July 14, 2010 / 10:26 PM / 8 years ago

U.S. utility-first climate bill sparks opposition

WASHINGTON (Reuters) - Two U.S. business groups opposed on Wednesday the latest version of a climate change proposal circulating in the U.S. Senate, saying it was unfair to power companies and would hurt energy-intensive industries.

Senators John Kerry, a Democrat, and Joe Lieberman, an independent, have crafted a draft bill focusing on capping greenhouse gas pollution from electric power utilities first. It scales back previous ambitions for a broad attack on emissions.

The plan would launch a “cap-and-trade” market in which utilities that cut pollution could sell credits to companies that do not. It expects overall emissions limits would be achieved because the cap on all utilities toughens over time.

Ten states in the U.S. East have capped emissions from utilities for two years under a plan called the Regional Greenhouse Gas Initiative. Senator Olympia Snowe from Maine, one of the states in RGGI, has said the program could be seen as a template for a national plan.

But not all utilities are on board.

“We have some real reservations about the utility-only approach and that’s hard for us to get past,” said Glenn English, the chief executive of the National Rural Electric Cooperative Association. His group says its members provide power for about 42 million Americans in 47 states with 9,000 rural power cooperatives.

English said the legislation could unfairly saddle regions of the country that use coal with higher electric bills.

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Several publicly-traded power companies such as Duke Energy have backed the idea of utility-first carbon caps, saying that such a plan would give them certainty to invest billions of dollars in low-carbon power such as nuclear, or wind and solar farms, or other electricity sources.

Duke’s Chief Executive Jim Rogers said earlier this month that a utility-first plan would have to guarantee that other parts of the economy, such as manufacturers, would also face caps on emissions in coming years.

But English said such guarantees were no easy task. “Far too often these kinds of intentions seem to get left behind.”

The American Chemistry Council also opposed utility-first legislation. The plan would have “far-reaching impacts on the U.S. economy, especially industries such as chemistry that are energy-intensive and exposed to global trade,” it said.

Carbon caps are also opposed by several senators from energy-intensive states. Senators John Rockefeller, a Democrat from coal-rich West Virginia, and George Voinovich, a Republican from manufacturing-centric Ohio, were outspoken against cap-and-trade legislation being pushed this year during a conference call with reporters.

“There aren’t 60 votes for cap and trade. It’s become a dirty word all over the state of Ohio,” Voinovich said.

They unveiled legislation on Wednesday that aims to boost research funds for “clean coal” technology known as carbon capture and storage.

Rockefeller said he hopes the measure will be included in a broader energy and environment bill that could be on the Senate floor in late July — one that they hope will not impose carbon controls on utilities.

The Rockefeller-Voinovich plan would create a $20 billion fund over 10 years from a new fee on utility customers that they estimate would cost households less than $10 per year.

Additional reporting by Richard Cowan; Editing by Lisa Shumaker

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