Duke Energy urges limits on carbon dioxide

TINA SEELEY
Bloomberg News
April 4, 2006

Utilities urge Congress to set ceiling

U.S. utilities, breaking with their own trade association, urged Congress to impose mandatory restrictions on emissions of carbon dioxide, a gas that contributes to global warming.

Exelon Corp. and Duke Energy Corp., the two largest U.S. utility owners, joined PNM Resources and Sempra Energy at a Senate hearing Tuesday to express support for creation of a federal program to set limits for U.S. greenhouse gas emissions.

"Customers and shareholders need greater certainty," said Ruth Shaw, president of Duke's nuclear subsidiary. The company is in the process of evaluating how it will spend "many billions of dollars" to provide power for its growing customer base over the next 50 years, said Shaw, and wants to know what future carbon limits will be.

Backers of mandatory caps face opposition from politicians and from some in their industry. President Bush in 2001 abandoned a campaign pledge to limit emissions of carbon dioxide, or CO2, from power plants, and he withdrew the U.S. from the Kyoto Protocol, an international treaty that would have required emission reductions.

The utility industry, through its trade group, the Edison Electric Institute, officially opposes government restrictions in favor of voluntary efforts.

The burning of coal and natural gas to generate electricity is the largest single contributor to carbon emissions in the U.S., the nation with the most greenhouse gas emissions.

The Senate energy committee on Tuesday heard from 29 witnesses who commented on a Feb. 2 proposal by its Republican chairman, Pete Domenici, and its senior Democrat, Jeff Bingaman, both from New Mexico, to set mandatory limits.

The senators asked whether limits should be imposed on particular industries or economy-wide, and how to allocate emission allowances for those who exceed targets.

Shaw and other supporters of mandatory caps are in direct conflict with utility companies such as Southern Co. and American Electric Power Co. Southern and American Electric have larger collections of coal-fired plants and would incur high costs to reduce carbon dioxide emissions to meet mandatory caps.

A representative of Southern, Senior Vice President Chris Hobson, told the senators that mandatory caps are not necessary, and that the industry should continue to invest in technology that can generate power with lower emissions, including coal gasification plants and new nuclear reactors.

"Even in the absence of a mandatory program there are substantial efforts under way to bring these technologies to the point of deployment," Hobson said. "A mandatory program, in our view, is not necessary to make that happen."

PNM's CEO, Jeffry Sterba, warned that new technology solutions "may happen a lot more slowly if it remains solely voluntary."

"We cannot delay and cannot count on a strictly voluntary approach," said Duke's Shaw.

The Clean Energy Group, which includes Entergy Corp., Calpine Corp. and PG&E Corp., even suggested the utility sector should be the first to be subject to mandatory caps. It would be a "good first step" before caps are established economy-wide, said Michael Bradley, executive director of the group.

Bingaman said he doesn't expect anything to be signed into law this year because of Bush administration opposition and a shortened legislative calendar ahead of congressional elections in November.

Duke Chairman Paul Anderson has called for a new tax on carbon dioxide to reduce greenhouse gas and alleviate global warming. Last April in Charlotte, he introduced a plan for a universal "carbon tax," saying he didn't want the power industry to be the only one targeted. He said he would rather have the tax spread across all carbon-dioxide producers, including cars and manufacturing plants, not just the easy targets of power plants. Shaw said Tuesday that a climate change policy should be economy-wide and that a carbon tax could be "an effective approach for U.S. climate policy."

Duke Energy's position on climate change here.