Tuesday, March 24, 2009

Trade and the environment in action

How does the environment impact on trade? Another article that justifies this blogs existence.

The US steel industry "would say that wouldn't they".

It is interesting to note that US steel claim that "greening" their industry adds to significantly higher production costs. Is this via pollution abatement operating costs (PAOC) and pollution abatement capital expenditure (PAVE). The distinction as all good economists would know is crucial.

The Chinese counter-argument is correct though. Hence why a political solution to climate change is a long way off.

U.S. Big Steel pushes for carbon fees on China [Reuters]

NEW YORK (Reuters) - China's steel industry should face fees on its exports into the United States if Washington adopts greenhouse gas cuts and Beijing does not, U.S. steel industry officials and advocates said.

As President Barack Obama begins to form plants to regulate greenhouse gases, U.S. steelmakers are nervous they will lose market share if rapidly developing steelmaking countries, like China and India, do not commit to similar emissions goals.

U.S. steelmakers say they have already invested far more in pollution control on pollutants like particulates and components of acid rain, sharply boosting production costs.

"Chinese steelmakers enjoy an unfair advantage in global trade due to the lack of enforcement of exceptionally weak pollution standards," Scott Paul, the executive director of the Alliance for American Manufacturing, told reporters in a teleconference.

Paul said Chinese steelmaking emits two to three times as much carbon dioxide, the main greenhouse gas, as U.S. industry does. Also, U.S. steel production has fallen during the global recession, while China's has held mostly steady.

Terry Straub, a senior vice president at U.S. Steel Corp, said the industry hopes the U.S. Congress does not rush greenhouse gas legislation without considering how the rest of the world will cut emissions.

"Let's take the time to do this right and not do it in a hasty fashion and end up with a disaster on our hands," Straub said.

He suggested leveling the playing field by putting carbon fees on imports of steel to the United States from any country that does not regulate greenhouse gas regulations.

U.S. Energy Secretary Steven Chu has said that if other countries do not impose a cost on carbon emissions once Washington does, the United States would be at a disadvantage. The tax idea on imports was just one proposal the Obama administration should evaluate, he said.

Xie Zhenhua, head of China's Climate Change and Coordinating Committee, during a visit to Washington last week rejected as protectionist the idea of tariffs on countries that do not place a price on carbon dioxide emissions.

Chinese climate officials have said countries that buy Chinese goods should be held responsible for the CO2 emitted by the factories that make them in any global plan to reduce greenhouse gases.

The debate comes as representatives from nearly 200 countries plan to meet in Copenhagen late this year in an attempt to agree a new global climate treaty. China recently surpassed the United States as the world's top emitter of planet-warming gases.

The United States never ratified the Kyoto Protocol, which runs out in 2012, in part because big developing countries like China were not required to cut emissions.


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