Major Greenhouse Gas Cuts Achievable If We Deploy All Technologies

Washington, DC - The U.S. electric power sector is committed to working with Congress towards enactment of economy-wide climate legislation that will produce substantial emissions cuts by 2050, EEI President Tom Kuhn said recently. But emissions targets and timetables must be premised on utilities' ability to bring a full suite of technology options to bear, or consumers will face dramatically higher energy bills than would otherwise be the case.

Testifying before the House Energy and Commerce Committee's Energy and Air Quality panel, Kuhn said that climate policy objectives must be addressed within the context of soaring electricity demand, which will require major new infrastructure investment, even with significant efficiency improvements already underway.

"The magnitude of the challenge in building infrastructure and providing electricity to a growing population and economy underscores the huge task that the electric utility industry faces in slowing, stopping and reversing the growth of greenhouse gas emissions," Kuhn said.

"In the near-term, increased energy efficiency and renewables will help, while over the long haul we'll also need additional nuclear capacity and advanced coal technologies, along with carbon capture and storage, to achieve the levels of emissions cuts being contemplated by Congress," Kuhn said. "The bottom line is that we'll need a full suite of technology options – there's no silver bullet – and they'll be costly to deploy."

Underscoring the importance of technology, Kuhn said that failure to align emissions targets and timetables with technology availability would lead to massive switching from coal to natural gas in electricity generation and divert capital investment away from advanced technology research, development and deployment. "There also would be a vast price difference to the consumer between a full technology pathway and a limited technology approach," he said.

Kuhn cited an analysis by the Electric Power Research Institute (EPRI) estimating that under a limited technology scenario real electricity prices by 2050 could increase 260 percent above business-as-usual increases. In contrast, electricity prices would increase 45 percent under a full technology approach.

To help protect consumers, Kuhn said that federal climate legislation should incorporate an effective cost-containment mechanism, such as an economic safeguard or "safety valve," which puts a ceiling on the price of a CO2 allowance, or a "price collar," which places both a floor and ceiling on allowance prices. Such price certainty would help protect consumers from potential price spikes and facilitate investment in advanced technologies.

Emissions offsets would provide another crucial tool for helping to control compliance costs, Kuhn said, by allowing utilities and other emissions sources to seek reductions where they are the least costly. He urged lawmakers not to place arbitrary limits on offsets, adding that any legitimate concerns can be addressed by monitoring, measurement, appropriate third-party verification and regulatory oversight.

In addition, Kuhn said that a federal climate regime must apply to all sectors of the U.S. economy. "Exceptions simply raise the cost for covered sectors and make it tougher to achieve environmental objectives. Likewise, it is essential that all major emitting nations commit to reducing greenhouse gas emissions. Otherwise, U.S. emissions cuts will be offset by rising emissions elsewhere," Kuhn said.

Finally, Kuhn said that federal legislation should avoid multiple regulation of greenhouse gases under different federal statutes and harmonize federal and state greenhouse gas requirements.

"Climate change is arguably the biggest energy and environmental policy challenge this country has ever faced, and crafting a workable solution won't be easy," Kuhn said. "Technology is the key ingredient to ensuring success, while helping to mitigate economic damage and costs to consumers."

SOURCE: Edison Electric Institute (EEI)