Energy Executives Endorse Kerry-Lieberman Climate Bill
May 12 2010 - 4:27PM
Dow Jones News
Lewis Hay, chief executive and chairman of FPL Group Inc. (FPL),
joked Wednesday that he couldn't believe he was on the same side of
major energy legislation as James Rogers, the chief executive of
Duke Energy Corp. (DUK).
The two men joined a handful of other senior executives from
energy firms to endorse a wide-ranging climate-change bill
introduced Wednesday by Sens. John Kerry (D., Mass.) and Joe
Lieberman (I., Conn.)
FPL Group owns Florida Power & Light as well as NextEra
Energy Resources, and is one of the largest U.S. operators of wind
and solar energy. Duke Energy is one of the nation's largest coal
electricity companies.
Kerry said that, in addition to those present at the bill's
introduction, the measure had the backing of such major oil
companies BP PLC (BP), ConocoPhilips (COP) and Royal Dutch Shell
PLC (RDSA, RDSB). It is the first time, he added, these companies
had signed off on a bill aimed at tackling climate change.
The legislation would target a 17% reduction in U.S. carbon
pollution by 2020 and over 80% by 2050. It would focus on
addressing the largest carbon-emitting sectors of the economy:
heavy industry, power plants and transportation infrastructure.
Just 7,500 of the largest U.S. companies would be caught by the
cap-and-trade system the legislation proposes, Kerry said, noting
those companies are responsible for 75% of U.S. pollution.
The cap-and-trade system would levy a tax against those largest
emitters, but not until 2016. Initially, the cost of the right to
emit a ton of carbon would be $12 a ton, increasing at three
percentage points above inflation annually.
In a bid to address industry concerns about the cost of the
plan, the cap-and-trade program wouldn't kick in until 2016. After
that point, there would be funds made available to help cover
compliance costs.
One of the criticisms levied against the introduction of a
cap-and-trade system is that utility companies would simply pass on
the cost to consumers. Kerry said two-thirds of revenue raised
through the measure would be passed back to consumers in the form
of rebates on home electricity bills
The legislation would allow offshore oil exploratory drilling to
continue. However, because of concerns about its safety spurred by
the ongoing spill at a well in the Gulf of Mexico, it would let
coastal state governments opt out of allowing drilling up to 75
miles from their shores.
The bill would piece together incentives for the construction of
new nuclear energy power plants, as well as for the development of
clean-coal technology and cleaner vehicles. Large truck and heavy
vehicle fleets would be encouraged to make the switch to natural
gas.
Hefty subsidies would be included for alternative energy
sources.
Even as the legislation is introduced, it faces significant
political head winds in an election year. The bill will need the
support of at least one Republican.
The two lawmakers had been working with Sen. Lindsey Graham (R.,
S.C.) but he left the negotiating table, frustrated that it
appeared Senate Democrats planned to move forward with an overhaul
of the country's immigration laws first.
Wednesday, Graham said the repercussions of the oil spill
combined with "the uncertainty of immigration politics, have made
it extremely difficult for transformational legislation in the area
of energy and climate to garner bipartisan support at this
time."
Senate Minority Leader Mitch McConnell (R., Ky.) was even more
blunt in his reaction to the bill's introduction.
"This bill is little more than a job-killing national energy
tax," he said in a statement.
Kerry said that he had spoken to Republicans who said they would
review the bill.
"We would not be here today if we didn't feel that we can and
will adopt the America Power Act in this session of Congress,"
Lieberman said.
Senate Majority Leader Harry Reid (D., Nev.) said he would work
with the White House and Democrats in the Senate, but said they
would need "significant bipartisan cooperation" to pass the
legislation.
President Barack Obama said he would engage senators in order to
complete the bill this year.
-By Corey Boles, Dow Jones Newswires; 202-862-6601;
corey.boles@dowjones.com
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