|
|
||
 Energy Policy PositionBackground Recycled aluminum—from beverage cans to all other uses—requires only about 5 percent of the energy as compared to primary-ore production. Americans’ recycling efforts and the industry’s aluminum reclamation system reduces the overall energy consumption in total U.S. aluminum production by 46 percent. Primary production consumes 507.16 trillion BTUs for 8 billion pounds, and recycled secondary uses 41.3 trillion BTUs for 8.2 billion pounds, making the national industry energy consumption for production 548 trillion BTUs. Energy represents about one-third of the total production cost of primary aluminum. Electricity is an essential ingredient in primary aluminum production. These factors together make energy efficiency and energy management prime objectives for the industry. While the industry is a large consumer of both natural gas and electricity, the annual expenditure for electricity by the aluminum industry is more than $2 billion. Since the 1970s, manufacturing energy consumption has grown at twice the rate of domestic energy production. This gap between energy use and production will continue to adversely affect manufacturing if the country does not resolve national energy policy with a comprehensive U.S. energy strategy that enhances supply, improves infrastructure, and increases efficiency, without compromising environmental safeguards or imposing efficiency mandates. Many business and labor leaders, economists, and policymakers agree that America must increase domestic energy supplies in an environmentally sensitive manner; improve energy efficiency, conservation and development of new technologies; expand and secure our energy delivery infrastructure; ensure affordable home energy supplies for low-income households; and thoughtfully streamline energy development regulatory processes. Electricity With artificial-market disadvantages, it may be impossible to operate or restore primary smelting capacity in the Northwest U.S., and other regional aluminum plants will be subject to similar concerns. The recommended approach is to provide short-term policies to help the industry survive the transition to a rational market situation, and provide long-term policies to restore supply-demand balance in electricity markets. Recommended policy solutions:
Electricity Notes: In the Northwest Power Act of 1980, the Congress and BPA sought to keep the Northwest aluminum industry and several other traditional Direct Service Industrial Customers (DSIs) of the Bonneville Power Administration as BPA customers. For that purpose, the Act includes the New Large Single Load (NLSL) provisions that preclude the DSIs from receiving the benefits of the Federal hydro system by purchasing such power from any utility except BPA. Since BPA controls about half of the power marketed in the region and has announced its intention to discontinue all electricity service to the DSIs, the effect of the 1980 NLSL prohibition is to deny the aluminum industry access to half—the lower-priced half—of the electricity market in the region. This unintended consequence of the Northwest Power Act threatens the existence of 40 percent of the U.S. primary aluminum industry and 5 percent of world supply. Natural Gas
As of June 2010, the Henry Hub wholesale price of natural gas was $4.75 per million BTU—well over twice the average price of $1.97 per million BTU from 1991 to 1998. U.S. natural gas production has been stagnant at 19 trillion cubic feet per year since 1995, even though demand has continued to increase and relatively abundant amounts of natural gas reserves exist. In fact, U.S. production in 1970 was higher—at 21 trillion cubic feet per year. Certainty of an affordable energy supply is essential to capital investment in the manufacturing sectors that provide high-paying jobs. Putting the U.S. on the path to a reliable and affordable supply of domestic energy is essential to this country's short-term economic rebound and future long-term growth prospects. All supply options should be considered to contribute to a diverse and robust supply of energy. Every major energy crisis since 1973 has been followed by an economic recession. The energy crisis of 2000-2001 was no different. The link between affordable supplies of energy and our economic well-being is no coincidence. Industrial energy-consuming companies were devastated by high-energy costs that resulted in plant closures, plant idling, worker layoffs, and the transfer of production to offshore facilities. This same scenario is being repeated again, only from a smaller base of manufacturing plants. The jobs may never return. Recommended policy solutions:
|
    |
|
 |
||
The
manufacturing sector has well over 3 million jobs since 1998, and
energy costs are viewed as a major contributing factor. It is vital that
Congress act quickly to stem the national energy crisis by enacting
legislation that provides a robust, diverse, and affordable supply of
energy. It is particularly critical that Congress and the states act to
increase the supply of natural gas, and address regulations such as New
Source Review to make it easier for power generators to meet air-quality
standards without switching from coal to natural gas. Congress must also
expedite commercialization of clean coal technology, the ultimate
solution for power generation, using coal in an environmentally
acceptable manner.