Missouri group: U.S. headed to 'carbon-constrained future'

Thursday, April 5, 2007

ST. LOUIS -- The head of a Missouri business group says industry has had a "great life" with energy sources derived from fossil fuels.

"They're abundant and easy to use. But they have risks," Roger Walker said Wednesday at the start of a two-day conference on climate change and energy policy his group is sponsoring.

About 200 representatives from Missouri businesses, utilities and academia are attending.

Walker's group -- the Regulatory Environmental Group for Missouri -- and conference host, Missouri Botanical Garden, put on the event to lay out the opportunities of what Walker calls a "carbon-constrained future."

That's shorthand for reducing the flow of carbon dioxide and other heat-trapping gases into the atmosphere that contribute to climate change.

Cities, states and regions are already taking steps to reduce those emissions. And more than a dozen bills in Congress would accomplish the same goal. President Bush has acknowledged that greenhouse gas emissions contribute to global warming, but opposes mandatory controls.

Ralph Cavanagh, energy expert with the Natural Resources Defense Council, said inaction and uncertainty about future regulations are costing U.S. companies.

In January, the chief executives of 10 major corporations urged Congress to require limits on greenhouse gases this year, contending voluntary efforts to combat climate change are inadequate.

Such limits are in part to ensure their long-term interests, they have said.

Federal legislation introduced so far has some variation of a cap-and-trade approach to dealing with climate change.

Such a mechanism would place mandatory limits on greenhouse gas emissions but allow companies to trade emission credits. Companies that can't meet the cap could purchase credits from those that exceeded them.

Cavanagh said a 500 megawatt power plant fired by coal emits upwards of 3 million tons of carbon dioxide a year.

Under proposed legislation, the cost of each ton of emissions would be $10, or $30 million a year in this example. No company can bear that kind of financial exposure, he said.

"Coal is the most carbon-intensive fuel source," Cavanagh said.

He believes the future of coal depends on the coal industry's willingness to find better ways to responsibly dispose of greenhouse gases, such as collecting and pumping it underground.

He believes it can rise to that challenge, but must do so quickly.

Cap-and-trade legislation isn't enough to stem the flow of heat-trapping gases into the atmosphere, Cavanagh said. "There is a critical role for hometown utilities and individual responsibility," he said.

In every state except California and Idaho, electric utilities tie their financial health to increases in electricity sales, and in effect, carbon emissions. The same is true for gas utilities in all but a dozen states, he said.

The NRDC is working with utility trade associations to adopt an alternative system. Utilities would make regular rate adjustments to cover the impact of unexpected changes in energy sales.

Fredrick Palmer, senior vice president with St. Louis-based Peabody Energy, said cap-and-trade strategies haven't worked in Europe and will only lead to influence peddling. He said that if Congress requires the caps, utilities will be forced to shut down operations and the U.S. will suffer brownouts.

He said the more practical solution is the path forced by the Supreme Court this week.

The court ruled the Environmental Protection Agency is authorized to regulate carbon dioxide emissions from new vehicles as an air pollutant.

The reasoning also appears to apply to EPA's decision not to impose controls on global warming pollution from power plants, a decision that has been challenged separately in court, several environmental lawyers have said.

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