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Should Manufacturers Support New Environmental Initiatives?

Posted By David Brousell, December 03, 2014 at 12:11 AM, in Category: Sustainability

As members of the United Nations gather this week in Lima, Peru, to try to reach an accord on cutting greenhouse gas emissions, the Obama Administration is pursuing plans of its own to cut ozone emissions in the U.S., one in a series of environment initiatives the administration has undertaken this year that would affect manufacturers large and small and in every industry sector.                 

In June, the Obama Administration proposed an Environmental Protection Agency regulation to cut carbon emissions from coal. In September, the President addressed the United Nations and urged all countries there, especially China, to step up their protection efforts.

In November, at a meeting of the G-20 in Australia, the President announced an agreement with China to cut U.S.net greenhouse gas emissions 26-28% below 2005 levels by 2025, while China agreed to a peak emissions level by 2030, with reductions thereafter.

And in late November, the EPA announced new rules to reduce ozone emissions. The EPA proposed cutting these emission limits to a range of 65 to 70 parts per billion, from 75 ppb. The EPA estimates that the cost to industry of the proposed new rule would be $3.9 billion in 2025, using a standard of 70 ppb, according to published reports. But the benefits – measured in prevented asthma and heart attacks, less missed school and work days, and fewer premature deaths – would amount to $6.4 billion to $13 billion annually in 2025, based on the 70 ppb standard.

All of these initiatives are designed to combat the growing problem of environmental pollution and warming, a trend that scientists warn could result, if left insufficiently checked, in an uninhabitable planet in the future.

Yet, the largest trade group representing manufacturers in the U.S., the National Association of Manufacturers (NAM), opposes some of these initiatives, saying the cost of implementing them would threaten an industry still recovering from the 2008 recession. On the proposed ozone regulations, NAM president and chief executive Jay Timmons said in a statement on November 26:

“Manufacturers in the United States are working hard for a manufacturing comeback, attempting to utilize America’s unmatched energy resources, building hundreds of billions of dollars’ worth of new facilities across the country. These are the facilities that make advanced cars and trucks, fertilizer to grow our crops, and roofing and insulation that keep our energy bills down. This new ozone regulation threatens to be the most expensive ever imposed on industry in America and could jeopardize recent progress in manufacturing by placing massive new costs on manufacturers and closing off counties and states to new businesses by blocking progress at the permitting stage.

“The new standard comes at the same time dozens of other new EPA regulations are being imposed that collectively place increased costs, burdens, and delays on manufacturers, threaten our international competitiveness, and make it nearly impossible to grow jobs. Before the Obama moves the goalposts with yet another set of requirements that will make it more difficult for manufacturers across the country, they need to  allow existing ozone standards to be implemented and to give time to American businesses to meet those already stringent and onerous requirements.”

Taken at face value, the Timmons statement makes it sound like the Obama Administration is acting in utter disregard for manufacturing and the future of the U.S. economy. Can the new regulations be that apocalyptic? Is the cost of adopting them really so high that industry growth and viability will be threatened?

Don’t reach for your handkerchief in sympathy just yet. There may be a case that industry can well afford to do a better job of protecting the environment. In June, for example, Fortune magazine reported that the profits of the Fortune 500 rose to an all-time high.

And what about the cost of not strengthening environmental rules and regulations and of not undertaking new initiatives? What about the future of how we live, the quality of life? Are strong rules about the environment incompatible with manufacturing’s growth and viability?

What’s your view? Are manufacturers burdened by too many environmental regulations or does industry need to do more to prevent climate change and protect the planet we all need to live on?

Category: Sustainability
Written by David Brousell

Global Vice President, General Manager and Editorial Director of the Manufacturing Leadership Council

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The regulations the Obama administration is promoting will do little to little to improve the environment, but will add significant costs to manufacturing in the USA. The NAM is right in their position.
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