By Andy Owens
aowens@scbiznews.com
Published May 25, 2009
As Congress hammers out compromise after compromise on a clean energy bill and the president challenges states and automakers to strengthen emissions standards, businesses are surrounded by a mass of opinion and political innuendo about climate change.
Everyone agrees a “silver bullet” might not exist.
What’s best for a struggling economy and for South Carolina’s environmental legacy seems unclear even to the experts.
But the answer should lie in science, according to several speakers who attended a rapid-fire four-hour conference sponsored by the U.S. Chamber of Commerce in mid-May in Charleston.
John Clark, the executive director of the S.C. Energy Office, suggested that “silver buckshot” might be the best solution. Clark said that, rather than depending on a single solution, a lot of little things could make a big difference over a period of time. For example, he envisions algae-growing facilities placed beside coal-fired plants to combine renewable energy with traditional sources.
The focus has to be on fuel, he said, and not just as a greenhouse gas emissions issue or a conservation issue. Clark said it’s also a national security issue.
The development of renewable energy sources — the algae, for example, as well as biomass, wood and switchgrass-based ethanol — and other alternative energy sources such as compressed natural gas and plug-in vehicles, could help economic development in South Carolina and get the state ready for the climate change measures that are certainly coming from Washington.
“Whether we agree with them or not, whether we want them or not, they’re coming down in some way, shape or form,” Clark said.
The options
Without reduction of greenhouse gases by consumers and industry themselves, climate change in America apparently will come either from passage of a new law to limit greenhouse gases or from Environmental Protection Agency regulation of greenhouse gases under existing laws.
At press time, U.S. House leaders were preparing to send the latest version of the American Clean Energy and Security Act of 2009 to the Energy and Commerce Committee for a key vote toward passage.
Many environmental groups favor the bill, or some version of it. The U.S. Chamber of Commerce opposes the bill, asserting that it’s too restrictive and likely would drive business and industry to move to countries with more lax environmental laws.
Congress seems dedicated to a cap-and-trade plan, which would create a market for utilities, manufacturers and others to buy and trade emissions “credits” after they reach a certain emissions threshold. How that limit is determined and how the market is structured are part of the debate and controversy surrounding the legislation.
Ross Eisenberg, a lawyer and policy official with the U.S. Chamber of Commerce who spoke at the Charleston forum, said the plan before Congress overlooks the global nature of the marketplace — companies are no longer tied to one area of the world.
If there’s not a global initiative to decrease greenhouse gas emissions, a company that finds it too expensive to comply with environmental laws in the United States could just leave. He said the plan could kill jobs, hurts the economy and doesn’t change any greenhouse gas emission.
“It wouldn’t take much for a company to move somewhere else,” Eisenberg said. “Our point is you can’t do this quickly.”
The Coastal Conservation League, a Charleston-based environmental group, said Eisenberg is being too narrow in his analysis of the bill. Program director Ben Moore said that if a cap-and-trade plan is structured properly, it will enhance economic opportunity instead of driving it away.
“They’ve never supported a climate bill, and it looks like they never will,” Moore said. “We need climate legislation.”
The league tends to favor a cap-and-dividend approach, in which proceeds from the sale of permits are returned to the American people, he said.
“You put a cap on emissions, and you require all the permits to be auctioned, and all the regulated entities have to bid on them,” Moore said. “Capping emissions to protect our environment — while returning the proceeds from a cap back to American consumers — seems to us a very responsible and equitable approach.”
Despite the disagreement over the bill, most everyone on both sides of the debate seems to prefer the legislative avenue.
Eisenberg said EPA oversight of greenhouse gases is “a little more dangerous, because courts can’t make Congress act, but courts can make the EPA act.”
Allowing the EPA to designate certain emissions as greenhouse gases would be reminiscent of the Food and Drug Administration’s effort to regulate nicotine as a drug in the late 1990s. The FDA director sought to have nicotine designated a drug and cigarettes labeled a delivery device, much like a syringe. This would have given the FDA across-the-board control over cigarettes and the levels of nicotine in them.
In 2001, the U.S. Supreme Court ruled in favor of the tobacco industry, which fought FDA oversight.
Warning that EPA oversight also could overwhelm federal and state agencies — such as the S.C. Department of Health and Environmental Control, which issues air quality permits — Eisenberg said the impact on business and industry could be devastating.
“It would shut down construction,” he said.
Whose science?
The mini conference in Charleston wasn’t designed to present all viewpoints on climate change; that wasn’t its purpose or its intention, said Mount Pleasant attorney Ben Hagood, the environmental committee chairman for the Charleston Metro Chamber of Commerce who introduced the speakers.
A wide range of viewpoints and information was presented — including a denial that climate change is a big deal, because carbon dioxide is a naturally occurring gas, as well as with a presentation by the Southeast Regional Carbon Sequestration Partnership, which has technology to collect and store carbon emissions underground.
Gerald Hill, the partnership’s technical coordinator, said the amount of carbon going into the atmosphere far exceeds what would naturally occur without man-made emissions.
“What we’re dealing with is an imbalance,” Hill said. “What we have to do is decide the intensity of these greenhouse gases as they are rising.”
One of the most detailed presentations was from Clemson University economists Sergei Mityakov and Bryan Buckley, who modeled what would happen if consumption in the United States was reduced by 1%, which Mityakov called a “conservative” estimate of what would be needed to reduce greenhouse gas emissions under the current proposals.
Mityakov said he studied a carbon tax and cap-and-trade plans. “Both ways are likely to be really costly,” he said.
As an example, his study found that a family of four could expect to see a $1,000 permanent tax increase starting in 2009, increasing some each year and hitting $3,000 by 2050. Mityakov said his study included control data for changes that are considered benefits under climate change legislation, such as projected job gains.
He also detailed the amount of money lost to the nation’s economy during the same time periods with a 1% reduction in consumption. He found the cost would be $82 billion in 2009, increasing each year and hitting $295 billion in 2050.
“It’s not a one-year change,” Mityakov said. “It’s like a stimulus package every year to the year 2050. I don’t know if we want that or not.”
Moore, of the conservation league, noted that Mityakov’s study was paid for by the George C. Marshall Institute, a right-wing think tank, and said it makes some assumptions about how a cap-and-trade plan would be structured. He said the structure and implementation of a plan determine how it would affect economic development.
“You say it’s going to cost consumers $3,000, but how does that benchmark against other studies out there?” Moore said.
Economic impact
Santee Cooper’s vice president for conservation and renewable energy, Marc Tye, says the state-owned utility thinks the bill before Congress would choke business and industry with higher costs and more regulation. Up to 50% of costs for most businesses comes from electricity, he said.
“We think that would have an impact on manufacturers. Some would move overseas,” Tye said. “With everything going on today, I don’t think we can afford to lose any more jobs.”
And forcing utilities to jump through more regulatory hoops to generate power would increase costs and delay their ability to meet the rising demand for electricity, Tye said.
Santee Cooper recently fought battle after battle with state regulators, the governor and environmental groups over its plans to build a coal-fired energy plant in lower Florence County.
“We’re looking out at least eight to 12 years. That’s how long it takes us to build generation,” Tye said. “We believe Congress should focus our efforts on technology to remove carbon.”
Santee Cooper is a leader in the use of landfill gas to generate electricity. The utility also is testing wind and biomass as power sources. Tye said that Santee Cooper sees renewables as part of a larger solution but that landfills are limited by the number of landfills and wind is limited by the wind.
Solar generation isn’t much of an option for South Carolina, either. Despite the state’s reputation for sun and sand, its high humidity and cloud cover are bad for solar energy production.
Nuclear power might be the best answer for greenhouse gas reduction and help for the economy, said Steve Byrne, SCANA’s vice president for generation and its chief nuclear officer. Not only would it be a reliable source of clean power, but the building the plants would create more than 3,000 construction jobs and 800 permanent jobs.
Byrne said renewable energy options have limitations, but the demand for power never stops.
“If the wind dies, you have to have other sources to ramp up and provide that need,” he said.
Reach Andy Owens at 843-849-3141.
