Volume 45, Issue 7 - July 2010

GANAPerspectives

A Call for Changes
GANA Offers CARB Direction in Cap-and-Trade
by Bill Yanek



In June, the Glass Association of North America’s (GANA) Flat Glass Manufacturing Division’s Climate Change Committee submitted comments to the California Air Resources Board (CARB) in response to that organization’s May 17th public meeting to discuss allowance allocation and the next steps for a California cap-and-trade program. The comments call for several modifications to the approach CARB is taking to cap-and-trade. Specifically, we asked that CARB adopt:
1. Retention of free/subsidized allocations for flat glass producers below benchmark levels.
2. Specific regulatory treatment and a working group meeting for the flat glass industry.
3. Benchmarks based upon
a) the entire U.S. and not just California manufacturers;
b) differentiation between regenerative furnaces and oxy-fuel furnaces;
c) differentiation for different glass colors/types; and
d) consideration of the long life-cycle of a flat glass furnace.
4. Multi-year averaging for allocations instead of currently proposed single year basis.
5. Retention of the assistance factor at 100 percent for the flat glass industry.

GANA recognizes that CARB’s proposal to lessen the impact on manufacturing by offering allocations to vulnerable industries is a way of reducing the immediate impact of the cap-and-trade program in California. GANA suggested, however, that any state or regional cap-and-trade program be deferred in favor of a more unified national approach. This, we feel, helps preserve the viability of manufacturing in California. Furthermore, a patchwork of state and/or regional programs would create uncertainty for businesses that operate nationwide and would expose the manufacturing sector in the regulated states/regions to great business risk. That uncertainty creates several possible adverse results that no state wants to face in the middle of a difficult economy.

"… A patchwork of state and/or regional programs would create uncertainty for businesses
that operate nationwide and would expose the manufacturing sector in the regulated
states/regions to great business risk."


In California, the increased costs associated with a state cap-and-trade program would be in addition to the already high cost of doing business in California as a result of the existing stringent environmental regulatory requirements. This situation has a high probability of causing carbon leakage to other areas of the country or indeed to other countries, such as Mexico, not covered by such programs.

In our letter to CARB, we suggested that CARB include all applicable regenerative type float glass furnaces nationwide in the establishment of the emission intensity benchmark, as opposed to restricting such scope again to only California or even the Western Climate Initiative (WCI) region. The primary reasons for this are: a) due to operational differences, container glass furnaces and flat glass furnaces must be considered separately and b) there are only three flat glass plants located in California. Restricting the basis of the benchmark to California produces too small a sample for establishing a representative intensity factor.

GANA also suggested to CARB that some consideration for furnace type be included in the emission intensity benchmark. Specifically, separate benchmarks should be developed for oxy-fuel type furnaces and regenerative type furnaces. A full oxy-fuel fired glass furnace represents a fundamentally different furnace design and would not be considered in the same category as any operational or add-on controls that may be employed for control of emissions. Including full oxy-fuel fired furnaces in establishing a benchmark based on direct greenhouse gas emissions only would artificially skew the benchmark against regenerative furnaces and force the industry toward a specific furnace type.

As GANA continues to voice the needs of the industry to CARB and other energy stakeholders, we need more industry voices to be part of the effort. Learn how you can become involved by visiting our website at www.glasswebsite.com.

Bill Yanek is executive vice president of GANA. Mr. Yanek’s opinions are solely his own and not necessarily those of this magazine.

USG
© Copyright 2010 Key Communications Inc. All rights reserved.
No reproduction of any type without expressed written permission.