Industrial energy use is the third largest GHG-emitting sector in the Midwest, accounting for 13 percent of total regional emissions in 2007.
Electricity generation in the Midwest accounts for approximately 37 percent of the region's total GHG emissions. To a large extent, the emissions from electricity generation are determined by the fuel mix. This figure compares Midwest state electricity fuel mixes to those of the region, the nation, and the world.
The figure shows that the Midwest as a whole generates approximately 20 percent more electricity from coal--the most carbon-intensive fossil fuel source--than the national average and 28 percent more than the world average.
On average, U.S. steel production is among the least carbon-intensive in the world. This is primarily the result of the type of production process the industry employs. Nearly half of all steel in the United States is made in “mini mills,” which use electricity to recycle scrap steel rather than starting from scratch by burning coal and coke to melt iron ore into iron.
A consideration in quantifying the impact of a trade measure on carbon-intensive industry in the United States is whether the relevant market is at home or abroad.
Despite the concern about carbon-intensive imports from China, they account for less than 10 percent of all but cement imports. Canada is the largest foreign source of all carbon-intensive imports except chemicals, where it ranks second only to Trinidad and Tobago. Canada accounts for more than half of U.S. paper and aluminum imports, compared with China at 3 percent. That said, it is important to note that over the past 15 years, more U.S. carbon-intensive imports have come from developing countries. How this trend translates into competitiveness of U.S.
The origin of imports differs greatly between industries. The majority of U.S. imports of steel, aluminum, and paper come from other industrialized countries, those listed in Annex I of the UN Framework Convention on Climate Change.
The United States runs a trade deficit in all five carbon-intensive industries included in the Peterson Institute for International Economics/WRI report "Leveling the Carbon Playing Field", despite running a trade surplus in certain product lines. Aluminum is, by far, the most exposed to trade, with net imports accounting for 60 percent of U.S. consumption. But even in cement, long considered the classic “nontradable,” foreign producers meet nearly 25 percent of domestic demand.
One option for containing costs for carbon-intensive manufacturing industries in climate legislation is to exclude them altogether from the list of regulated entities. At less than 6 percent of total U.S. emissions, carving out this sector of the economy may seem like an acceptable sacrifice if it alleviates enough concern about industrial competitiveness to win support for broader climate legislation.
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Though the forest products industry as a whole may stand to gain, climate change will impact companies and investments differently based on the location of the forests, mills, and markets, the vertical integration of assets, and the sustainability of forest operations. This figure illustrates these risks and opportunities in a qualitative way with respect to their potential financial impact and the level of certainty.
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