Washington (Platts)--11Mar2008

US Representative Rick Boucher, chairman of the House Subcommittee on
Energy and Air Quality, on Tuesday said he supports a greenhouse gas
cap-and-trade system that would provide nearly all emission credits for free
to industrial companies, utilities and other major CO2 emitters.

Speaking at a Platts Energy Podium in Washington, the Virginia Democrat
said he believes the US should model its GHG control law on the country's
successful acid rain program that is designed to cut national sulfur dioxide
emissions from electric utilities through a cap-and-trade system.

The SO2 system gives away 97% of its allowances and auctions off the
remaining 3%, Boucher said. "We can look to the very successful sulfur dioxide
program," he said, calling the acid rain program "fluid" and "transparent."

"I think the burden of proof rests on those who think we would need to
auction most of the allowances," Boucher said.

Boucher is seeking to pass economy-wide legislation that would reduce
emissions 60% to 80% below current levels by 2050.

He put the odds of getting the bill through Congress and signed by
President Bush at more than 50% but estimated a better probability next year.
"In the next Congress, I think the prospects of passing cap and trade and
having it signed into law will be 80% or better," he said.

The three presidential candidates all support mandatory emissions
reductions and Democrats, who are viewed as more supportive of climate change
actions, are considered likely to gain seats in both the House and Senate, he
said.

The congressman said he would prefer that any GHG cap bill offer modest
cuts in carbon emissions to 2025 with steeper reductions thereafter to allow
coal-fired power generation to remain in the mix and permit the development of
carbon capture and sequestration technologies.

To do otherwise would mean that natural gas would become the dominant
fuel for power generation, leading to higher prices for the fuel amidst
increasing natural gas demand from other economic sectors, Boucher said. "We
simply have to prevent that from happening," he said, adding it will result in
"deep economic dislocation."

He also said he is optimistic that permanent carbon storage could work.
"This isn't rocket scient at all. It isn't even auto mechanics," he said. "It
will work. They've been storing CO2 in oil and gas fields for decades."

The coal-fired power industry "will not be given a pass," but it will
have reduction opportunities through offsets like reforestation and various
forms of methane capture, he said.

Boucher added that the Kyoto Protocol, which the US did not ratify,
failed to require developing nations to rein in their emissions.

"We're not going to make that mistake again," he said. "An obligation to
be imposed there is absolutely essential."

The congressman also said he is considering two different proposals to
reduce international emissions. The first would impose tariffs on products
from other nations that don't have an emissions-reduction program and the
second would impose a GHG standard on products made overseas.

Boucher said the bill Congress passes will create "tens of thousands
of jobs" in a new "green economy."

"I think this is going to be the next technology boom," he said. "The
coal companies in my district understand the need to do this and they believe
that it is inevitable and it is going to happen. That being the case, the
sooner the rules are written, the better."

--Alexander Duncan, alexander_duncan@platts.com