BUSINESS:

Some energy-sector companies call for market incentives to cut CO2

A coalition of energy-sector business leaders is calling on Congress to revive legislation that would rely on market-based incentives to achieve cuts in carbon dioxide emissions.

It also wants the government to promote innovation in energy generation and pollution-reduction technologies and to maintain a high degree of flexibility for legacy fuels -- such as coal and oil -- so that they can be integrated into a 21st-century energy mix.

In a five-page letter released Friday, the Business Council for Sustainable Energy said it supports implementation of new regulations "in a manner that would allow existing power plants to achieve target emission rates" by a variety of means, including supply-side energy efficiency, additions to renewable energy capacity, fuel switching to lower-carbon fuels and investing in carbon offset programs.

Perhaps most significantly, the council urged the Obama administration to use output-based compliance standards when implementing its forthcoming New Source Performance Standard (NSPS) for coal-fired power plants. Such an approach links permissible carbon emissions to the amount of electricity or heat generated by the power plant in lieu of firm caps on end-of-stack emissions.

Such an approach "would both enhance air quality and encourage cost-effective reductions," the group said.

It also encouraged Congress and regulatory agencies to credit existing clean energy technologies as a solution to help meet the demands of the Clean Air Act, and it asked the federal government to give states maximum flexibility in implementing new rules and regulations.

"Any federal actions to regulate greenhouse gas emissions should not pre-empt or complicate effective existing state or regional emissions reduction programs which provide compatible alternatives," the group said.

Lower-carbon fuels make huge jump

The letter, addressed to the Democratic co-chairmen of the recently formed Bicameral Task Force on Climate Change, is intended to aid lawmakers as they begin to set parameters around the latest public policy push on climate change. President Obama, both in his second inaugural address and in the State of the Union speech, challenged Congress to pursue legislation aimed at curbing emissions.

At the same time, U.S. EPA is drafting new regulations targeting greenhouse gas emissions from the electric power sector, the largest industrial source of emissions linked to global warming. The first suite of regulations targets newly built power plants, but many expect the agency to follow with a new set of restrictions on greenhouse gases from existing plants.

In its letter, the Business Council for Sustainable Energy -- which draws its members from the energy efficiency and renewable energy sectors as well as from natural gas providers and gas-burning electricity generators -- pointed to a recently released report showing that the three sectors have helped drive down carbon emissions to an expected 18-year low for 2012.

According to the group's estimates, lower-carbon fuels accounted for 43 percent of all electricity generated in the United States last year, up from 27 percent a decade ago. While plummeting natural gas prices were a significant factor in such fuel switching, the group noted that renewable energy installations for 2012 hit an all-time high of 17 gigawatts.

Roundup of 'best ideas'

"Together, a broad portfolio of technologies including renewable energy, natural gas generation, distributed generation, demand side resources and energy storage fit well together and can provide clean, reliable power to meet the evolving needs of the power grid," the group said.

BCSE is among hundreds of interest groups expected to file comments with the bicameral task force over the coming weeks. Other groups that have submitted comments to the lawmakers include the Business Roundtable, the Southern Alliance for Clean Energy, the American Trucking Association, the National Farmers Union, the American Public Health Association and the Association of Metropolitan Water Agencies.

In a Jan. 31 solicitation, the panel's co-chairmen, Rep. Henry Waxman (D-Calif.) and Sen. Sheldon Whitehouse (D-R.I.), asked more than 300 organizations, businesses, think tanks and industry groups, including representatives of the nation's oil, natural gas and coal sectors as well as leaders of the nation's five largest electric utilities, to submit their "best ideas for addressing climate change."

While not representing the entire Washington-based think tank, Benjamin Zycher, a visiting scholar at the American Enterprise Institute, urged the lawmakers to focus their attention on the international scope of emissions linked to climate change, noting that "federal policies aimed at reducing the effects [of climate change domestically] are likely to impose very substantial economic costs without yielding benefits even remotely commensurate."

Click here to view a list of the solicited groups.

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