Economic Health of Manufacturing Rides on US Senate's EPA Vote

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As a follow-up to our previous discussion about recent developments in carbon capture technology in the steel industry, we turn to the policy side of things by looking at the battle between Congress and the Environmental Protection Agency (EPA). The battle boils down to major sides (although of course there are others as well, including subgroups of the following): the environmentalists and the business community. The vote is scheduled to take place today.

According to The Hill, Senate minority leader Mitch McConnell introduced an amendment that would permanently block the EPA from regulating greenhouse gas emissions. Sen. Jay Rockefeller, a Democrat from Virginia, proposed to delay the EPA’s climate regulations for two years. Finally, Sen. Max Baucus proposed a concessionary amendment that would prevent farms and other small businesses from costs of compliance, but some say that’s won’t be the effect at all. Cap and trade failed in Congress, so why shouldn’t these amendments?

Simply because both Republicans and Democrats will be hard-pressed not to side with business interests on this one in light of high unemployment and stagnant growth. This is especially true for the 14 senators who face uncertain re-election, especially the Democratic ones. As the Wall Street Journal put it, “The question for Democrats is whether their loyalties to President Obama and EPA chief Lisa Jackson trump the larger economic good, not to mention constituents already facing far higher energy costs. Concern that the amendments will die in the Democratic-majority Senate, however, is uncharacteristically low for this one. According to the WSJ, McConnell may have the 13 Democratic votes he needs to get the requisite 60.

Back to “Environment Vs. Business, the League of Conservation Voters put out a poll showing that 63 percent of voters in Michigan, Ohio and Pennsylvania prefer the EPA to set greenhouse gas standards for industry. On the other side, the National Association for Manufacturers (NAM), among others, clearly has a vested interest in keeping compliance with existing and new emissions rules at a minimum, as their television announcement below, for viewers in Michigan, makes clear:

[youtube]http://www.youtube.com/watch?v=cu59vjXOr4k&feature=player_embedded[/youtube]

Source: NAM

Straddling the middle, as I often do, it’s clear that both sides cannot nor should they get absolutely everything they want. Should McConnell’s amendment win out? I don’t think so; even though new, overly strict EPA rules may be counterproductive, there should be some semblance of third-party oversight. Is the Baucus counter-amendment a shameless political ploy? Of course; the broad reach of the EPA likely should be scaled down. But should steelmakers and other manufacturers have financial incentives to do what they can to keep our drinking water clean and air less harmless than it was pre-1970 while keeping production efficient? Yes.

We’ll just have to see how this one plays out.

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