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Houston Chronicle: Bumps on green road come into focus

Conference confronts issues businesses face on environment

Copyright 2008 Houston Chronicle

The likely regulation of greenhouse gases in the U.S. will bring huge business opportunities, but cleaning the environment won’t be cheap or easy, speakers said Wednesday at a Houston conference.

The trading of carbon dioxide pollution credits is already a multibillion-dollar business in Europe just a few years after markets were launched there under the Kyoto Protocol, an international climate treaty the U.S. did not sign.

Carbon credit trading, often called a cap and trade system, sets steadily shrinking limits on emissions while letting polluters buy and sell emissions credits to stay within their allotments.

And with the three leading presidential candidates supporting climate change legislation, the U.S. is expected to create laws that will lead to even bigger markets.

But the efforts will be costly, said panelists at Wednesday’s conference, Business and Climate Change: Challenges and Opportunities in a Carbon Constrained World.

The British Consulate-General, Houston; Shell Oil Co.; and others sponsored the event.

“Climate change tests us as a society like no other challenge before,” said James Cameron, vice president of the investment firm Climate Change Capital.

It’s a problem all societies helped create, which can’t be ignored and can’t be fixed by local actions alone, he said.

“There’s no competitive advantage in inaction,” he said.

Under the main climate change bill proposed by Congress last year, average U.S. electricity prices would increase as much as 25 percent by 2030, according to an analysis by the U.S. Energy Information Administration.

Jeff Sterba, CEO of New Mexico-based utility company PNM Resources, said the power industry is planning to invest about $800 billion on infrastructure in the next 12 years, which will likely increase power rates another 25 percent.

“If these changes are not handled well by policymakers and industry the costs will be huge,” Sterba said.

But legislation has to do more than just send a blunt price signal to businesses that CO2 emissions are expensive, Sterba said, because that could lead companies to make undesirable moves. They might make a massive switch from coal to natural gas-fired power plants, for example, which would send costs even higher.

“We need to invest in less carbon-intensive power sour- ces, but it’s not going to happen on a dime, more like 10 to 12 years,” Sterba said.

Carbon capture and storage technology — storing CO2 permanently underground — is widely seen as a solution, but still faces many technical hurdles, he said. On top of that there’s much work to do developing a legal and regulatory framework for CO2 storage.

But many successful efforts to cut greenhouse gas emissions are under way, speakers said.

Carl Rush, vice president of organic growth at Houston-based Waste Management, said that company is spending $500 million over 10 years to reduce emissions of its 22,000 trash trucks by 15 percent.

The company also operates waste-to-energy power plants at 16 of the 277 landfills it operates and is looking at wind and solar projects on some sites.

A number of studies indicate some of the easiest power and cost savings can come through efficiency efforts, said Jeff Holmstead, an environmental strategy lawyer with Bracewell & Giuliani.

“Insulation and new windows are very boring, but they’re enormously important,” he said.

Many at the conference said the public and lawmakers don’t grasp the technological or economic challenge of managing growing energy demand while reducing greenhouse gases.

“We’re at a tipping point with public policy, where we need leadership,” said Rick Lazio, an executive vice president with JPMorgan Chase and a former New York congressman. “If business does not speak up for change, it’s not likely to happen in the right way.”

Shell Oil CEO John Hofmeister put it more bluntly, saying when it comes to addressing the nation’s energy and environmental needs, government leaders are “missing.” He noted that while every major presidential candidate has given at least one speech on energy, “we must beware of superficial promises of easy solutions.”

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