BOSTON, April 29 (Reuters) - Two U.S. utility executives, in a debate on Tuesday, staked out contrasting positions on how much consumer electricity prices will be affected by a proposed cap-and-trade system on carbon emissions.
A bill currently making its way through Congress seeks to impose a cap-and-trade system on American industry to reduce emissions of carbon dioxide, a greenhouse gas associated with global climate change, by about 70 percent by 2050.
In a cap-and-trade system, regulators issue big polluters permits to emit a certain amount of carbon dioxide.
Companies that reduce emissions below their permitted amounts could then sell the permits to companies that exceed theirs.
Jim Rogers, chief executive of Duke Energy DUK.N, argued that the government should allocate the permits to utility companies based on their current emissions, rather than auctioning them off to the highest bidder.
“Let’s not be fooled by what an auction is. A 100 percent auction is a carbon tax,” Rogers said at the debate, sponsored by environmental-investor group Ceres in Boston.
Rogers said carbon emissions permits should be allocated without charge to coal-burning electricity plants in the Midwest and Southeast to prevent consumers from feeling a further pinch in rising energy prices as utilities develop lower-emitting sources of energy.
“These allowances need to be used for that transition,” he said. “Any other way to use it is wrong.”
Duke, based in Charlotte, North Carolina, is one of the largest electric power companies in the United States and operates plants that burn coal, oil and gas. It also has nuclear and hydroelectric plants.
Ralph Izzo, CEO of Public Service Enterprise Group Inc PEG.N, argued that consumers would have to face higher prices to encourage them to reduce consumption if the United States, the world's largest producer of greenhouse gases, is to succeed in reducing overall emissions.
“The reality is that part of what we ought to be doing is sending a signal to the consumer to use less” electricity, Izzo said. PSEG, based in Newark, New Jersey, operates coal and gas-fired, as well as nuclear power plants.
“What I like about using the auction approach is that you couple the cost associated with using carbon with the revenues that are generated for other social benefits,” Izzo said, explaining that revenue raised through the auction could fund investment in energy-saving technologies.
The European Union already has a cap-and-trade system covering more than 10,000 industrial sites. (Reporting by Scott Malone; editing by Ted Kerr)
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