ACC report sees serious risks from Washington plan to pause new resin plants

A proposal by Democrats in Washington for a three-year pause in building new resin plants risks doing serious economic damage to the industry and could lead to sizable job losses, according to a new study from the American Chemistry Council.

But supporters of the pause, which is part of both the Break Free From Plastic Pollution Act and the main climate legislation favored by House Democrats, said a delay would give regulators crucial time to write new air and water emissions rules to protect communities.

The Democratic legislation includes many other provisions aimed at boosting recycling and sustainability, but it's the idea of the pause in federal permits for new resin facilities that's drawn the most intense opposition from industry groups.

ACC, for example, argues the pause could spill over and reduce production by 10-20 percent at existing resin plants if they struggle to get needed permits for their continued operations. In its June 8 study, it projected several hundred thousand lost jobs in plastics and the broader economy.

"While a pause may sound harmless, it would shut down key manufacturing facilities that support nearly 1 million jobs, create untold number of essential products and make America's supply chains more resilient," said Joshua Baca, ACC's vice president of plastics.

ACC said downstream sectors like plastics additives, compounding and processing could become less competitive globally as supplies of resin shrink and companies switch to imported materials.

But one of the main authors of the Break Free act, Rep. Alan Lowenthal, D-Calif., said the ACC report doesn't consider the environmental issues faced by communities around plastics plants.

"The [ACC] paper completely ignores the environmental justice emergency in these petrochemical corridors," Lowenthal said.

The permitting delay, he said, would "allow EPA to work with the National Academy of Science to study and make necessary updates to regulations to the Clean Air Act and the Clean Water Act to ensure that these facilities are not poisoning the environment nor the communities around them."

"The authors didn't seem to account for the increase in missed days at school from asthma attacks or missed days at work due to the ever-increasing cases of cancer that will come from an increased buildout of these petrochemical and refining facilities," Lowenthal said.

Lowenthal said his bill explicitly calls for a pause of no longer than three years, and he questioned the economic modeling in the ACC report, which assumed a pause of between three and five years.

But ACC argued that given delays in federal rule-making, the three-year pause could stretch to five years.

"The idea of pausing production for five years demonstrates a thorough lack of understanding of how American manufacturing works," Baca said. "Our 'just-in-time' economy relies on an uninterrupted supply chain of essential materials that would be severely disrupted by the pause.

"The COVID-19 pandemic recently put our nation on pause," Baca said. "We don't need another, even more devastating, shock to the economy."

The study estimated at least 40,000 direct job losses in the chemical industry over three years, with at least 185,000 jobs lost in supply chains and from broader economic impacts.

In a worst-case, five-year scenario, it said 910,000 jobs and more than $400 billion in economic activity could be lost by 2026.

The pause, which is also part of the House Democrats' Clean Future Act, would apply to facilities making plastic resin, ethylene and propylene from natural gas liquids and to new chemical, or advanced, recycling facilities.

Including chemical recycling facilities has also been a focus of the industry's political pushback.

ACC in March held an online news conference with high-ranking executives like Dow Chairman and CEO Jim Fitterling to argue against the pause, and they released a social media advertisement with this latest report criticizing it.

Industry consultant Bob Bauman said the plan could lead to resin shortages in key markets like those for milk bottles, cars and construction films, and he predicted increasing imports of plastic would cause delays and higher costs because of rising global shipping rates and container shortages.

Bauman, president of Polymer Consulting International in Houston, also noted plastics shortages after Hurricane Harvey in 2017 and this year’s winter storms in Texas. Bauman said resin facilities needed new permits to rebuild and resume operations after those events.

“Companies that make plastic products were unable to meet their customer requirements once they used up what little inventory they had on hand,” he said. “Luckily, the [resin] plants received their permits and were able to rebuild the damaged plants over a period of time.”

ACC's report said a pause could shift the U.S. from being a net exporter of resin to a net importer and risks causing supply chains for plastic to move out of the United States and making job losses permanent.

"This trade impact would make the U.S. dependent on other countries, likely China and the Middle East, for a wide range of critical chemicals and plastics," the report said, "including plastics used in medical applications such as syringes, N95 masks, lightweight polymers and composites for fuel-efficient vehicles and electric vehicle batteries and solar panels and wind turbines."

ACC said it would hurt the economic advantage the industry has from the growth in shale gas, which it said shifted the U.S. from being one of the world's high-cost producers of ethylene in 2005 to one of the lowest in 2019.

But Lowenthal criticized the ACC analysis for assuming the pause could last five years when the legislation explicitly limits it to no more than three years.

"The fundamental approach the paper takes is simply flawed," Lowenthal said. "The policies that the paper is attacking seems to have been a straw man that the authors constructed."

Lowenthal also said the report ignores other parts of his bill that will create jobs and lead to innovations in how plastic waste is handled.

"The paper pulls this one policy element from the broader Break Free From Plastic Pollution Act legislation, ignoring important robust elements of the bill such as extended producer responsibility, minimum recycled content standards and a national bottle deposit program," Lowenthal said.

The legislation's push for better recycling infrastructure, a stronger domestic market for recyclable products and more sustainable packaging will lead to economic growth, Lowenthal said.

"No one … can look at the broader bill and claim that it will do anything other than revolutionize our system and create jobs," he said.