Jul/Aug 2005 │ The Aluminum Association │
U.S. Senate Moves on Energy Legislation
The Senate has voted for a national energy bill that would focus on tax breaks and boosting domestic oil and natural gas production via incentives, renewable energy, nuclear power and conservation. The Senate called publicly for the first time for mandatory limits on emissions of carbon dioxide and other greenhouse gases linked to global warming, although the resolution is not binding on the Bush administration, which opposes mandatory controls.
The House approved in April its version of a bill that would provide incentives for traditional energy production. The House bill also included a provision for protection from MTBE lawsuits for manufacturers of the gasoline additive methyl tertiary-butyl ether, which was the issue over which the Senate blocked passage of 2003 energy legislation—after the House insisted on its inclusion. The latest Senate bill is more favorable to conservation, wind farms and ethanol and less to oil and gas producers.
Thetwo bills differ on the size and beneficiaries of tax breaks. The Senate version calls for $18 billion in tax breaks over 10 years, which is partially offset by about $4 billion in projected revenue. The House tax breaks total $8 billion over 10 years. The Bush administration sought $6.7 billion in new energy tax breaks.
The Senate legislation gives authority to federal regulators to approve terminals to receive liquefied natural gas imports, suggesting more terminals may be constructed by limiting state challenges. The bill also seeks to encourage nuclear power construction using a combination of incentives. To improve the reliability of the electrical grid, the bill calls for mandatory and enforceable rules for utilities. Currently, those regulations are voluntary. The bill also gives the federal government new authority in approving the location of electrical transmission lines.
President Bush has asked Congress to resolve differences and send him a final bill by August, but the two chambers will have to resolve MTBE and other issues that will complicate negotiations. Bush has sought national energy legislation since 2001, but two conferences failed to reach agreement.
Bush said the Senate bill "will help our economic growth by addressing the root causes of high energy prices and reducing our dependence on foreign sources of energy."
Energy costs comprise about one third of the production costs of primary aluminum, and electricity is essential to primary aluminum production. These factors make energy efficiency and energy management prime objectives for the aluminum industry. The industry is a large consumer of natural gas and electricity, with annual expenditures for electricity alone of over $2 billion. The industry supports legislation that helps consumers and industrial customers achieve access to affordable, reliable energy.
Senate Votes for CAFTA Trade Agreement
Senate Votes for CAFTA Trade Agreement The Senate also passed the Central America Free Trade Agreement. The Bush administration now turns to the House to produce a free trade agreement it says will promote democracy in the region and open markets to American business. The House is expected to vote in July.
CAFTA would further open a market of 44 million people by eliminating trade barriers to U.S. manufactured and farm goods, protecting trademarks and other intellectual property and establishing legal frameworks for U.S. investment. Last year the region purchased about $15 billion worth of U.S. goods.
International trade is vital to the health of the aluminum industry, and the industry has generated success both at home and abroad. The members of the Aluminum Association are fully committed to a fair and open world market for aluminum.
The Association strongly supports the initiation of global trade negotiations in the WTO, as well as a comprehensive approach to the phased-in reduction and elimination of tariffs over a multi-year period, not to exceed 10 years. It supports participation by all aluminum producing, importing and exporting countries in the WTO Round, and that no country be required to reduce or eliminate its tariffs on a unilateral basis.
