Disruptive technologies and resource shifts are changing the utility business model. Market factors are driving companies toward four possible paths.
Climate Change at the Stack: Posturing Toward Kyoto
of the U.S., Doniger says.
Thorn, of Enron, which has several major projects in developing countries, says those countries should be required to curb their CO2 emissions. "The difference: They're not at the level we are. They want to have free rein to exploit their resources and be as dirty as the U.S. and the rest of Europe was in the last 50 years. We say no, there should be an emphasis on them introducing clean technologies now and not go down the same path.
"China's a disaster," Thorn adds. "But there are things the Chinese can be doing in the way of technology. These developing countries default to dirty technologies for two reasons: One, usually it's cheaper to put a dirty plant in. So they have capital restrictions. At the other end of the wire, they have targets on how much electricity can cost."
The State Department has been pushing China to agree to future steps, even though the Berlin mandate excludes the possibility of new commitments.
Meanwhile, the status of other U.S. positions at midsummer going into Kyoto follows:
• Credit for early reductions. The State Department says it's under consideration. Credit for early reductions in greenhouse gases could be factored into later targets, giving credit to companies that are "out front" and making reductions.
• Timetables. None should be binding before 2005, the U.S. suggests. The U.S. has been pushing for medium-term targets, meaning after 2005.
• Emissions trading. The cornerstone of U.S. proposals is emissions trading jointly implemented through various countries, but the European Union is an obstacle. The Japanese, too, seem wary of emissions rights. Hopp believes emissions rights should be a precondition to U.S. participation in an accord out of Kyoto. "It should be a precondition for any country," she says.
• Banking and Borrowing. The U.S. has proposed the idea of banking and borrowing of emissions credits, but those in industry suspect this provision will be thrown out because there are no other proposals on the table.
"We're against that," says Thorn. "We're the number one sulphur trading people in the United States. ... And the absolute key to any trading program is that these credits can be certified, verified and they're legitimate credits.
"If you're telling me that I want to trade a credit in 1997 (em that I promise to take action to produce reductions in 2001 but I want credit now (em the integrity of that system is violated. What if the company goes out of business?"
Utilities Can't Wait
U.S. utilities are not waiting to start reducing greenhouse gas emissions, according to Novak.
More than 630 utilities are participating in Climate Challenge to reduce, avoid or sequester emissions. Climate Challenge is an industry-DOE effort. One such project, spearheaded by EEI and 40 electric utilities under the nonprofit umbrella of UtiliTree Carbon Co., is developing carbon sinks to offset CO2 emissions (see related story, page 24).
Some 46 million metric tons of carbon equivalent will be reduced in 2000 via the Climate Challenge program. That's a small dent in the 1.5 billion metric tons of carbon