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Guest Opinion: It's Time to Act on Climate Change Energy Efficiency, Cap-and-Trade System Are Needed

By Jim Rogers Chairman, President and CEO, Duke Energy
From USChamber.com The monthly member magazine of the U.S. Chamber of Commerce.
September 2007
Reprinted with Permission

Congress should act now to pass climate change legislation that encourages investment in new technologies and fairly distributes the cost of compliance across all sectors of our economy.
 
By the year 2030, demand for electricity in the United States is expected to grow by approximately 40%. As the CEO of Duke Energy, my No. 1 obligation is to meet that demand as cleanly, reliably, and cost-effectively as possible. We are planning to invest billions of dollars over the next decade in advanced nuclear, coal, and natural gas power plants; energy efficiency; and renewable energy. It is critical that we know how greenhouse gases will be regulated so that we can make the best decisions for our customers and shareholders.
 
Generate Save-a-Watts. The most immediate action for addressing climate change is to invest more in energy efficiency. By reinventing how utilities are regulated, we can put investments in energy efficiency on par with investments in new power plants. This would enable utilities to earn the same amount whether producing megawatts or enabling customers to save watts by reducing energy consumption. Electric utilities should be responsible for providing universal access to energy-efficient products and services to customers.
 
Send the Right Signals. A growing number of CEOs from the utility, industrial, and transportation sectors are joining the U.S. Climate Action Partnership and support legislation to reduce greenhouse gas emissions.
 
Duke Energy believes that we must build a bridge to a low-carbon economy. To cross that bridge, we must have an economy-wide cap-and-trade program for carbon dioxide.
 
With appropriate allocation of allowances, a cap-and-trade program will protect consumers as technologies to reduce carbon dioxide emissions are developed.
 
In 1990, Congress provided a similar bridge when it passed the Clean Air Act Amendments-legislation that has dramatically reduced sulfur dioxide using an innovative emissions-based allowance approach-with relatively little harm to our economy.
 
Like that legislation, the emissions cap should be put in place five years after the climate change legislation becomes law-followed by a phasing in of tighter limits. This would give companies enough time to comply as new technologies are developed. It would also prevent sudden energy price shocks.
 
Some have suggested that allowances should be auctioned. But an auction approach would unfairly and disproportionately harm the 25 states in the Midwest, Southeast, and Great Plains that get more than half of their electricity from coal. 
 
Forcing customers in these regions to bear the cost of buying allowances for existing plants, while at the same time bearing the cost of retrofitting and replacing existing plants, would result in a double hit.  
 
Allocating allowances based on megawatt-hour output as some suggest is equally unfair. This would give unnecessary allowances to power plants, such as nuclear or hydro, that produce no greenhouse gas emissions.    
 
Finally, we must acknowledge that if we are not serious about supporting more nuclear power plants in this country, then we are not serious about climate change.