Companies Weigh Climate Laws Over EPA Rules

In a new world, electric companies and manufacturing plants will have to control their greenhouse gas emissions. Congress is debating setting up a cap and trade system to cut global warming pollution across the whole economy. Meanwhile, the Environmental Protection Agency has announced it plans to regulate emissions from big polluters. Companies are comparing the impact of the two approaches to decide which one would work better for them.

RENEE MONTAGNE, host:

One way or another, it looks like electric companies and manufacturing plants will have to control their greenhouse gas pollution. The Environmental Protection Agency is working on rules to require that but most businesses say they would much prefer that Congress set the rules and create a market-based system to cut emissions.

NPR's Elizabeth Shogren looks into why.

ELIZABETH SHOGREN: Frank Prager is a vice president of Xcel Energy, which provides electricity and natural gas to millions of residents and businesses in the West and Midwest.

Mr. FRANK PRAGER (Vice President, Xcel Energy): We're going to have to change the way we do business, a lot, to be able to meet the emission reduction requirements that are almost certainly going to be imposed on us.

SHOGREN: He says the future will look very different for his company if Congress fails to act and lets the EPA set the rules.

Mr. PRAGER: We're not excited about the future. In fact, it's a very difficult future.

SHOGREN: Prager says if EPA is in charge, each time a company builds a new plant or expands an operation, government officials would have a say in what kind of fuel is used and what pollution controls are installed.

Let's say his company is planning to build a new coal plant. The EPA might require the company to install very expensive equipment to capture the carbon dioxide. But if Congress sets up a cap and trade program, the company would have broad leeway. It could, say, build a coal plant without the costly pollution controls, but also build a big wind farm, which would not pollute at all.

Mr. PRAGER: So, from our perspective, a flexible market-based program would do a much better job in allowing us to bring renewable energy online.

SHOGREN: In a cap and trade system, polluters would need allowances for every ton of greenhouse gases. They would buy and sell them in a new market. The quicker a company cleaned up, the less it would have to spend to buy allowances and the more it could make selling them.

Steve Corneli is a senior vice president of NRG, a huge electric company with plants in 12 states. He also prefers a cap and trade approach. He says EPA regulations cannot bring about the deep cuts in greenhouse gases scientists say are needed to prevent catastrophic climate change.

Mr. STEVE CORNELI (Senior Vice President, NRG): The only way it works is for Congress to pass a fairly comprehensive climate and energy bill. EPA's effort really will not succeed, environmentally, and they will be a very large burden on us and other companies.

SHOGREN: On the one hand, his company probably could build new natural gas plants, which pollute about half as much as coal plants. But it would also likely have to spend a lot of money tweaking its coal plants.

Mr. CORNELI: And that could very well be things like increasing the efficiency of the boiler or the turbine, or coal firing a little bit of biomass with coal. We can do those things, but they won't reduce CO2 emissions very much. So, we'd do less of the stuff that really moves the needle, in terms of reducing CO2.

SHOGREN: Like building new nuclear plants, which don't produce carbon dioxide but are very expensive. Bills before Congress would give subsidies and incentives for nuclear plants as well as for renewable energy and new technologies that make coal cleaner.

Still, some business representatives say the pollution cuts being considered by Congress are so fast and deep that EPA regulation might be the lesser evil.

Mr. JEFFREY HOLMSTEAD (Lobbyist): Everyone would prefer a different solution.

SHOGREN: Lobbyist Jeffrey Holmstead represents energy companies and other businesses.

Mr. HOLMSTEAD: But so far, the options that are on the table, are not very good ones.

SHOGREN: Holmstead and others said the bills would be too painful for the economy because they push pollution cuts before cost-effective technologies are available. That's a big part of the reason that the legislation is stalled in the Senate.

Elizabeth Shogren, NPR News, Washington.

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