Energy execs give climate bill grudging support

SAN FRANCISCO Fri Jun 26, 2009 1:05pm EDT

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SAN FRANCISCO (Reuters) - A grudging acceptance of the U.S. climate change bill among energy industry executives and some environmentalists only reinforces the notion that a compromise ensures nobody's really happy.

Ahead of a House of Representatives vote on the bill Friday, the measure was a hot topic for executives of U.S. utilities and power producers as they gathered at their annual industry meeting this week.

Conference organizer Edison Electric Institute stressed support for the legislation and reminded members that their industry had been among the first to argue for such a measure.

But the EEI wants to see changes as the bill moves through the Senate, including some sort of upper limit on the price of carbon once the credits start trading.

"We do think that there still needs to be improvements on it from the cost-containment mechanisms for our customers," EEI President Tom Kuhn told reporters as he sat alongside U.S. Energy Secretary Steven Chu, who addressed the conference.

At the core of the bill is a "cap and trade" plan designed to reduce emissions of carbon dioxide and other greenhouse gases by 17 percent by 2020 and 83 percent by 2050, using 2005 levels as the baseline.

The EEI sees the 2020 target as too aggressive and would prefer a cut closer to the roughly 15 percent proposed by President Barack Obama.

"It's going to be a very expensive transition," said David Ratcliffe, chief executive of Southern Co and outgoing EEI chairman. "If you try to do it fast, it's going to be more expensive."

Environmental Defense Fund President Fred Krupp, in one of the EEI meeting's opening speeches, expressed support for the bill but portrayed it as merely the start of a long process.

He singled out mercury emissions from power plants as a high priority. "This is an issue that so far has defied solution," he said.

Executives also viewed the bill as largely a framework for further negotiation, given the potential for litigation and modifications down the line.

Ford Motor Co CEO Alan Mulally, who addressed the EEI meeting in San Francisco two days after Ford got a $5.9 billion U.S. government loan, stopped short of endorsing the bill, saying, "We look forward to participating. We've got a long way to go -- which is the process."

At an energy economics conference just blocks away, the bill was sharply criticized by Chevron Corp CEO David O'Reilly and George Schultz, a former secretary of state and former president of infrastructure and power plant builder Bechtel. Both men supported a "transparent" carbon tax.

"My concern is that it's going to be so obviously corrupt that it's going to discredit the whole idea," Schultz said. "Better to lay down the line, it's a tax. So if we want to tax carbon, let's do it."

LIGHTS OUT

The bill includes what many saw as a modest goal on reduced use of electricity, requiring utilities to show just a 5 percent gain from energy efficiency by 2020.

"We're the Saudi Arabia of waste," said John Woolard, CEO of solar company BrightSource and founder of an energy efficiency firm. "We can harvest so much waste in this country."

But the EEI noted that many decisions would have to be made by the 50 states because utilities answer to state regulators.

"If you tried to take away the states' rate-making authority over the utilities, this wouldn't go anywhere," said Tony Earley, DTE Energy Co CEO and incoming EEI chairman. "The bill would be dead on arrival."

(Reporting by Braden Reddall; editing by John Wallace)

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