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Ready for CO2 Allowances? U.S. Passes on Emissions Cap, Kyoto or No

Fortnightly Magazine - May 15 1998

Institute spokeswoman. "We had an internal memo from EPA saying that is what they wanted. I mean I'm glad it's not there but by no means do we think it's over with. This is just the starting point for the Administration."

Before release of the plan in late March, Elliot Diringer, representative for the White House Office for Environmental Quality, had confirmed that electricity restructuring legislation discussions did include some talk of a cap-and-trade system for CO2.

Environmental Protection Agency Administrator Carol Browner and Secretary of Energy Federico Peña defended the plan's lack of direct CO2 provisions. Peña claimed the plan would reduce carbon emissions by 25 percent to 40 percent by 2010 through such details as the $3-billion matching fund to finance energy efficiency and the 5.5-percent portfolio standard for renewable energy. %n6%n Asking for any more likely would have killed any chance of legislation.

"[The Administration's plan] will reduce greenhouse gas emissions in cost-effective ways," Browner said at a briefing on the proposal. "This Administration remains firmly committed to reducing greenhouse gas emissions on the timetable set out by the president's climate change strategy. And we will work with Congress to determine the appropriate legislative vehicle¼ including a cap-and-trade program for carbon dioxide. At this point in time, we did not believe that was the appropriate way to proceed."

Meanwhile, the Administration plans to make sure that information on CO2 emissions is readily available. It will ensure that the relevant federal agencies coordinate the data on utility emissions and then provide such data in annual reports to the president, according to the report.

Amber Jones, DOE spokeswoman, would neither confirm nor deny future plans on a cap-and-trade program for CO2, but acknowledged the president's global climate plan includes the idea.

A representative of the Department of State confirmed that several federal agencies (em including EPA and DOE, plus several state governments (em are involved in talks to come up with a plan for a carbon emissions allowance trading program, but it's only at the idea stage. The coalition hopes to have a proposal together in time for the next global climate talks in Bonn, Germany set for June 2-12.

The Ni-Mo/Suncor Deal

Kyoto or no, two North American energy companies took the initiative to create a trading plan for CO2 that the rest of the world might follow. Vice President Al Gore has lauded the idea as proof that such a market is feasible. Others have called it a well-meaning public relations coup. Either way, without an official program identifying exactly what credit will be awarded, utilities are taking a chance by acting now.

In early March, Niagara Mohawk Power Corp. sold 100,000 metric tons of greenhouse gas emission reductions to Suncor Energy with an option for 10 million more tons over the next 10 years. The deal has a potential value of $10 million (Canadian) if Suncor uses all options. Suncor will apply the credits toward its emissions reduction targets under Canada's voluntary Climate Change Challenge Program. Niagara Mohawk will use 70 percent of the proceeds to fund new