Washington (Platts)--11Apr2008

Coal producers and coal-fired electric utilities are voicing concerns about
federal and state governments each setting up their own carbon regulations,
saying such "dual regimes" would be detrimental to the economy and would raise
costs for companies to comply with the regulations.

"Piecemeal state and regional climate initiatives can lead to inefficient
resource allocation and unnecessary consumer costs," said Gene Trisko, an
attorney representing energy clients, during a presentation at an Americans
for Balanced Energy Choices webinar on Thursday.

Trisko said that if Congress decides to regulate emissions from specific
sources or sectors, states and regional initiatives "should not duplicate"
those federal efforts.

He said federal climate programs are most likely to affect electric utilities
and other large industrial sources such as petroleum refiners.

Trisko said, however, that there is plenty of room for states to tackle carbon
emissions when the federal government steps in with its own mandatory scheme.
He said some areas in the economy where states could tackle emissions are
residential and transportation sectors.

Trisko said states also may receive "substantial amounts" of CO2 emissions
allowances under a federal carbon cap-and-trade scheme, which "they could fund
to use programs targeting other emission sources and enhancing energy
efficiency."

Over the past few years, states have been debating ways they could attack
greenhouse emissions while the federal government has yet to implement a
mandatory scheme. For instance, one of the initiatives is the Regional
Greenhouse Gas Initiative, which calls for freezing electric utility emissions
in several northeastern states and then reducing those emissions by 10% by
2012-2018. The seven states participating in the initiative are Connecticut,
Delaware, Maine, New Hampshire, New Jersey, New York and Vermont.

Coal-fired utilities and producers have been seeking more voice in the current
debate about ways to address rising carbon emissions through groups such as
ABEC. On its web site, the group lists 23 major producers, utilities and
railroads as its supporters, including Arch Coal, Peabody Energy, American
Electric Power, Union Pacific and Norfolk Southern.

--Marcin Skomial, marcin_skomial@platts.com and
--Joel Kirkland, joel_kirkland@platts.com