Utilities Could Bear CO2 Reductions Burden

By Published On: September 2, 2005

Regulating vehicle contributions to global warming could be dismissed in favor of focusing on power plant regulation, according to speakers at an August 29 Climate Change Action Team meeting. In early June, the governor set carbon dioxide reduction goals, and the state has begun debating how to meet the proposed cuts. The climate change team is attempting to spearhead that effort. “The power sector has really stepped up” by voluntarily registering many of its greenhouse gas emissions through the state’s registry, said Peggy Duxbury, Calpine vice-president of government and environmental policy. She is concerned that power plant owners, however, “are now being set up as a primary target” to meet the CO2 reduction goals. The transportation industry should not be exempt from potential regulation, despite the complexity of tackling its emissions, Duxbury added. There is resistance to applying CO2 reduction goals to the transportation industry, the biggest emitter of CO2, because it is seen as a multiheaded monster difficult to control and, in California, a political third rail. “We need diverse participants and multiple sectors,” said Wendy Pulling, Pacific Gas & Electric’s director of environmental policy. “You have got to take into account cost and customers,” she said, adding that limiting the emission-reduction pool decreases its effectiveness. Focusing solely on investor-owned utilities and their in-state emissions “may result in a disproportionate cost burden on utility ratepayers,” conceded Lainie Motamedi, regulatory analyst with the California Public Utilities Commission?s Division of Strategic Planning. Including all power generated by investor-owned utilities, both in-state and imported—as well as municipal power agencies, private generators, and direct-access providers—would spread out the costs but also require new regulations giving the state authority over these entities. A California Energy Commission attorney recently concluded that the state might be able to regulate emissions from out-of-state power supplies (<i>Circuit</i>, Aug. 26, 2005). Ralph Cavanagh, Natural Resources Defense Council energy program director, insisted that all load-serving entities be subject to CO2 cuts. “Out-of-state power suppliers emphatically qualify,” he added. California is the ninth-largest emitter of greenhouse gas emissions. The electricity industry is responsible for about 16 percent of the state?s CO2 pollution—30 percent when power imports are added. The in-state electricity industry is considered the low-hanging fruit because it tracks and reports its greenhouse gas emissions to the state (<i>Circuit</i>, Aug. 12, 2005). Also at issue are the methodologies to use to verify emissions and the type of cap-and-trade program that would be imposed. One concern is that if not properly structured, a cap-and-trade program—where total emissions are limited and those polluting less get credits they can sell to those polluting more—could wipe out the green tag trading program. Technology to reduce greenhouse gas emissions is expected to have a worldwide market potential of $180 billion a year, said Eileen Tutt, special assistant to the California Environmental Protection Agency secretary. It could result in the creation of 53,000 jobs in California by 2020, she added. The climate action team plans to release a draft report on CO2 reduction strategies September 13.

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