Duke CEO warns of carbon cap
By Bruce Henderson - The Charlotte Observer
CHARLOTTE -- Duke Energy says electricity rates in North Carolina and South Carolina would rise by at least 13 percent under President Barack Obama's plan to address climate change by auctioning off carbon credits.
Obama would set the nation's first limits on emissions of carbon dioxide, the gas linked to global warming. Under an approach outlined in his proposed budget last week, industries and utilities such as Duke would be able to trade allowances to release the gas.
But Duke CEO Jim Rogers, who supports the carbon cap, says Obama is wrong to insist that those allowances be initially auctioned to carbon emitters. Rogers calls an auction a "carbon tax" that would be passed on to consumers, with most of the burden placed on coal-dependent states such as the Carolinas.
"He's going to create a market that's going to dramatically drive up the costs for allowances," Rogers said Monday. "It's going to be a feeding frenzy."
Allowances auctioned for $15 each would raise rates here 13 percent in 2012, when the system could go into effect, Duke estimates. A $30 auction price would raise rates 27 percent, it says.
Obama's proposed budget assumes allowances would go for $20 each. Most of the proceeds would be returned to taxpayers as payroll tax credits, with the rest supporting solar, wind and other renewable-energy technology.
Duke ranks third largest among U.S. utilities in releases of carbon dioxide, at about 100 million tons a year.
Rogers, who will appear today at a climate-change conference in Washington, D.C., said auction costs would be added to the billions of dollars utilities will spend to replace or retrofit their power plants.
He advocates a mix of free allowances and auctions, an approach endorsed by some of the nation's largest corporations and environmental groups in January.
Critics dispute that argument, saying those costs will push energy prices higher regardless of whether carbon allowances are auctioned. They insist that polluters should have to bear the costs of controlling carbon.
"He's doing what the utilities are going to try to do -- scare people," said Stephen Smith of the Southern Alliance for Clean Energy. "There's really nothing to show that if Rogers is given this windfall that's actually going to protect consumers."
The alliance and several allies say 600 economists have signed a petition calling for all allowances to be auctioned. That's the fairest way to share costs, they say.
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Tuesday 03 March 2009 - 12:42:06
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