The United States continues to reign as the place to manufacture chemicals now, as potential U.S. chemical industry investment has now topped $100 billion.
As of this month, the number of publicly-announced chemical and plastics projects stands at 148, with the tally continuing to grow (ACC’s first report analyzed 97 projects valued at $71.7 billion announced through March 2013). Impressively, more than half of the investment dollars come from firms based outside the U.S.
These projects could generate huge job gains – 637,000 permanent new U.S. jobs between 2010 and 2023, including 55,000 jobs in the chemical industry alone – and $16 billion in permanent tax revenue. And they are helping to drive a broader manufacturing renaissance as other industries benefit from lower-cost materials.
Two words: Shale gas
As we’ve helped to make clear over the past few years, these new projects are made possible by one factor above all – plentiful and affordable natural gas and natural gas liquids from shale formations.
U.S. chemical makers are building new factories, expanding production and revamping their operations to capitalize on lower energy and feedstock costs.
Exports are surging. As one of the lowest-cost producers of key petrochemicals and resins today, the industry has gone from a chemicals trade deficit to a $2.8 billion surplus, which we expect will increase as more production comes on stream.
Smart policies and regulations
America’s chemical industry has a new, profound and sustained competitive edge that can be a powerful catalyst for economic growth and job creation across the country. But our nation’s ability to fully realize the shale gas opportunity depends on having the right policies and regulations.
Allow access to American natural gas resources
Access to domestic natural gas supplies on government and private lands is needed.
Implement responsible, state-based regulations
Regulations must avoid undue restrictions on production. States are best equipped to oversee natural gas production since state governments have the knowledge to oversee the process in their jurisdictions.
Ensure timely regulatory permitting for shale-related manufacturing projects
In his 2014 State of the Union Address (above), President Obama pledged to “cut red tape” which could be a roadblock to manufacturing projects made possible by shale gas. Companies investing in projects need certainty as to the processes and timing for obtaining permits.
Facilitate the building of infrastructure
New infrastructure is needed to link natural gas production sites to manufacturing facilities around the country. Pipelines and other reliable infrastructure can transport energy from where it’s produced to manufacturers who will use it to create jobs.
Ensure tax policies promote U.S. competitiveness
Policies such as accelerated depreciation help ensure that American manufacturers are able to compete in global markets. Policies must minimize cost and reduce complexity for businesses.
Other experts have echoed ACC’s concerns about how governmental policies could limit the benefits of shale gas development.
According to the IHS report, “America’s New Energy Future: The Unconventional Oil and Gas Revolution and the U.S. Economy—Volume 3: A Manufacturing Renaissance,” restrictive regulations “have the potential to fundamentally alter the break-even economics of extraction, pace of development, or access to these energy resources,” and could “slow or reverse the manufacturing renaissance.”
There are measurable consequences to not getting these policies and regulations right. According to IHS, as many as 289,000 potential U.S. chemistry jobs would be lost, with $46 billion in potential economic growth lost by 2025.
The policies above are an important part of the coherent national energy strategy America needs in order for our economy to grow, U.S. industries to innovate and compete globally, and businesses to create jobs.
A true “all of the above” policy must incorporate all energy resources, including natural gas, oil, coal, nuclear power, alternatives and renewables; promote energy efficiency and speed the adoption of energy-saving solutions; and support diverse new energy sources such as energy recovery from non-recycled plastics.
The wave of new projects being announced by the world’s chemical manufacturers signals their belief in a bright outlook for America when it comes to natural gas. But we must all work together to ensure that our nation is a magnet for manufacturing investment for decades to come.