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ANOTHER PERSPECTIVE
 A NEW CLIMATE CHALLENGE
Bill Fang, deputy general counsel and climate issue director, at Edison Electric Institute.
Eric Holdsworth, director of climate programs, at Edison Electric Institute.
The electric power industry has been presented with a new challenge on the climate issue. Last February, the Bush administration announced a plan to address global climate change that would rely on the use of a new metric—greenhouse gas (GHG) intensity (linking emissions to gross domestic product, GDP, rather than an arbitrary annual tonnage)—to slow and eventually reverse growth in GHG emissions. The President's suggestion that sustained economic growth is an essential part of the solution—and not the problem—has fundamentally altered the climate debate.
It is imperative that industry address this issue proactively. The President indicated that a review of progress on his plan will occur before 2012, and that additional, more aggressive measures could be called for if initial efforts are not successful. If we do not work now toward the goal of achieving voluntary GHG emissions reduction, we run the risk of facing stringent mandatory regimes that misdirect economic resources, retard global economic growth, and in the end, slow the world's ability to halt climate change.
The administration's plan calls for reducing U.S. GHG intensity 18 percent by 2012 by lowering the emission rate from 183 metric tons per million dollars of GDP in 2002, to 151 metric tons per million dollars of GDP in 2012, a goal the administration calls "ambitious but achievable." The plan aims to improve the current voluntary emissions reduction registration program under section 1605(b) of the Energy Policy Act. The improvements will "enhance measurement accuracy, reliability, and verifiability" and promote "the identification and expansion of innovative and effective ways to reduce greenhouse gases," according to the administration.
The plan recommends reforms to ensure that businesses and individuals that register reductions are not penalized under a future climate policy—known as "baseline protection"—and give transferable credits to companies that can show real emission reductions. Also included were a long-term technology research and development plan and new and expanded domestic and international policies. Funding for these efforts likely will be about $7.1 billion over the next 10 years. Such incentives will be critical to facilitating industry participation.
A New Metric
The GHG intensity metric is a new approach that developed countries can emulate—countries that now account for approximately half of all GHG emissions. The plan encourages partnerships on climate change issues and calls for more funding of international climate programs. By slowing GHG growth, the plan aims to put the United States on a steady path toward achieving stabilized atmospheric concentrations while sustaining the economic growth needed to finance investments in a cleaner energy infrastructure.
A reduction in U.S. GHG intensity will require a 33-percent decrease in intensity beyond the business-as-usual projections over the next 10 years. Adding to this ambitious goal, the U.S. economy already has reduced GHG intensity significantly over the last two decades through improved automobile fuel standards, construction of nuclear powerplants, and increased electrification through computers and the internet.
Voluntary Works
The President's plan builds on the success of cost-effective voluntary reduction programs like the industry-led Climate Challenge. Under this initiative, estimates show that the electric utility industry eliminated nearly 150 million metric tons of carbon dioxide (CO2) in 2000, nearly four times its original goal.
Our first Climate Challenge worked—now we must respond to the new climate challenge. The alternative—failure to meet the administration's goal or to demonstrate that significant action is underway—will strengthen the efforts of advocates for CO2 regulation. In fact, as we go to print, Congress is scheduled to take up a multi-emissions bill introduced by Senator James Jeffords (I-VT) that calls for mandatory reductions in CO2 emissions to 1990 levels by 2007, a target greater even than that called for in the Kyoto Protocol.
Edison Electric Institute is working with member companies and other stakeholders to fashion industry-wide initiatives that address climate change. The principles of a new voluntary program likely will emphasize improved energy efficiency, increased investments in research and development, and cost-effective CO2 emissions reduction. We are also working with the Departments of Energy, Agriculture, and Commerce, the Environmental Protection Agency, and others to develop partnership climate programs and strengthen the reporting guidelines for the enhanced 1605(b) registry.
The good news is that the electric power industry already has a solid foundation on which to base a robust voluntary program. Hopefully, and with input from all stakeholders, we will meet this new climate challenge with equal success.
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