US Has 'Implicit' Price on Carbon Emissions - DOE

US Has 'Implicit' Price on Carbon Emissions - DOE

PlanetArk US

4th May 2007

NEW YORK - Utilities in the United States are factoring in an "implicit" price for carbon emissions that may push them to clean up or scrap coal-fired power plants, a top ranking US Energy Department official said on Thursday.

Many scientists, analysts, brokers and academics say regulating the gases linked to global warming would put a stiff explicit price on emitting them.

A price of about US$30 a ton for carbon emissions would stimulate utilities to install expensive technology to capture and bury carbon dioxide from plants that burn coal, according to a recent Massachusetts Institute of Technology study.

Coal produces more of the heat-trapping gas than oil and natural gas.

The United States emits more heat-trapping gases than any other country, but does not regulate them.

"One could argue that there is an implicit pricing of carbon going on in the US market," Andrew Karsner, assistant secretary at the Department of Energy in charge of renewable energy, said in an interview. "And it affects valuations, so people do account for what is the potential risk relative to time, permitting, siting and emissions changes of law."

Focus on US greenhouse emissions has intensified this year after scientists who advise the United Nations released reports that human-induced global warming will cause more hunger, droughts, heat waves and rising seas. Their report on how to combat emissions is due on Friday.

Karsner said power company TXU Corp.'s decision in February to scrap plans for eight of 11 coal-fired plants in Texas was an example of how the implicit pricing has made companies think about coal.

Still, more than 150 coal-fired power plants are being planned in the United States, the most in decades. About 12 of those are under construction, with another six close to being built. None of the plants plan to add carbon capture and sequestration equipment.

Karsner would not estimate how many plants might be scrapped, but said companies could feel pressure to clean up. "I think the bar will be very high for cleanliness of output and I think that the coal industry will find it in their interest to reach that bar."

The United States has the world's top coal reserves, while output of natural gas and oil is falling.

"It is not going away as a substantial source of power generation," Karsner said. How to cut coal's output of pollutants like mercury and smog and acid rain components as well as carbon "is almost the exclusive focus" of the Department of Energy's fossil fuel department now, he said.

He said it would not be logical for the United States to make mandatory emissions cuts unless rapidly growing China and India also cut them. "Let's come up with a policy that addresses the fact that China added as much generation capacity last year as all of France ... and most if it dirty coal," he said.

US 2008 presidential candidates from both major parties say they would regulate greenhouse gases.

Story by Timothy Gardner

REUTERS NEWS SERVICE