Nation's Electric Companies Advancing Climate Solutions
By Steve Kiesner Director of National Accounts, Edison Electric Institute | May 04, 2010
America is moving toward a low-carbon future. The shift is unmistakable. A number of states have already passed laws that will limit their emissions of carbon dioxide (CO2) and other greenhouse gases (GHG) in the near future. Congress is now looking at over a dozen bills to reduce the country's GHG emissions, and all three presidential candidates have gone on record to say that they want legislation as well.
To reduce the nation's GHG emissions, while keeping the cost of electricity and natural gas affordable, will be a challenge. To help guide the country in achieving both goals, the electric power industry has drafted a set of climate change principles. Climate legislation must include the time and incentives necessary to develop and deploy a full suite of "climate-friendly" technologies for generating electricity. Legislation must also take an economy-wide approach. And any climate legislation must not hurt the U.S. economy or harm energy consumers.
Perhaps the most important element is having the technology available to make the needed GHG reductions. As an example, Senators Joe Lieberman (I-CT) and John Warner (R-VA) have introduced one of the leading climate change bills in Congress. Although we agree it is time to move forward on climate, we are deeply concerned about the Lieberman-Warner proposal.
The Lieberman-Warner bill sets aggressive early targets and timetables for reducing emissions. The technologies that will be needed to achieve the carbon reductions, however, will not be ready by the deadlines the legislation sets. With demand for electricity at record levels today and expected to grow 30-percent in the next twenty years, this raises the potential for dramatically higher electricity prices and increased pressure on natural costs.
A recent study of the economic impact of this bill found that the average household will be paying about $2,000 per year more for energy in 2020, and $2,169 per year more in 2050 (in constant 2007 dollars). The impact on the economy would start out large and grow over time. Gross Domestic Product would be reduced by 1.9-percent in 2015 and more than 3.5-percent in 2050 relative to baseline levels.
The impact on natural gas prices would be dramatic as well. Large amounts of natural gas would need to be used for electricity generation to achieve near-term emission reductions and meet demand. By 2020, this added demand is projected to drive wellhead prices up by 18.2-percent compared to currently projected levels.