Washington, DC -- The EPRINC study shows that as the U.S. enters a period of low growth in gasoline consumption, the combination of new global refining centers and the rising costs imposed by the legislation will distort the competitive position of domestic refiners and could idle and bring permanent closure to as much as 8 million barrels per day (mb/d) of the nation's 17.5 mb/d of domestic refining capacity. Direct and indirect job losses could rise to 400,000 across the 2015-2030 forecast periods.
Capacity at Risk Due to Sub-100% Pass-Through of Product Emission Costs Rising production costs resulting from stationary emission allowance costs (emissions released at the refinery during the refining process) could idle or shut 1 mb/d ' 5 mb/d of capacity in a scenario where allowance costs vary between $15 to $30 per metric ton of CO2. Although importers of fuels into the U.S. will also have to purchase allowances for the GHG emissions that will be released by combustion of the fuels they sell, imported fuels will not include a cost for stationary emissions at refinery sites.
Refiners have been allotted 2.25% of the free allowance pool between 2014 and 2026; however this amount covers less than half of refiners' stationary emissions and no portion of their product emissions. In addition, as the refined products market experiences a large surplus of worldwide capacity, U.S. refiners will be unable to fully pass through the cost of allowances, over $30 billion annually at an allowance price of just $15 per ton of CO2. Pass-through rates slightly below full pass-through, even 80% - 90%, will place U.S. refiners at a severe competitive disadvantage.
Lucian Pugliaresi, EPRINC's President said, "It should be noted that under the European Union's cap-and-trade program refiners have been deemed vulnerable to international competition and the EU is working to alleviate refiners' allowance cost burden, while under the Waxman-Markey bill the U.S. refining industry is specifically excluded from receiving additional allowances set aside for trade vulnerable industries.'
The full report is available on EPRINC's website at http://www.eprinc.org/pdf/refiningindustry-waxmanmarkey.pdf
EPRINC was incorporated in 1944 in New York and is a not-for-profit organization that studies energy economics with special emphasis on oil. It moved from New York to Washington, D.C. in 2007. It is known internationally for providing objective analysis of energy issues.
 |
All comment postings require your name and email address for user verification only. Your email address will not be used or distributed for any other purpose.
No advertising is permitted and will result in the post being deleted and/or banning. Please click "REPORT" to report any inappropriate posts. blog comments powered by Disqus
Permission to Reproduce:
Unless otherwise stated, the copyright and similar rights to all material published on this website are owned by The Manufacturers Group Inc. DBA Manufacturing & Technology eJournal( mfrtech.com ). Reproduction of any article in print, electronic or any other form must acknowledge mfrtech.com as the Source and include a link to http://www.mfrtech.com
 |
