Environmental - NESHAP - Killing jobs in the Cement industry

Titan America’s position is to oppose overly stringent EPA regulations that target the US Cement industry, specifically NESHAP and CISWI.

The U.S. cement industry is one of the most heavily regulated industries in the country. Currently, it faces no fewer than seven different existing or proposed EPA regulatory standards that, cumulatively, will severely hamper the industry’s ongoing efforts to modernize,  remain globally competitive, and survive these economic times. 

Two of these EPA rules alone will impose $5.4 billion in compliance costs on the industry by 2015.  This $5.4 billion price tag will be imposed on an industry that is only generating $6.5 billion in annual revenues taking critical Capital dollars from cement companies that are suffering financially. Titan America will be forced to spend $50Million at the Pennsuco and Roanoke Cement plants during a time when Titan has more critical investments to make in the existing business.

  • National Emission Standards for Hazardous Air Pollutants or NESHAP has a compliance date of 2013.  This regulation requires cement producers to invest billions of dollars in compliance equipment targeting four specific emissions reductions. These emission standards are 4 – 13 times more stringent than the country of Germany which is a country known for its industrialization and environmental responsibility.
  • New Standards for Commercial and Industrial Solid Waste Incinerators (CISWI) with a compliance date if 2015.  It proposes broader set of emissions standards than NESHAP, targeting emissions of alternative fuel burning plants.  No U.S. cement plant can currently meet all NESHAP and/or CISWI standards simultaneously.

As mentioned, the cement industry is a highly regulated entity. The cement industry takes pride in its record of achieving state and federal standards. However, the overwhelming, and at times, overlapping regulations facing us today is unprecedented.

 In order to get a clearer picture of the impact of these regulations on U.S. cement, concrete, and construction industries and  their potential impact on employment, construction costs, and the environment, the Portland Cement Association’s Economic Research department examined the impact of each regulation and analyzed their cumulative effect on our relatively small industry.

 The results were startling for both the environment and economic health of our nation and, especially, the communities where cement plants are located. 

 In summary, the study showed that EPA regulations will stifle the cement industry’s ongoing modernization efforts to remain globally competitive.  This is seen as a subtle message to the industry to shut down plants and source cement from foreign sources – thereby exporting emissions along with the jobs associated with cement production.

 Here are the details of the findings.

 First, what are the impact on US  jobs.  Part of EPA’s emission reduction plan will result in the closure of cement plants.  NESHAP alone will likely cause the closure of 18 cement plants of the nearly 100 plants nation.  This will result in  the direct loss of up to 4,000 high paying cement industry jobs.  These closures translate into $200 million to $260 million in lost wages, reduced US taxes, and less opportunity for industry employees.  

 Cement plants are often located in rural areas where the plant is the tax base of the community.  Not only does the community lose jobs, but also a strong contributor of tax revenue and supporter of local schools, charities, and activities is eliminated when a cement plant closes.

 That is just the direct job loss estimated by the report.   Cost increases in the manufacture of cement and concrete due to EPA compliance is likely to displace some construction activity.  Construction projects that may have been created might not materialize.  PCA roughly estimates a potential direct job loss in the construction sector at 12,000 to 19,000. With up- and downstream indirect impacts considered, more than 80,000 construction jobs are potentially lost due to EPA regulations.

Many of these job losses would be concentrated in areas near the plant shutdowns, magnifying the potential distress in these communities.

 Due to direct and indirect cost of compliance, the PCA report also outlines the impact on the cost of construction due to EPA regulations. The study estimates that current and proposed EPA regulations could add $2.4 to $3.9 billion to annual construction costs.  The cost of cement /concrete construction would increase the concrete portion of a construction project 22 to 36 percent. This would result in less cement and concrete usage in construction projects further adding to the financial distress of the industry.

 Our bridges, roads, dams, schools, and hospitals will be hit the hardest by construction cost increases at a time when the nation’s already deteriorating infrastructure is at unsafe levels. As the country’s largest consumer of consumer of cement/concrete, the public sector would be hardest hit.  PCA calculates that EPA compliance costs could add as much as $1.2 to $2 billion annually to state and local governments’ infrastructure expenditures just to maintain existing roadways and bridges.  The addition of new roads and bridges would increase the price tag even further. 

 Finally, the PCA report showed that the EPA regulations will result in the exportation of US jobs, while the US will be importing cement. The inability to make capital investments coupled by plant closures will cause the United States cement industry to become increasingly dependent on imports as a source of supply.

 The cumulative impact of these regulations will force increased reliance on imports to meet expected future consumption.  EPA regulations will cause cement import levels on increase from 2010 levels of about 5.9 million metric tons to 82 million metric tons in 2025—or roughly 48 percent of the US consumption.  Increased reliance on imports dramatically increases the probability of future material supply shortages and causes price volatility to become more common. This could hurt the entire construction economy, with impacts on infrastructure, housing, commerce and jobs. Much of this imported cement will come from countries which have more relaxed emission standards than in the US. These regulations will increase global emissions associated with cement manufacture, and it will not just be mercury emissions, but others like CO2 and greenhouse gases.

 What this all clearly illustrates is need for, as President Obama called for earlier in the year, a regulatory system that protects public health, welfare, safety and our environment while promoting economic growth, innovation, competitiveness and job creation.