Sep/Oct 2005 │ The Aluminum Association │
Aluminum Industry Voices on Energy, Transportation and Trade Policies
This year’s Washington policy activity is likely to have a noticeable influence on the aluminum industry and the markets its serves for years to come. The 2005 Energy Policy Act—the first comprehensive energy legislation in 13 years—focuses somewhat on the aluminum industry’s two biggest energy concerns: affordable and reliable sources of electricity and natural gas. Separately, the National Highway Traffic Safety Administration (NHTSA) proposed revisions to corporate average fuel economy (CAFE) standards for light trucks, while the White House won the CAFTA trade agreement.
New National Energy Policy
President Bush signed the 2005 Energy Policy Act on August 8, hailing it as a smart way to make Americans more secure and less dependent on foreign oil.
The legislation includes new rules for reliability oversight, new transmission technologies and incentives, some protection of Pacific Northwest transmission contracts, and new measures for market transparency. The Act provides tax breaks and other incentives to encourage new nuclear plants, cleaner-burning coal facilities, and production of more oil and natural gas. It also offers incentives to produce energy from wind and other renewable sources.
The Act exempts oil and gas industries from some clean-water laws, streamlines permitting of oil wells and power lines on public lands, and helps the hydropower industry appeal environmental restrictions. It also repeals a Depression-era law that has prevented consolidation of public utilities, potentially transforming the nation’s electricity market.
The law also seeks to increase another kind of energy: imported liquefied natural gas (LNG). The legislation gives the federal government ultimate authority to approve new LNG terminals, which could lead to more being approved. In its effort to support new energy policy and promote the needs of industrial customers, the Aluminum Association served on the steering committee for the Alliance for Energy and Economic Growth, a broad-based coalition of more than 1,200 members that develop, deliver, or consume energy from all sources.
Size-Based Light Truck Fuel Standards
In its August 23 proposed rulemaking to revise CAFE standards for light trucks, NHTSA proffered a “size-based approach.” Specifically, the rule would establish six size-based categories, each with its own improved fuel-economy target. Effectively, the six categories would replace the existing single-category system, wherein fuel economy is averaged over an automaker’s light-truck fleet.
The Aluminum Association, through its Automotive and Light Truck Group (ALTG), has championed a size-based approach for the revised light-truck standards since NHTSA announced its intention to visit this issue in 2003. We strongly commend the agency for its tacit acknowledgement of the emerging body of knowledge confirming that vehicle size—not weight—is the better determinant of vehicle safety.
CAFTA Trade Agreements
President Bush signed a hard-fought free trade pact with five Central American nations and the Dominican Republic on August 2, saying it would "advance peace and prosperity throughout the region."
The agreement, with Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic, removes trade barriers, opens up the region to U.S. goods and services, takes steps to facilitate investment in the area, and strengthens intellectual property protections.
While the economic impact for the U.S. is modest, the agreement became the medium for a fierce debate over trade policy. Exports to the region are now roughly $15 billion out of $1 trillion in total annual U.S. exports in goods and services. El Salvador, Guatemala, and Honduras have already ratified the pact, which will take effect as soon as those countries and the U.S. agree on a date. The other three countries have two years to approve it.
