Public Power - September 2008 - (Page 10)

PERSPECTIVE In Search of Equitable Climate Change Solutions By Mark Crisson • President & CEO • American Public Power Association The needmeet concerns aboutgas emisto reduce greenhouse sions to climate change is the most pressing challenge facing electric utilities right now. The issue has had a high profile in Congress this year, notwithstanding the lack of movement on a bill in either the House or the Senate. The increase in gasoline prices gave new vigor to public discourse on energy policy, resulting in two high-profile, radical proposals for energy supply in mid-July. On July 8, oilman T. Boone Pickens announced his proposal for reducing U.S. dependence on foreign oil by boosting U.S. development of wind energy and by making motor vehicles run on natural gas. Pickens pointed to a 2005 Stanford University study that concluded there is enough wind power worldwide to meet electricity needs seven times over, even if only 20 percent of wind power could be captured. Once this potential is tapped, Pickens said, electricity generators can reduce their dependence on natural gas, freeing up the supply for motor vehicles. Nine days later, former Vice President Al Gore challenged the nation to stop using carbon fuels within a decade. All electricity should be produced using renewable fuel sources, he said. “This goal is achievable, affordable and transformative,” Gore said in a July 17 speech in Washington. The economics of energy have changed in recent years to drive this kind of change, he said. The vice president put his climate change challenge in a league with landing humans on the moon. He recalled that many Americans snickered in 1961 when President Kennedy allowed 10 years to meet that goal. These proposals (and the media attention they attracted) should be of concern to elec10 SEPTEMBER 2008 tric consumers. Any policy adopted to address climate change will necessarily lay an enormous burden in front of electric utilities and their consumers. And there is no spacerace-sized budget to help us meet the challenge. APPA’s CEO Task Force on Climate Change has been working for two years now to develop policy positions on climate change. The panel, comprised of 31 CEOs from public power utilities, agrees with the former vice president regarding the events of a carbon tax, which would be an equitable and sensible way to reduce carbon emissions. From our perspective, a carbon tax offers a solution that would be preferable to an emissions cap-and-trade program. Unlike a cap-and-trade program, a tax is transparent, administratively feasible, flexible, and it would generate a revenue stream, which could be used for related public purposes, such as R&D and ratepayer assistance. Under a cap-and-trade program—the option that gets the most attention in Congress—emission allowances would be auctioned off and traded in a multi-billion dollar market. Our members feel strongly that allowances must have a price cap or “safety valve” or a comparably stringent cost control mechanism. There is a significant risk of volatility and market manipulation in such a scheme, which makes addressing potential costs paramount. Consequently, it is also important that any carbon market be carefully regulated in a fashion that maximizes the revenues generated for appropriate public purposes. Even with such measures, implementing a cap-andtrade program would not be simple and there are likely to be numerous unintended consequences. As Congress continues to consider climate change policy solutions, we need to monitor the legislative process closely to assure that electric utilities have the flexibility needed to meet carbon-reduction targets while keeping electricity prices un- der control. Climate change is a global problem and the solutions for addressing it can and should be global in scope. If, for example, a utility in the United States must burn coal to meet local demand for electricity, it should have the flexibility to look abroad for offsetting carbon-reductions— perhaps by sponsoring a reforestation project in a developing nation. Such “offsets” for emissions are a potentially useful means of building flexibility in to the system, provided they meet certain standards, i.e., are verifiable and additional. The Pickens plan aside, plug-in-hybrid electric vehicles offer enormous potential for reducing carbon emissions. According to the U.S. Energy Information Administration, motor vehicles emitted 1,953 million metric tons of carbon dioxide in 2006. The Electric Power Research Institute estimates greenhouse gas emissions would fall by as much as 500 million metric tons a year by 2050 with a high saturation of plug-in hybrid electric vehicles. Development of plug-in hybrid vehicles would also reduce other air pollutants, especially ozone. But the reduction of greenhouse gas emissions in transportation could lead to an increase in carbon emissions in the electricity industry. National legislation must recognize the contribution of electric generators to the overall goal of reducing the nation’s carbon emissions through appropriate offsets or allowances. APPA and its members support comprehensive federal legislation to address the issue of climate change. But Congress must recognize that this is a very complex undertaking that will impact every consumer and virtually every aspect of the economy. For legislation to be successful over time and to be politically sustainable, it must reflect the realities of our economy and the current state of technology. Doing so will maximize our chances of successfully meeting important environmental goals while minimizing costs to the consumer. ❚ PUBLIC POWER

Table of Contents Feed for the Digital Edition of Public Power - September 2008

Public Power - September 2008 Contents Perspective 10 Questions What’s Good About RTOs? Capturing Coal’s Carbon Carbon Safety Valves Greater Glass, Greater Savings Getting Customers to Embrace Compact Fluorescent Lights LEEDing Green Kansas City Shows How to Build Green For Governing Boards Safety Community Broadband Hometown Connections Parting Shot

Public Power - September 2008

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