When it comes to climate change policy, US energy executives worry. They fret over when or how the United Nations will enforce a treaty. They are anxious billion-dollar investments may not make sense if the rules keep changing. Yet even more distressing to them are states seeking mandatory carbon dioxide emission reductions in the absence of federal standards.
"We're seeing carbon regulation from the ground up, at the county level-at Suffolk County in New York-[and] at the state level throughout New England and in Oregon and Minnesota and elsewhere," Mike Marvin, president of the US Business Council for Sustainable Energy said last month at an Evolution Markets brokerage firm teleconference.
The council includes energy companies whose members already have made investments because they assumed the US would regulate CO2, either as part of the UN Kyoto Protocol or on its own.
"Here's the dilemma, [if] you are looking to do a clean energy program. You want to make sure that the credits are accounted for here on the local level, as you have those restrictions. But conversely you want to make sure that you have a sellable, fundable emissions credit for any global market. So the US nonparticipation really starts to put companies that are looking to do the right thing in a real bind," Marvin said.
Local worries
US officials agree that the federal government, not individual states, should oversee climate change policy, because it is both a foreign affairs and a public health issue. States that seek CO2 rules may in fact be making the problem worse by creating even more uncertainty for businesses that fear they may be embroiled in legal disputes to avoid complying with competing regulations.
"It's a scenario even worse than Kyoto," in the words of one US policy-maker.
But the Bush administration isn't buying Marvin's argument that the answer is to ratify Kyoto-a policy they say costs too much and may be unenforceable.
Having the US regulate CO2 as a pollutant may still be problematic because it could create big increases in retail electricity rates, some White House officials say.
States should be patient and be aware that an interagency task force plans to offer its own blueprint to deal with the issue, US officials say.
Congressional solutions
Lobbyists think the White House may also be hoping Congress helps make its job easier by passing generous clean energy tax incentives that may take the pressure off them in the short term until policy-makers can refocus on the administration's own Kyoto alternative.
White House officials could be hoping new tax incentives may help discourage other states from taking on an issue that should be left up to the federal government to decide.
But too much stalling by policy-makers in Washington may mean more states will try to fill the policy vacuum on their own, making a tough problem even worse.
