finding a balance on climate change

William Fang and Eric Holdsworth, Edison Electric Institute

As the nation debates the best approach to take on global climate change, the need to find a balance between reducing carbon dioxide (CO2) emissions and maintaining economic growth is becoming increasingly clear.

In April, the U.S. Senate furthered congressional study on how to achieve this balance. The discussion focused on the impacts and design elements of a potential market-based system for reducing emissions. At the hearing, the Edison Electric Institute (EEI) urged Congress to adopt voluntary climate strategies that would enable the electric power industry to continue developing and deploying zero- and low-emitting generation technologies to reduce emissions.

EEI also recommended that Congress support robust voluntary programs in the near term to enable the industry to continue to lower its emissions intensity (CO2 produced per unit of electricity generated). In fact, the industry’s voluntary efforts in 2004 alone eliminated an estimated 282 million metric tons of CO2 emissions-nearly two-thirds of the total reductions and offsets reported to the government that year.

the future for coal

The industry’s large and growing use of coal is a testament to its domestic abundance. Coal is, and will remain, central to the industry’s ability to deliver a reliable and affordable electricity supply. However, since no commercially feasible technology currently exists that can “scrub” or remove CO2 emissions from coal-based power plants, imposing short-term carbon reduction targets on the industry would force massive fuel switching to natural gas, aggravating already tight gas supplies and causing hefty cost increases for consumers.

The Energy Policy Act of 2005 (EPAct) contains a number of provisions that will help advance the industry’s development of “clean coal” technologies:

“- $200 million per year from 2006 to 2014 for the Clean Coal Power Initiative (CCPI), a federal government cost-share program to conduct demonstrations of commercial-scale, advanced clean coal technologies.

“- Almost $1.1 billion over three years in funding for the DOE clean coal research and development program.

“- $90 million over three years for a DOE program to develop carbon capture technologies for use by existing coal plants.

“- New investment tax credits for clean coal facilities, including two new investment tax credits for integrated coal gasification combined cycle (IGCC) and advanced combustion facilities.

Electric companies are already examining the potential of IGCC plants. Duke Energy, American Electric Power and the Southern Company are pursuing plans to construct IGCC plants. The electric power industry is also working with DOE to develop clean coal power plants through the FutureGen project and the CCPL.

EPAct also encourages the industry’s use of other zero- and low-emitting generation technologies:

“- Funding for nuclear power research and development and a production tax credit for electricity produced at new nuclear generation facilities.

“- An extension through 2007 for the tax credit for wind, closed-loop and open-loop biomass facilities, geothermal, small irrigation power, landfill gas and trash combustion facilities.

“- Increased tax credits for solar energy and new tax credits for fuel cells and distributed generation.

The industry is also expanding the voluntary activities it began in 1994 to reduce, avoid or sequester carbon emissions. Through the Climate Challenge program, and now the Power Partners program, the industry has been proactively undertaking improvements to nuclear and fossil fuel plants, conducting energy efficiency and demand-side management projects, and investing in the development of efficient electric technology, forestry, and fly ash reuse projects.

international connection

At the Senate hearing, EEI expressed its view that the country will also need to work with developing nations to reduce their emissions. The International Energy Agency (IEA) is now predicting that in three years CO2 emissions from the emerging economies in Asia, Africa and Latin America will exceed those produced by the mature market economies in North America, Europe and Asia. By 2030, the IEA estimates global CO2 emissions will rise 60 percent compared to today’s levels, with developing country emissions driving two-thirds of the increase.

EEI and its members are participating in the newly formed Asia-Pacific Partnership on Clean Development and Climate to develop global solutions for the climate issue. The partner countries-Australia, China, India, Japan, Republic of Korea and the United States-that together produce about half of the world’s CO2 emissions, have agreed to work to meet goals for climate change, energy security and air emissions in ways that promote sustainable economic growth and poverty reduction.

William Fang is deputy general counsel and climate issue director, and Eric Holdsworth is director, climate programs, at the Edison Electric Institute.

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