Utilities get little credit for their efforts to strengthen the sustainability of their businesses. But these efforts have paid dividends in stock performance, capital costs, regulatory...
Greenhouse Gas Emissions: Changing U.S. Climate
The states are getting into the act on greenhouse emissions, and the power industry is getting more proactive. What policy measures are appropriate?
A growing number of U.S. utility companies have come out in favor of federal mandatory limits on emissions of carbon dioxide ( CO2) from their facilities. Edison International's Chairman John Bryson recently called for a comprehensive national program to address global warming; eight companies constituting the "Clean Energy Group" support national "four-pollutant" legislation that would among other things seek to stabilize carbon emissions at 2001 levels by 2013; and Cinergy has voiced its support for mandatory limits on carbon emissions. Cinergy, which relies heavily on coal, is among the companies named in the landmark public nuisance lawsuit filed last July by a coalition of eight state attorneys general, led by New York's Eliot Spitzer. Furthermore, shareholder pressure has forced Cinergy and other companies to examine their risks related to climate-change regulation. Finally, companies doing business in states with mandatory carbon caps under development, such as those in Regional Greenhouse-Gas Initiative (RGGI) states, would rather have federal regulation extend those limits to the entire industry, thereby leveling the playing field on a national scale.
Proponents of mandatory carbon limits – though increasing in number – still constitute a minority within the utility industry. Most utilities prefer voluntary greenhouse-gas (GHG) emissions reductions, or take the view that CO2 should not be considered a pollutant at all. Yet if the current momentum continues, the utilities calling for mandatory GHG regulation will continue to grow. Shareholder resolutions, litigation, public scrutiny and state actions to regulate GHGs all contribute to this drive. This article provides an overview of the state regulation trend; actions taken by the utility sector to address GHG emissions; and industry views on proposed mandatory GHG caps to be implemented at the federal level.
Overview of State Climate Change Actions
Twenty-eight states have set forth plans to combat climate change by reducing their net emissions of GHGs, implementing policies that vary in scope and stringency. One example: seven states (New York, New Jersey, Rhode Island, Connecticut, Massachusetts, Maine, and Vermont) have adopted or have stated intentions to adopt California's requirement that automakers cut global-warming emissions from new vehicles by more than 29 percent in the next decade. Together these eight states comprise 26 percent of the