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Summary of Select EPA Regulatory Exposure Factors by Chemical Manufacturing Subsector Based on CO2 Emissions
WRI and Standard & Poor’s were unable to conduct a full assessment of credit quality per subsector
under EPA regulation because of limited information on the EPA’s anticipated regulatory approach
Instead, using two key characteristics the EPA is likely to prioritize when developing regulations—
absolute emissions and the potential to reduce emissions—WRI determined that likely
regulatory priorities among the 13 subsectors include petrochemical, all other basic organic,
and nitrogenous fertilizer producers (see figure 10). It is important to note that the likelihood of
regulation does not necessarily translate to negative credit impact. For example, some companies’
facilities may already meet EPA regulatory thresholds. In addition, some emissions reductions
may be relatively cheap, such as N2O reductions in nitric acid and adipic acid production, and
may not necessarily have a material impact. Finally, the EPA will also consider other key criteria,
particularly cost feasibility and the remaining useful life of facilities, which could limit compliance
requirements and resulting costs.
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