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March 17, 2025

Seeking a Goldilocks approach to public policy

By Samir Hifri

As a father of four, I have read my fair share of children's stories over the years. The ones that stand the test of time teach our kids an important lesson.

I can feel the resonance of one of those stories echoing throughout my day-to-day life as the leader of Covestro's U.S. business.

Hifri

You likely remember the story: One bowl of porridge is too hot, another too cold, and a third, just right. One bed is too hard, another too soft, and the third — you guessed it. Just right.

Goldilocks is searching for balance.

The U.S. chemical industry will also benefit from balance. Our industry touches nearly 96 percent of all manufactured goods. Its success is crucial to the broader health and competitiveness of the country's economy.

Yet, with the new administration and its stated policy objectives, we find ourselves at a crossroads. For four years, we walked a challenging road, paved in the wake of a global pandemic, laden with overregulation, yet focused on a sustainable future. Now, while I am excited about the potential opportunities for strengthened domestic manufacturing via an "America first" road with reduced overregulation and lower cost energy and raw materials, we must ensure growth in the present does not come at the expense of the future.

One option, arguably too hot. The other, too cold. But, what exactly is "just right" for U.S. manufacturing?

It is important to keep in mind that the strongest predictors of business success are stability and predictability. Manufacturing, and chemical manufacturing in particular, needs stability to predict long-term success. Strategies for investments, growth, trade, jobs — all focus on long-term returns. The decision to build a multi-billion dollar, job-creating asset is not dictated by four-year terms, but rather decades.

To best maximize investment in the U.S., the new administration should play the long game when it comes to domestic manufacturing. Policymakers should not be obsessed with reversing the previous administration's policies for ideological reasons, but rather be focused on establishing policies that are formulated to truly strengthen our industry, and the American economy, over the long term.

Look at energy. As a chemical manufacturer with production sites in Texas, West Virginia, Ohio, and several other states, energy plays a critical role in Covestro's balance sheet. Focused only on the present, the balance sheet would be king, driving our energy decisions. Focused only on the future would result in emissions reductions, regardless of cost. So, what is the "just right" fit?

For Covestro, and many others in our space, we advocate for an "all of the above" approach to energy. There are operations we cannot continue without using fossil-based energy. At the same time, power for several of our U.S. locations can be attributed to solar. When federal policy swings wildly and all but dictates energy decisions instead of providing options and incentives for both, it takes the power away from businesses to make strategic, long-term decisions.

Look at decarbonization. Abundant and low-cost energy is vital for U.S. domestic competitiveness. While I support leveraging U.S. energy potential, expanding the supply of fossil-based energy without addressing emissions is not a balanced formula. Rather, there is a win-win opportunity, combining increased access to conventional energy sources like oil and gas while curbing emissions through proven technologies such as carbon capture and sequestration (CCS). Covestro, its energy partner and other manufacturers have utilized the 45Q and 48C tax credits expanded under the Inflation Reduction Act to directly invest in capital expenditures here in the U.S. This both creates near- and long-term value and jobs for our manufacturing assets that will span decades.

Chemical manufacturing is a carbon-intensive industry, but not without its own decarbonization agenda. Covestro, for example, aims to be operationally climate neutral by 2035 and has invested heavily in projects to decarbonize. Some of these projects hang in the balance with policy uncertainty. Here again, policy swings from pro- to anti-decarbonization create undue burden on organizations that are continually working to execute a strategy while managing policy uncertainty.

Look at the regulatory landscape. Regulations are quite literally our license to operate. While overregulation constrains growth and disincentivizes innovation, lax regulations, focused on short-term growth without sight of long-term consequences, undermines our credibility and the reputation that we work so hard to preserve. Both scenarios, and the drastic swings between them, jeopardize much-needed stability. Strong, science-based regulation is stable and predictable. It lends credibility to our industry and shows our commitment to the health and safety of our employees and communities while providing a framework to make smart, strategic business decisions. Here, I encourage Congress to work with EPA Administrator Zeldin to advance sensible and durable reforms to how we regulate manufacturing.

To truly make America great, we must play the long game. We must reintroduce stability and predictability into policy, opting for an approach that allows for long-term growth while not overreaching and creating undue burden in the short-term. We must find a middle road that eliminates the policy pendulum. One where Congress effectively legislates durable policy in a bipartisan manner. Only then can we truly unleash the power of American manufacturing.

When my kids are someday reading Goldilocks to their own children, I want them to be doing so in a strong America. The best way for that to happen – create a stable, "just right" environment for growth, safety and the future.

Samir Hifri is chairman and president of Covestro LLC.