White House official says GHG caps would hike US energy prices

Washington (Platts)--12Dec2006

A top Bush administration official warned Tuesday that the new Democrat
majority Congress would raise energy prices if it makes good on its promise to
pass legislation to curb industrial greenhouse gas emissions blamed for global
warming.

Harlan Watson, a US Department of State official who serves as the
administration's chief international climate-change negotiator, made the
comments at a Platts Energy Podium forum in Washington.

A climate bill with mandatory emissions caps would spur "fairly large
increases in electricity costs" by discouraging the use of coal and
"encouraging fuel-switching" to more expensive natural gas, Watson said.

He rejected an argument made frequently by Democrats and environmental
groups that Congress could cap greenhouse gas emissions just as it took steps
in the 1990s to cap sulfur dioxide emissions blamed for causing "acid rain,"
saying there are "very important differences" between the two.

In the case of the acid rain program, the technology that was needed to
curb utility SO2 emissions was "essentially on the shelf, ready to go," Watson
said. Moreover, the US had a large supply of low-sulfur coal it could use and
transport around the country easily thanks to a well-developed railroad
infrastructure, he added.

"We have no low-carbon source of coal," Watson said, adding that the
availability of cleaner-burning gas is "limited."

Watson also offered a somewhat bleak assessment of the UN global-warming
conference he attended in Nairobi, Kenya, last month.

Watson said he "got into loggerheads" with negotiators from developing
countries on how to proceed on the issue of technology transfer, which is one
of the Bush administration's chief policies for addressing global climate
change.

Watson also emphasized the difficulties he had in trying to convince
China and other developing countries to take steps to curb their greenhouse
gas emissions. "They are not about to put their economic growth in harm's way"
to address global warming, Watson said.

Watson said he's learned to be "realistic" about the situation, and that
he realizes he can't "preach to them about [emissions] reductions and
timetables."

"You just can't talk down to them" about the need to curb emissions,
Watson said. "They're going to have to be convinced...that they can do it in a
way that doesn't slow their economic growth, he added.

--Brian Hansen, brian_hansen@platts.com

Listed to a recording of the Platts Energy Podium at
http://www.platts.com/energypodium/index.xml?src=story