USW President Gerard Testifies on Trade Aspects of Climate Change

Leo W. Gerard, international president of the United Steelworkers (USW) appeared today before the U.S. House Trade Subcommittee, saying "the potentially catastrophic issues posed by climate change is the challenge of our generation, and meeting that challenge will require the mobilization of everyone in the world behind a common purpose."

He told the hearing, "America can and must lead this effort, not only by taking a bold stand to limit greenhouse gas emissions, but by harnessing this nation's greatest resource, the ingenuity and creativity of the American people."

"We must make a national commitment to rebuild America clean and green with products built here, to develop new forms of clean, renewable energy and provide incentives to further their deployment," Gerard declared.

"In creating a program to achieve these emissions reductions, we must make the development of manufacturing a centerpiece of that program. The products made by our members and millions of other hard-working Americans are quite literally the building blocks of all these new technologies."

He acknowledged change will not come easily in the transition to a green economy, "But I am here to tell you today that American workers are ready and willing to help bear that burden and help lead America into a new, green future."

Gerard said the most difficult issue for workers and industry is the phenomenon by which emissions reductions in one country lead to increased emissions in another. Known as carbon leakage, he explained that the reason this happens is if one country puts a price on carbon emissions, that additional cost provides an incentive to the company to move its production - and therefore its emissions - to a country where additional cost doesn't exist.

"All policy proposals to address climate change, including cap-and-trade, arise from the idea that if a price is put on carbon, it will provide an incentive to emit less carbon," Gerard testified. "This theory is sound, as long as the cost cannot simply be evaded by companies moving production overseas or by downstream producers and consumers avoiding the cost by purchasing imported materials from nations that do not share the U.S.'s commitment to climate change abatement."

He identified for the committee that the threat of leakage is particularly acute among manufacturers of energy-intensive primary products like the ones made by members of the Steelworkers. "In commodity-based industries like steel, glass, chemicals, rubber and paper, even small differences in production costs can devastate an industry if they are not managed effectively."

Gerard said: "Any climate change policy that does not seek to prevent the unnecessary off-shoring of production from state-of-the-art American industries to less efficient, more carbon-intensive industries overseas will both cost American jobs and, perversely, will actually make the problem of global climate change worse."

In his testimony, Gerard related release of a China steel environmental report sponsored by the Alliance for American Manufacturing, in which the USW is a partner with several major employers. The study revealed stark findings showing American steel has become 25 percent less energy intensive over the past 20 years, while the Chinese steel industry now emits as much carbon as the rest of the global steel industry combined. "The production of a ton of steel in China generates more than three times the carbon emissions of a ton of steel produced in the U.S.," he pointed out.

He presented a series of solutions currently being discussed by environmental and policy experts on the issue of carbon leakage, citing the USW's view of each option to the committee. These included allocation schemes, the international reserve allowance program, a hybrid approach and others.

The USW president joined a panel of witnesses from environmental and business organizations to focus on what the Subcommittee Chair Sander M. Levin (D-MI) said would be a discussion on the trade aspects of climate change legislation including how to minimize carbon leakage between nations and maintaining U.S. competitiveness of workers and industry.

The USW is one of the first industrial unions to support comprehensive climate change legislation and is a leader in the labor movement on the environment. Gerard serves as a commissioner on the National Commission on Energy Policy and is a founding member of the Blue Green Alliance (BGA). The Alliance brings together unions and environmental groups to plan a new way forward through the promotion of policy solutions that spur growth and investment in green technologies and products produced in America.