05 November 2007 17:16 [Source: ICIS news]
Senator Jeff Bingaman (Democrat-New Mexico), chairman of the powerful Senate Energy and Natural Resources Committee, told a press conference that global warming “is an issue we need to confront and deal with”.
“I think we need to confront this issue of increasing greenhouse gas emissions, and I think cap and trade as a mechanism to do that is probably the most promising of the various options I’ve seen,” Bingaman said.
The US Congress is now considering legislation that would impose a mandatory cap and trade system on
Under a cap and trade system, the federal government would set limits or caps on the amount of greenhouse gas (GHG) emissions that would be allowed and auction or give emissions permits to individual companies. Those firms that emit less GHG than they are allowed could sell their excess permits to companies that exceed their allocations.
In theory, a cap and trade system would use market forces and incentives to drive technology advances that would reduce GHG emissions in electric power production, manufacturing and refining.
Bingaman acknowledged that a nation-wide cap and trade system would raise energy costs for industry and consumers.
“I think, realistically, if we adopt a cap and trade system, you’re going to see an increase in the price of energy across the board in this country,” Bingaman said. “I think that is a reality that people need to accept if they are willing to embrace some significant effort to reduce greenhouse gas emissions. It is going to increase the price of energy, and that’s all kinds of energy, not just natural gas.”
“I think there is a danger that a cap and trade system would be structured in such a way that there would be enormous pressure to move to much greater use of natural gas very quickly, and that would result in substantially higher prices for natural gas,” Bingaman said.
Asked if he thought sharply higher gas prices would be a good thing for the US economy, Bingaman said: “Well, obviously, raising the price of anything is not a good thing, but reducing greenhouse gas emissions is a good thing, and if you think that is an important thing to do then I think you have to accept the fact there will be an increase in the price of energy that results.”
“Now that’s not good news to a lot of people, but some believe that the importance of reducing greenhouse gas emissions is such that we need to go ahead and acknowledge that and then proceed,” he said.
Bingaman said that prospects for final congressional action on the Senate cap and trade bill (S-2191) by the end of this year are not high, given that there are only a few weeks left in the congressional calendar.
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