This is the American Iron and Steel Institute's position on the border adjustment provision in the House-passed climate/emissions bill.  Some the the dynamics between cost, timing and amounts of border adjustments are below the fold.

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American Iron And Steel Institute Says Climate Bill As Passed By House Puts Steel Industry At Competitive Disadvantage; Bill Must Have Important Modifications As It Heads To The Senate

June 29, 2009

PR Newswire

WASHINGTON - The American Iron and Steel Institute (AISI) expressed its disappointment today over the House passage of the American Clean Energy and Security Act of 2009.

"We believe this bill has moved at a rushed pace that has not allowed for full debate of provisions that are critical to the steel industry, which was clearly underscored by the fact that the bill passed in the House by only seven votes," said Thomas J. Gibson, AISI president and CEO. "The bill, as passed, will need important modifications as it moves through the Senate.

"We appreciate the hard work of Congressmen Doyle and Inslee and we look forward to continuing our work with them as this legislation moves through the process," said Gibson. "However, we can say - with certainty - that if this bill is enacted as it presently stands, U.S. steelmakers and our workers will be at a significant competitive disadvantage in the global marketplace. Several modifications must be made to achieve the bill's stated purpose of avoiding job loss and emission migration to overseas markets."

"With this bill, all forms of energy - coal, natural gas, biomass and electricity - have the potential to suffer a dramatic cost increase due to fuel switching, deployment of waste gas capture/regeneration technology, carbon capture and sequestration technology, and wind, solar and other clean energy technologies. Energy intensive industries should be rebated allowances to recover consequential cost increases resulting from this legislation, and not just emissions costs," he said.

"Currently, the bill does not contain a meaningful border adjustment mechanism and has a significant lag before any assessment of comparable action by our trading partners is made," Gibson said. "The legislation would clearly be inadequate to ensure that the new costs placed on steel and other trade-sensitive manufacturers would also be borne by imports," he said. "As currently written, the border mechanism would be wholly ineffective and would simply lead to the substitution of imported products (from countries with no or far lesser environmental standards) for domestic production - undermining both the environmental objective of the bill and the competitiveness of U.S. products."

Another area of concern in the House bill, Gibson said, is the arbitrary formula used to lower the emissions allowance schedule to energy-intensive manufacturers below 15 percent after beginning in 2015. This deprives energy-intensive manufacturers of nearly one billion allowances over the life of the program, he said. Energy-intensive manufacturers should receive the same emissions allowance schedule that is applied to every other recipient of emission allowances, he noted

AISI serves as the voice of the North American steel industry in the public policy arena and advances the case for steel in the marketplace as the material of choice. AISI plays a lead role in the development and application of new steels and steelmaking technology. AISI is comprised of 24 member companies, including integrated and electric furnace steelmakers, and 138 associate and affiliate members who are suppliers to or customers of the steel industry. AISI's member companies represent over 75 percent of both U.S. and North American steel capacity. For more news about steel and its applications, view AISI's Web site at www.steel.org.