HARTFORD, Connecticut (Reuters) - Two top executives from U.S. industry told a congressional panel on Monday that the country should assign a dollar cost to carbon emissions to encourage investment in efficiency and tackle climate change.
“We need to reaffirm the principle of predictability,” George David, chairman of United Technologies Corp, told the House of Representatives Select Committee on Energy Independence and Global Warming.
“We need to say to our world that we are going to have a cost of carbon, whether it’s cap-and-trade or a carbon tax,” he told a hearing in Hartford, Connecticut, where United Tech, the world’s largest maker of elevators and air conditioners, is headquartered. “There’s got to be an understanding that the cost of energy is going to be high for a long time.”
While oil prices have quadrupled in the last four years, he noted past price spikes have been followed by sharp declines.
David declined to back a particular approach for assigning a cost to emissions of carbon dioxide, the primary greenhouse gas associated with global climate change.
But John Rice, a General Electric Co vice chairman, said GE sees cap-and-trade as the way to go.
GE, the second-largest U.S. company by market value, makes both energy-producing devices from equipment for coal plants to windmills and energy-consuming products like jet engines.
“We believe that a cap-and-trade program can provide a reliable market pricing mechanism for carbon,” Rice said.
With cap-and-trade, regulators issue companies permits to emit a certain amount of carbon dioxide. Those that emit less than allowed can sell permits to those who top their limits.
While the European Union already has a cap-and-trade system covering more than 1,000 industrial sites, the U.S. Senate last month defeated the most recent effort to adopt such a system.
Daniel Esty, a professor of environmental law at Yale University, told the panel that a cap-and-trade system would be the best way to encourage investment in energy efficiency, which is directly proportional to emissions.
“We have an element of harm that’s not being priced,” Esty said. “So when we burn fossil fuels ... if you don’t pay for that you end up burning more than you otherwise would.”
Rice told the panel that GE — which has invested heavily in alternative energy sources such as wind turbines and solar panels, as well as traditional electricity sources like coal and natural gas — believes the government also needs to do more to help emerging energy technologies through tax credits.
“A lot of times we get questions like, ‘Is this possible, can it be done?’” Rice said. “Carbon capture and sequestration can be done today, it’s technically viable. Is it commercially viable? Not yet ... We have to be thinking in terms of both technical viability and commercial viability.”
Carbon capture would capture carbon dioxide emitted by burning fossil fuels in a power plant and bury it underground, preventing it from entering the atmosphere.
Under extended questioning from Rep. Christopher Shays, a Connecticut Republican, the United Tech and GE executives took differing tacks as to whether the United States should consider more offshore drilling as a way of meeting its energy needs.
“We don’t need to go out and to have vast new efforts to tap vast new sources of fossil fuel,” United Tech’s David said. “We can solve this problem without having these enormous increases in fossil fuels.”
Rice, however, said the option should not be ruled out. Noting that about three-quarters of U.S. electricity generation relies on fossil fuels, he said: “Finding responsible ways to access as much of our fossil fuel sources as we can is the only responsible way to go forward.”
Editing by Braden Reddall