Eastman optimistic on chemical recycling demand
Amid uncertainty surrounding projects funded through the Inflation Reduction Act, the CEO of Tennessee-headquartered Eastman expressed confidence in the future of its second U.S. chemical recycling plant, which was greenlit upon a $375 million award from the Department of Energy.
“Our project’s under contract with the DOE, and we’ve already received our first funds from the program, and so we feel like we’re on a good track there,” said CEO Mark Costa during the company’s investor call Jan. 31. During a November investor event, executives had expressed less certainty about the project in Longview, Texas. He didn’t mention the proposed chemical recycling plant in France during the call.
With regards to tariffs, Costa said today’s global manufacturing economy is weaker than during the 2019 trade war with China, and many countries are in a weaker position. “So it’s not clear to me how much more negative impact tariffs can have on top of the manufacturing recession we’re already in.”
And in the absence of specific tariff actions, “there’s no way for me to estimate the impacts at this stage,” he said during the call, which took place the day before President Donald Trump announced tariff actions against Canada, Mexico and China effective Feb. 4; those against Mexico were later postponed. “But I will say that our forecast does not include any significant impact from the trade actions.”
So far, Eastman has not yet seen an impact from regulatory and funding uncertainty, Costa said. However, the challenging macroeconomic environment has forced consumers to choose more carefully how they spend their money, which has slowed Eastman customers’ adoption of recycled resin. Instead Eastman’s customers are focusing on launching new products to help grow market share in a challenging environment, Costa said.
The company has more than 100 customers using Renew resin in durable goods, he said, “and they’re already paying premiums for those products.”
Nevertheless, the company doesn’t see a long-term shift away from brands using more sustainable plastics. “The reality is, the brands are very focused on the brand equity and consumers’ engagement around their products, and consumers really don’t like plastic waste,” Costa said.
“The NGOs, the media are still very much going after plastic waste,” he said. “In many states, they’re more committed post-election to driving this agenda with what choices they can make at the state level. And regulations are certainly coming out in Europe that are driving and forcing change as well as in multiple states in the U.S. So I don’t think that context is changing.”
Texas project aligns with Trump priorities
Costa said Eastman’s project “fits perfectly” with Trump’s agenda in three areas: building a resilient U.S. supply chain, creating energy independence and moving the U.S. toward a competitive advantage in managing end-of-life plastics.
The company’s Kingsport methanolysis plant produces plastics for food packaging, durable goods and medical devices, items Costa said the U.S. needs to produce to increase supply chain resiliency. He added that Eastman’s investments “create jobs in revenue for recycling infrastructure that feeds into this kind of facility and the others that need to be built in this country, and that creates a sustainable growth not just in Texas but across the country.”
As for energy independence, “plastic waste is basically oil sitting above ground in landfill,” he said. He said using that plastic as feedstock provides an advantaged cost position when crude oil is above $60 per barrel. In its January Short-Term Energy Outlook, the U.S. Energy Information Administration forecast global benchmark Brent crude oil prices to average $74 per barrel in 2025 and $66 in 2026, compared to $81 in 2024, as global oil production is expected to grow more than demand.
Building U.S. recycling infrastructure also helps advance long-term competitive advantage in creating a circular economy – which Costa defined as using local end-of-life plastics as feedstock.
“Imports obviously shouldn’t count as recycled content, because that’s solving someone else’s waste problem, not ours. And whether you’re Republican or a Democrat, no one likes plastic waste, they all want it solved,” he said. “Even Trump signed a Save our Seas Act in the first-term showing that marine debris and impacts to the environment are important to him on this topic.”
He added that “obviously, we’re paying very close attention to the new administration.”
Trump tariffs poised for courtroom showdown
E&E News | Niina H. Farah | Feb. 7, 2025
Recent Supreme Court rulings dismantling Chevron deference and elevating the major questions doctrine could hurt the president’s plans.
President Donald Trump’s planned tariffs on neighboring Canada and Mexico rely on a novel interpretation of federal law that is prompting questions about whether his strategy could survive legal challenge.
Legal experts say the 1977 law Trump is using to implement the tariffs — the International Emergency Economic Powers Act, or IEEPA — gives the president broad economic authority, but has never been used to impose tariffs on foreign goods.
For now, Trump’s plans to impose a 25 percent tariff on the nation’s northern and southern neighbors is on ice, but the threat of a North American trade war — and massive impact for U.S. energy infrastructure — still looms.
If Trump relies on the IEEPA to advance his plans, he may stumble in the courts, as it is “far from clear” that Congress gave the president power to issue tariffs under the statute, said Julian Ku, faculty director of international programs at Hofstra University School of Law.
Its original intent was to block trade and transactions with other countries — not impose taxes while allowing trade to continue.
“That’s why it doesn’t fit in an obvious way with what IEEPA has typically been used for,” Ku said.
Other legal challenges to the IEEPA, while not focused on tariffs, have found that the law is not an overly broad delegation of authority to the president, said Jennifer Hillman, co-director of the Institute of International Economic Law at the Georgetown University Law Center.
Some observers said recent Supreme Court rulings might also throw a wrench in the president’s plans, if tariffs are eventually challenged in federal court.
“Courts have generally given great deference to the President’s emergency powers,” said David Goldwyn, chair of the Energy Advisory Group at the Atlantic Council, in an email.
But the Supreme Court’s ruling last year striking down Chevron deference could change that, Goldwyn said. Under the legal doctrine, courts generally deferred to agencies’ interpretations of ambiguous laws. Last summer, the Supreme Court ruled in Loper Bright v. Raimondo that courts should rely instead on the “best” reading of the statute.
The IEEPA does not “specifically name tariffs, and it is possible that it could be challenged on that basis,” said Goldwyn.
Thomas Berry, director of the Cato Institute’s Robert A. Levy Center for Constitutional Studies, said the major questions doctrine could also prove problematic for the president.
The legal doctrine states that Congress must clearly delegate power on issues of major economic or political significance. The Supreme Court cited the doctrine for the first time in its 2022 ruling in West Virginia v. EPA that invalidated Obama-era regulations on greenhouse gas emissions from power plants.
When courts review a statute, they are looking to see if the executive branch has ever asserted this power before, and judges will take a close look in cases where a decades-old law is being used as part of a new exercise of power, said Berry.
The courts are looking out for whether the executive branch is trying to “find a statute to shoehorn that policy goal into,” said Berry. “I think there’s a lot of evidence that that is what happened here.”
Not all courts agree that the major questions doctrine applies to actions by the president. The 5th U.S. Circuit Court of Appeals in Louisiana has taken the view that it does, and the 9th U.S. Circuit Court of Appeals in California has said that it doesn’t, said Berry.
“In my view, the major questions doctrine is a way to interpret whether the executive branch as a whole has been given a certain authority by a statute,” said Berry. “That question is relevant whether the particular official given the authority happens to be the president … or an agency.”
What qualifies as an ’emergency’?
Under the IEEPA, the president has power to impose economic restrictions based on a declaration of a national emergency where there is an “unusual and extraordinary threat” to the national security, foreign policy or economy of the United States.
Unlike other laws authorizing tariffs, which require time to implement, the IEEPA allows for quick action by a president citing emergency powers. Congress does not precisely define what counts as an emergency under the statute.
In this case, Trump is relying on the threat of illegal immigration and illegal transport of fentanyl across the U.S. border to justify plans to impose a 25 percent tariff on goods from Canada and Mexico, as well as a 10 percent tariff on Canadian energy resources.
The countries reached a temporary deal earlier this week to delay the tariffs for 30 days. A separate 10 percent tariff on goods from China, however, has already gone into effect.
Trump will need to stick to the argument that the tariffs are about illegal immigration and drug smuggling in order to have the best chance of defending them in court, Ku said. Attorneys for the president will need to avoid talking about the amount of trade between the countries.
While the IEEPA has been challenged before, those claims typically do not succeed because courts have generally been deferential to the president’s authority over issues of national security and foreign affairs, he said.
Ku anticipated that legal challenges brought by companies paying the tariffs at ports of entry could crop up in any federal court across the country, unlike typical trade disputes, which would land before the Court of International Trade in New York.
Energy impacts
The combined effects of the tariffs on Canada, Mexico and China could be felt broadly by the energy industry.
The United States imports many of its transformers for electrical transmission from Mexico. With a global shortage of transformers, increasing their costs by 25 percent could have major impacts for various projects, said Joseph Webster, a senior fellow at the Atlantic Council.
He added that China and Canada also supply a significant portion of U.S. transformer imports.
Late last year, Canada became the second-largest exporter of battery energy storage systems to the United States, after China, said Webster, citing U.S. Census Bureau data.
About 60 percent of the U.S.’s crude oil imports come from Canada, and 11 percent come from Mexico.
Even if all of the tariffs against Mexico and Canada do not end up being implemented, they have already taken effect for Chinese goods, so the issue is still a live controversy, said Berry.
The ability to implement these tariffs under the IEEPA is “a serious power to be placed in the hands of the president,” he said.
“It would be good for the separation of powers and good for international relations if we had clarity — one way or the other — on the scope of [the president’s] powers,” Berry said.