances, the company has not performed any cost analysis, he said.

If greenhouse gases "are the cause of global warming, I think a lot of manufacturers would say we need to do something about it, but that has not been the case. One state going in alone doesn't change anything because the manufacturers will move into another state--you've just reduced jobs in California," Guge said.

Guge does not foresee California Steel Industries shifting its operations to another state.

"We will do the right thing. It is just that the right thing hasn't been defined," Guge said.

The California Manufacturers and Technology Association in Sacramento believes AB 32 threatens an industry that generates $250 billion a year in revenue and provides about 1.5 million jobs.

The association believes a thorough study should be compiled and presented before AB 32 is accepted, said Gino Dicaro, spokesman for the California Manufacturers and Technology Association.

"California is the most efficient industrialized state. [AB 32] shouldn't start in California only, it should start as a national policy to reduce the country's greenhouse gases. If California does anything on its own, there should be an economic safety valve to look at the data after one or two years to see what actual efficiencies we're gaining and how many jobs we're losing. If we do that, we'll be protected from a situation where we gain nothing for limited reductions in global warming," Dicaro said.

The state produced the lowest greenhouse gas emissions among industrialized states in 2000, averaging 10.7 tons per capita, according to the Bureau of Economic Analysis. Indiana produced the highest rate of greenhouse gas emissions with 38.5 tons per capita.

AB 32 would fail to reduce global warming because many other states would not adopt a measure that targets an entire industry and disrupt their economy, Dicaro said.

"There are many arguments out there on both sides of the equation and we're not about to debunk the idea [greenhouse gases] are contributing to global warming," he said.

The Natural Resources Defense Council in New York supports AB 32 and has sponsored the bill since its inception, said Craig Noble, a spokesman at the organization's San Francisco office.

Noble considers manufacturers' fear of losing profits because of AB 32 to be an exaggeration.

Passage of the Global Warming Solutions Act would generate revenue for the state, creating new businesses that are "clean high-tech" and assist existing businesses, Noble claims.

The Climate Action Team, an environmentalists group in Sacramento, compiled a report that suggests the state would gain $4 billion and create 83,000 new jobs if AB 32 could reduce emissions to 1990 levels by 2020. The findings were supported by a similar, independent study compiled by University of California at Berkeley.

" In most cases, [environmental initiatives] end up being economic drivers. With AB 32, we expect that if it becomes law, it will spur market change," Noble said.

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