INSIGHT: US cuts emissions - but not enough

29 November 2007 17:23  [Source: ICIS news]

US GHG cuts not enough to sway some in CongressBy Joe Kamalick


WASHINGTON (ICIS news)--The US cut its overall greenhouse gas (GHG) emissions by 1.5% in 2006 compared with 2005 and reduced its GHG intensity by more than 4%, but that will not deter those in Congress who want to mandate industrial emissions cutbacks.


The US Energy Department’s Energy Information Administration (EIA) said this week that the 2006 drop in emissions was due in large measure to last year’s mild winter and summer seasons and a related reduction in electricity demand for residential heating and cooling.


However, last year’s emissions decline also reflects trends in less carbon-intensive electricity fuels, including more nuclear power, increased wind energy and fuel-switching by utilities from coal to natural gas for electricity generation.


“A portion of last year’s emissions reduction does indicate some long-term trends in less carbon-intensive electricity generation,” said Glenn Sweetnam, an energy specialist at EIA.


“We do expect to see natural gas use [as an electricity fuel] continue to grow, and that would be part of a long-term trend in using a lower carbon-emitting fuel,” he said.


That trend is not good news for US chemicals manufacturers, however, who worry that increasing use of natgas for power generation will only add further supply and pricing pressures on natural gas - the industry’s principal feedstock.


According to EIA, total US GHG emissions were just over 7bn tonnes of carbon dioxide (CO2) equivalent in 2006, down 1.5% from the 2005 level.  Although modest, that reduction is significant bearing in mind that the US economy and overall production and output grew from 2005 to 2006.


In the context of that economic and industrial growth, US emissions of greenhouse gases per unit of gross domestic product (GDP) - a measure known as GHG intensity - fell more than 4% from 653 tonnes per $1m (€670,000) of GDP in 2005 to 625 tonnes in 2006.


Emissions of CO2 from energy consumption and industry, which had risen at an average annual rate of 1.2% annually from 1990 to 2005, fell by nearly 2% in 2006, EIA said.


“The decline in CO2 emissions from 2005 to 2006 can be attributed to a one-half percent decline in overall energy demand and a decrease in the carbon intensity of electricity generation,” the administration said.


Legislation now pending in Congress would impose mandatory reductions on industrial generation of greenhouse gases, a measure that chemical producers, manufacturers in general and some legislators fear would devastate US industry and the broader economy.


Senate bill S-2191, the America’s Climate Security Act,” would put limits or caps on US industrial GHG emissions and issue or auction emissions permits to individual companies.  Those firms whose plants emit less greenhouse gases than permitted could sell remaining emission credits to companies whose facilities exceed allotted maximums.


According to the bill’s sponsors, Senators Joseph Lieberman (Independent-Connecticut) and John Warner (Republican-Virginia), their cap and trade mandate would spur industry to develop technologies to reduce their emissions.


The apparent trend in US industry and power generation toward lower emissions - as demonstrated at least in part by this week’s EIA report - will not, however, sway many cap and trade enthusiasts on The Hill.


A spokesman for Senator Warner noted correctly that the EIA report of reduced US GHG emissions last year was only the third decline since 1990.


“That is not exactly a significant downward trend,” Warner’s spokesman said, “and there is nothing to say that next year couldn’t see a staggering increase in emissions.”


There are those in Congress who take industry’s side, arguing against a mandatory cap and trade programme that, according to Senator George Voinovich (Republican-Ohio), would fail to reduce emissions but would succeed in undermining the US economy.


“Cap and trade can’t be achieved with available technology, and it can’t be achieved before we have the technology for carbon capture and sequestration,” Voinovich said.


“If Congress were to impose a cap and trade system now, the first thing companies will do is fuel-switching, shifting their power sources from coal to natural gas, and this would have a troubling effect for industry and labour and would ripple throughout our economy,” he added.


Instead of beating industry over its head with the “stick” of cap and trade mandates, Voinovich favours an incentives approach to GHG reductions, with federal and state tax incentives, loan guarantees, government procurement policies and other carrots to spur technical developments that would cut emissions without undercutting industry.


With the congressional legislative year nearly at an end, action on the Lieberman-Warner cap and trade measure will have to await the 2008 session of Congress.  As the US national elections heat up in the new year toward the November vote, there will be increasing political pressure among the Democrat majority in Congress to get a climate control bill done before voters head for the polls.


($1 = €0.67)

By: Joe Kamalick
+1 713 525 2653

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