As the climate bill sponsored by Reps. Henry Waxman (D-Calif.) and Ed Markey (D-Mass.) headed for a showdown in the House last year, critics warned that the energy-intensive U.S. chemical industry would be among the primary victims of a cap-and-trade carbon regime.
Now, with time running out on climate legislation in the Senate, officials of Dow Chemical Co., the largest American chemical company, continue to call for a bill that would set a price on carbon emissions.
"We just see it differently" than others in industry, said Peter Molinaro, Dow's vice president for federal and state government affairs. "We start with the premise that you can't solve the climate problems without chemistry. That's what we do, and that is on the plus side."
Molinaro and Douglas May, Dow's vice president for energy and climate change, were working members of Congress and the media last week, trying to keep the climate debate alive. They carried their exhibit "A" -- one of Dow's Powerhouse solar shingles embedded with energy cells. A roof covered with the shingles could generate a maximum of 3 kilowatts of electricity under prime conditions, enough to meet 60 to 80 percent of a typical household's electricity requirements, Molinaro said.
In Dow's dreams, solar shingles sales could eventually reach $5 billion, if government policies and consumer attitudes coalesce to support the market.
Dow's contrarian position in the climate debate illustrates the cross-currents that run through the U.S. electric power and industrial sectors, which count costs and risks on one side of the climate debate, and opportunity on the other.
The company's products, filling seven pages in its annual report, span a wide horizon of the economy, from basic chemicals to frontier technologies. Some, like chlorine, are on blacklists of some consumer and environmental activists. At the company's urging, shareholders turned down a resolution proposed by critics at Dow's annual meeting that called for a report on the company's efforts to clean up contamination from industrial discharges around its Midland headquarters. Dow said the proposal duplicated ongoing cleanup efforts.
Working hard to go green
Since the mid-1990s, Dow has added environmental and climate goals to its mission statement. It reduced the carbon footprint of its manufacturing processes by 22 percent between 1994 and 2005 and aims at deeper reductions by 2015. And it is using a $1.6 billion annual research and development budget -- more than 3 percent of annual sales -- to expand products on the green front. Insulation products, advanced diesel engine filters, the solar shingle, and carbon fiber materials for wind turbine blades are on this list. Dow has not yet priced the shingle, so independent calculations aren't possible of how much households will have to pay to cover their roofs and how long the payback period would be.
On June 21, Dow broke ground on a manufacturing plant in Midland, Mich., that will produce advanced lithium-ion batteries for hybrid and electric vehicles. The plant will be built by Dow Kokam, a joint venture between Dow and TK Advanced Battery LLC of South Korea, and will employ 800 people, Dow says.
The solar shingles are a prominent feature on a demonstration home Dow put up in Bay City, Mich., with a Michigan homebuilder. Solar units on the home will produce more than enough electricity to supply the 3,500-square-foot house, creating surplus power that can be sold back to the local utility for energy credits. Other solar units provide hot water. Geothermal heat pumps heat and cool the house. All told, it will use 60 to 70 percent less energy than a conventional home, May said.
Dow has drawn on crucial federal and state support to pursue its green agenda. Green programs, primarily the battery plant and solar shingle project, have received $750 million in federal and state research grants and incentive payments. In return, Dow promises to lead the way in creating jobs based on new technologies, providing a success story for the Obama administration's climate and economic agendas.
Dow Chairman and CEO Andrew Liveris welcomed Vice President Joe Biden to the groundbreaking for the zero-energy home in Bay City in June. "All of these green-tech programs show the great results that can be achieved when government and industry work together toward a common goal," Liveris said. That view puts Dow on the administration's side in the debate over expanding or shrinking Washington's powers.
Finding a balance on cap and trade
While Dow moves ahead on its green agenda, it is also advancing a shopping list in Congress that seems as wide as its product line. Greener building codes would provide more pull for its insulation products, for example. It supports proposals to create low-interest, tax-free private activity bonds that would help fund energy conservation and renewable energy projects at airports, hospitals and other facilities.
The details on how federal clean-energy manufacturing grants are defined matter to the company. So does the handling of carbon offsets and allowances if a cap-and-trade bill moves forward.
"We chose to take the more solutions point of view, recognizing that chemicals industry does have issues. We are very much in line with the chemical industry in the need to get that right in the end," Molinaro said.
"We didn't support Waxman-Markey in toto. We didn't sign on the dotted line," Molinaro said. "But we said it was sufficiently developed that it should move forward to allow the process to continue in the Senate."
The House legislation was "representative of what we believe in," Molinaro said. "We certainly didn't want the process to end."
"There are so many clean energy solutions that have a positive return," May said. "To decouple GDP from carbon requires innovation. If you don't put a value on carbon, how are you going to get that innovation?" he said.
"What you are left with is command-and-control under the Clean Air Act," Molinaro said.