Putting a Price Tag on Carbon Emissions
Could the government one day put a price tag on carbon emissions? Top U.S. executives told a congressional panel on Monday that lawmakers should assign a dollar cost to carbon emissions to encourage investment in efficiency and to fight climate change.
"We need to say to our world that we are going to have a cost of carbon, whether it’s cap-and-trade or a carbon tax," George David, chairman of United Technologies Corp, told the House of Representatives Select Committee on Energy Independence and Global Warming.
"We need to reaffirm the principle of predictability," he told a hearing in Hartford, Connecticut, where United Tech, the world’s largest maker of elevators and air conditioners, is headquartered. "There’s got to be an understanding that the cost of energy is going to be high for a long time."
David noted although oil prices have quadrupled in the last four years, past price spikes have been followed by sharp declines.
He would not support a particular method for assigning a cost to emissions of carbon dioxide, the primary greenhouse gas associated with global climate change.
General Electric Co vice chairman John Rice said GE sees cap-and-trade as the smart way to go. GE makes energy-producing devices from equipment for coal plants to windmills and energy-consuming products like jet engines.
"We believe that a cap-and-trade program can provide a reliable market pricing mechanism for carbon," Rice said.
Under cap-and-trade policy, regulators issue companies permits to emit a certain amount of carbon dioxide. Companies that emit less than allowed can then sell permits to those who exceed limits.
Daniel Esty, a professor of environmental law at Yale University, testified that a cap-and-trade system would be the best way to encourage investment in energy efficiency, which is directly proportional to emissions.
"We have an element of harm that’s not being priced," Esty said. "So when we burn fossil fuels … if you don’t pay for that you end up burning more than you otherwise would."
Last month, the U.S. Senate voted down an effort to adopt a cap-and-trade policy. However, the European Union already has a cap-and-trade system covering more than 1,000 industrial sites.
Rice told the panel that GE wants the government to do more to help emerging energy technologies through tax credits.
"A lot of times we get questions like, ‘Is this possible, can it be done?’" Rice said. "Carbon capture and sequestration can be done today, it’s technically viable. Is it commercially viable? Not yet … We have to be thinking in terms of both technical viability and commercial viability."
Carbon capture would capture carbon dioxide emitted by burning fossil fuels in a power plant and bury it underground, preventing it from entering the atmosphere.
Rep. Christopher Shays, a Connecticut Republican, had a wall of pointed questions to the United Tech and GE executives, who took differing approaches as to whether the United States should consider more offshore drilling as a way of meeting its energy needs.
"We don’t need to go out and to have vast new efforts to tap vast new sources of fossil fuel," United Tech’s David said. "We can solve this problem without having these enormous increases in fossil fuels."
Rice differed with his colleague, and said the option should not be taken off the table. He said about three-quarters of U.S. electricity generation relies on fossil fuels, "Finding responsible ways to access as much of our fossil fuel sources as we can is the only responsible way to go forward."
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