Home> Direct Energy Purchase Costs as % of Shipment Value under Three EIA Projection Scenarios of the American Power Act (2016)
Direct Energy Purchase Costs as % of Shipment Value under Three EIA Projection Scenarios of the American Power Act (2016)
The impact of energy-related costs varies under the three EIA scenarios. Direct energy
purchases are limited to less than 1% of the value of shipments for all subsectors except nitrogenous
fertilizers in the medium scenario. In the high scenario, energy-related purchases are less
than 4% of shipments, except for nitrogenous fertilizers, where it is more than 12% of shipments.
WRI assumed that the fuel mix for each of these subsectors remains constant, and only quantified
changes in costs due to policy, and relative to no policy. In addition, our assessment only includes
costs from direct natural gas, fuel oil, LPG, LNG, coal, and electricity purchases and does not
consider the potentially higher costs of raw materials, which are derived from natural gas or oil
products, because of data limitations. As such, these results may not be representative of the costs
for chemicals subsectors that are large purchasers of select raw materials. For example, producers
in the plastic material and resin subsector rely on natural gas-based feedstocks. The results don’t
capture the price increases of these feedstocks passed along to these subsectors. Thus, the energy
and emissions intensity and ability to pass along costs of suppliers within the chemicals industry
are also key factors in determining the credit effects of climate policy.