CEOs seek firm signal on US climate change policy

Thu Mar 4, 2010 6:46pm EST

Related Topics

* CEOs say need clarity on U.S. climate-change policy

* Say investment stalled by uncertainty

* Broadly support cap-and-trade type of legislation

By Poornima Gupta

SANTA BARBARA, Calif., March 4 (Reuters) - Global leaders in the energy business say they want some certainty in U.S. climate policy to encourage development of new technologies and other investment, but they do not expect federal legislation to pass this year.

The chief executives of some of the biggest companies in the power, raw materials and oil businesses also said they broadly support a carbon cap-and-trade program.

Cap-and-trade was the centerpiece of a climate bill passed by the House of Representatives last year, but senators are not expected to back such a plan, which would limit greenhouse gas emissions and let companies trade permits to emit carbon.

"We are a very keen proponent of market-based energy legislation," Royal Dutch Shell Plc (RDSa.L) Chief Executive Peter Voser said at a Wall Street Journal conference in Santa Barbara, California.

He said the industry needs "certainty on the carbon price, certainty on legislation."

"I am still very hopeful we'll get something passed," Voser said. "I am skeptical (about) this year."

The head of the largest U.S. producer of power from burning coal, American Electric Power Co Inc (AEP.N), also said a climate bill was unlikely this year.

But AEP CEO Michael Morris told the conference that a climate policy was needed to support investment in technologies that can reduce the environmental impact of burning coal, such as carbon capture and storage.

"We need this done, America needs to lead the world," Morris said.

A climate bill that would help reduce U.S. emissions, the highest in the developed world, has stalled in the Senate due to opposition from lawmakers representing coal and oil states. Since Democrats lost their Senate supermajority after an election in Massachusetts, its prospects have worsened.

Tom Albanese, chief executive of mining conglomerate Rio Tinto (RIO.AX) (RIO.L), said his company typically does long-term planning for the mines, as much as 30 years ahead.

"For us to have some assurance that the market's going to be there, we need to begin to create some carbon pricing signals sooner rather than later," he said.

Such pricing would allow companies to redirect spending and provide less investment uncertainty, he added.

"Overall, on balance, I would say cap-and-trade would be our preferred view," Albanese said.

Lewis Hay, chief executive of power utility FPL Group Inc (FPL.N), said U.S. utilities need to know what climate-change legislation would look like before they can invest more in developing nuclear and renewable power sources.

A lack of U.S. policy and the uncertainty surrounding it "puts a lot of investment dollars on the sidelines," Hay said, adding that the economics surrounding it need to be clear.

"Are we going to have a price on carbon, and if so, what's it going to be?," he wondered.

Another system now being debated is a cap-and-dividend, under which similarly strict limits would be placed on carbon emissions, but instead of focusing on smokestacks, it would aim the cap at upstream operations, such as coal and oil companies and importers.

The "dividend" would be in the form of monthly checks to consumers to help ease the cost of higher energy prices and without the complicated trading of cap-and-trade.

In the absence of a climate bill, President Barack Obama has pushed the Environmental Protection Agency to begin regulating gases blamed for warming the planet.

Many companies oppose EPA regulation of greenhouse gases, and some hope to block it.

U.S. coal producer Peabody Energy Corp (BTU.N), which is suing the EPA, said incentives were needed to accelerate technology, not "draconian" regulations.

"We believe in a technology pull and not a command-and-control regulatory push in order to make changes to the energy infrastructure," CEO Gregory Boyce said. (Reporting by Poornima Gupta; Editing by Tim Dobbyn)

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BrianJDonovan wrote:
For another perspective, read “The Role of Offsets in Climate Change Legislation,” available at:

http://donovanlawgroup.wordpress.com/2010/03/03/the-role-of-offsets-in-climate-change-legislation/

Mar 05, 2010 11:04am EST  --  Report as abuse
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