It takes as many as 500 highly specialized chemicals to produce one semiconductor chip. Some of these will soon be subject to misleading new environmental regulations that will increase costs and effectively ban the production of these chemicals for U.S. manufacturers. This will shut down domestic production and give our overseas competitors an advantage in the global market.
For his own good and that of the country, President Joe Biden would be wise to change course. This regressive regulatory approach will work against its environmental and economic goals by encouraging manufacturers to outsource production to other countries with lax environmental standards and rising prices for the everyday products we need to thrive.
Virtually all household and commercial goods – everything from computer chips and medicines to the materials used to build your house to the energy that fuels your life – start with chemical production. Innovation in this sector has spurred the creation of new industries over the past century, making our country a dominant force in the world. But we are now approaching a dangerous tipping point where sweeping new restrictions threaten to overwhelm what is already one of the most heavily regulated industries.
After decades of success and reducing chemical incidents by 80%, the Environmental Protection Agency (EPA) recently introduced new regulations for chemical plants, saddled companies with unworkable mandates that will impact our nation’s ability to safely to supply food, clean water and reliable water. energy. The rule restores and extends restrictions that the Obama administration put in place a decade ago and that the Trump administration rolled back due to critical economic and national security risks. The scope and costs of these mandates for chemical companies are enormous. They have more than tripled from EPA’s original proposal in 2022 and will pose serious compliance issues for many facilities.
Hampering America’s ability to produce these chemicals at home does not eliminate the need for them. It just forces companies to source from countries that don’t share our commitment to environmental and health standards, and it forces American companies to manufacture offshore. This is a major barrier to innovation, as capital that could be spent on research and development is diverted to establishing new supply chains abroad and importing finished products.
The warning signs of this deterrent effect on innovation are clearly visible in a recent survey of chemical companies. Two-thirds say the current regulatory environment threatens their efforts to achieve clean energy goals, for example by hindering the production of lithium-ion batteries for electric cars and power grids. About half were discouraged from investing in medical equipment needed to diagnose and treat diseases and keep hospitals sterile and safe. And most companies lamented the impact on domestic semiconductor production – a pressing national security concern.
China is already the world’s largest producer and exporter of chemicals, and many of the rules federal agencies are proposing appear designed to keep it that way. They threaten more than a million jobs and $110 million in wages for hardworking Americans.
Before implementing more regulations, President Biden should consider creating an Interagency Policy Committee, led by the White House Director of the National Economic Council, to coordinate an analysis of the economic impact. He should require all Cabinet departments to evaluate the impact of these regulatory proposals on American employment, domestic manufacturing, and especially on the Infrastructure Investment and Jobs Act, the Inflation Reduction Act, and the CHIPS and Science Act.
The committee should also consult industry leaders who bear the brunt of this regulatory burden. There is precedent for such a move from presidents of both parties. The Obama administration worked with industry groups to implement some of its climate goals. And early in his term, former President Trump established a Strategic and Policy Forum, which included some of the most prominent business leaders, including Blackstone’s Stephen Schwarzman, Disney’s Bob Iger, and JP Morgan’s Jamie Dimon.
President Biden could do the same. A rigorous, balanced analysis of the costs and benefits of sweeping new environmental regulations would help him avoid raising the cost of living for our already struggling families and sending high-wage American jobs abroad. With one of the most consequential elections in a generation looming, he cannot afford to make unforced errors.
Chris Jahn is the president and CEO of the American Chemistry Council.
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