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US: Industry starts to back rules on greenhouse gas

by Zachary CoileSan Francisco Chronicle
August 24th, 2006

When the head of the American Public Power Association spoke last week to electric utility operators in Minnesota, he had a straightforward message: Federal regulation of greenhouse gases is coming. Get ready for it.

"The issue is no longer whether there is a human contribution to global warming but the extent of that contribution," said Alan Richardson, president and CEO of the group, whose members supply 15 percent of the nation's power. There is, he added, "an emerging public consensus and a building political directive that inaction is not a viable strategy."

For years, most industry groups have fought any effort to limit carbon dioxide and other gases linked to global warming, warning of dire consequences for the U.S. economy. But with growing public anxiety about climate change, major corporations are increasingly preparing for -- and, in some cases, lobbying for -- Congress to regulate emissions of heat-trapping gases.

The industry's response is evolving in spite of opposition by the Bush administration to new limits on carbon dioxide.

But businesses are reading the political tea leaves. Legislation to limit greenhouse gas emissions is gaining ground in Congress with members of both parties. States, especially California and those in the Northeast, are moving forward with climate-change regulations. Two top presidential hopefuls for 2008 -- Republican Sen. John McCain of Arizona and Democratic Sen. Hillary Clinton of New York -- have called for reining in greenhouse gases.

California's senior senator, Democrat Dianne Feinstein, plans, in a major speech today on global warming at San Francisco's Commonwealth Club, to propose legislation to cut carbon emissions.

"The scientific evidence is real," said Betsy Moler, vice president for government and environmental affairs at Exelon Corp. of Chicago, an energy firm that supports a mandatory cap on carbon dioxide emissions. "When you have the likes of Sen. Ted Stevens of Alaska, a conservative Republican, and he says he has seen the changes in his lifetime in the Arctic, there is just no doubt that something has to happen."

The trend became clear in April, when the Senate called America's top energy companies -- including some of the nation's largest emitters of greenhouse gases -- to testify about new legislation to regulate emissions.

Six leading energy companies went on record supporting mandatory limits on emissions of CO{-2}, including Shell, Duke Energy, Exelon, General Electric, Sempra Energy and PNM Resources, an Albuquerque utility. Even the world's largest retailer, Wal-Mart, voiced its support for new limits on greenhouse gases.

Only two energy firms testifying opposed new regulation: American Electric Power and Southern Co., electric utilities in the Midwest and South whose power plants are the biggest emitters of greenhouse gases in the country. Both companies prefer the system of voluntary reductions by industry favored by the Bush administration.

"There is a split in industry -- there are the forward-leaners and the knuckle-draggers," said David Doniger, the top climate change official at the Environmental Protection Agency under former President Bill Clinton, now a senior attorney for the Natural Resources Defense Council.

"The forward-leaners are looking realistically at the future. Either they agree that global warming is real and needs to be addressed -- and that means regulation -- or they see it as inevitable that it will happen even if they don't agree," Doniger said. "Then you have the knuckle-draggers who are just trying to use their political force to put it off as long as possible."

BP, formerly British Petroleum, the London-based energy giant, cut its carbon emissions by 10 percent across its refineries and plants. The firm's chief executive, Lord John Browne, set the goal in 1997 when he gave a speech at his alma mater, Stanford University, that marked the first time an oil company chief had acknowledged that the burning of fossil fuels was contributing to global warming.

BP announced plans in February to build a $1 billion plant at its refinery in Carson (Los Angeles County) to convert petroleum coke, a byproduct of oil refining, into hydrogen. The plant will generate 500 megawatts of power, but 90 percent of the carbon emissions will be pumped underground into nearby oil fields -- boosting oil recovery while preventing the release of 4 million tons of CO{-2} a year into the atmosphere.

Critics have noted the contrast between BP and another oil giant, ExxonMobil, which has spent millions of dollars in recent years funding groups that question global warming science and oppose carbon regulation.

The auto industry also has resisted climate-change legislation and is battling California in federal court over the state's landmark law limiting tailpipe emissions of greenhouse gases. But, as in the oil industry, there are divisions among the automakers.

In a speech at the National Press Club on Friday, Jim Press, president of Toyota North America, challenged other automakers to work with Congress to set reasonable goals for boosting fuel efficiency and curbing greenhouse gases.

"It's time for us to stop being the 'against' industry and to come out strong for something important, like a better Earth and a better quality of life," Press said.

Corporations are keenly aware that lawmakers' views on climate change are shifting. For years, hearings in Congress focused on whether global warming was real. But in June 2005, the Senate passed a nonbinding sense of the Senate resolution stating that human activity is contributing to rising temperatures and that Congress should enact legislation to "slow, stop and reverse the growth" of greenhouse gas emissions.

While Congress has yet to pass legislation, many states are rushing to fill the void. Last week, seven northeast states reached an agreement to cap carbon dioxide emissions from their power plants at current levels from 2009 to 2015 and gradually reduce them by 10 percent by 2019.

California also is considering legislation to require all businesses in the state to reduce greenhouse gas emissions. It's another reason industry groups want federal regulation: They fear a patchwork of state rules, some of which could be tougher than any future federal standard.

Not surprisingly, the views of many companies on climate change depend on how new regulations would affect their bottom lines. Utilities with nuclear, natural gas or other power plants with low CO{-2} emissions could profit from a "cap and trade" system in which they could sell carbon credits to firms with traditional coal-fired plants, which produce huge quantities of greenhouse gases.

One utility, Dallas-based TXU, recently announced plans to build 11 new coal-fired plants, more than doubling its CO{-2} emissions by 2011. Critics say TXU hopes to get the coal plants grandfathered in, before new climate change rules take effect, a claim the company denies.

Feinstein criticized TXU's plans to build more traditional coal plants as exactly the wrong way to go for business to address the climate crisis.

"Instead they should really be putting the effort into seeing if coal gasification can work and if you can sequester carbon sufficiently," Feinstein said, citing new technologies to cut emissions. "That's what has to be looked at, and very quickly. These coal plants have to change."



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