FEDERAL CLIMATE LEGISLATION SHOULD PROTECT AMERICAN COMPETITIVENESS AND REWARD PAST CLIMATE LEADERSHIP

Earlier this summer, the House of Representatives passed the American Clean Energy and Security (ACES) Act, HR 2454, a massive bill addressing energy efficiency, green energy, and climate change, the latter through a cap-and-trade proposal. The Senate currently is considering S 1733, the American Clean Energy Jobs and American Power Act (ACEJAPA), which is mostly focused on cap-and-trade. Earlier the Senate Energy and Natural Resources Committee marked up a separate energy bill.

Intel views climate change as an important environmental and social challenge and we support development of a Federal program to respond to that challenge. As part of that response, however, we believe Congress should bear in mind two important principles: First, in deciding how cap-and-trade allowances are to be allocated among industries and programs, attention should be paid to using a significant quantity of “free” allowances to help protect US industries that are subject to significant international competition and therefore might suffer a competitive disadvantage as their US costs increase under a cap and trade program while their foreign competitors face no similar climate programs or increased costs. The bills focus mostly on industries that are energy-intensive or greenhouse gas-intensive, even if they are not very trade-intensive. By contrast, industries like semiconductors that are less energy- or greenhouse gas-intensive but very trade exposed are not eligible for allowance allocations. As the second-leading export sector in the US, the semiconductor industry is very trade-exposed. Our competitors in Asia and Europe do not face the type of climate regulations and increased costs that a Federal cap-and-trade program will impose on the US semiconductor sector. That competitive disadvantage needs to be addressed by the Senate by establishing trade exposure as a standalone criterion for allowance allocations.

Both the House and Senate bills sensibly include provisions for crediting with allowances companies that have shown prior leadership by reducing their climate emissions in advance of any regulatory requirement. Intel has spent approximately $100 million over the last decade reducing our climate emissions as part of a program between the semiconductor industry and the USEPA. Other US semiconductor companies have made significant reductions as well. The current credit for early action proposals fail in two respects. They both provide only a very small amount of allowances for crediting early action and both have very narrow criteria for qualifying for allowances. The final legislation needs to provide a bigger “pot” of allowances for this purposes and the eligibility criteria need to be broadened to encompass programs like our industry has with USEPA.