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March 2 (Bloomberg) -- Duke Energy Corp. Chief Executive Officer James Rogers said President Barack Obama’s plan to raise revenue from an emissions-trading system would increase electricity bills by as much as 40 percent in some U.S. states.
Rogers, who supports a cap on greenhouse-gas emissions, says the problem with Obama’s plan, unveiled last week as part of a $3.55 trillion budget, is it assumes an auction of all trading permits, bringing in $645.7 billion by 2019.
The CEO is among business leaders and lawmakers who favor giving away permits to some industries to offset the cost of the transition to a low-carbon energy economy. Rogers, who backed Obama in the election, said he’s concerned that some of the money raised may not be used to promote “clean” energy. Also, consumers in the states that are the biggest users of coal for energy would be hit with higher electricity costs, he said.
“They would be asking people in these 25 states to carry a heavy burden and then not get the money to help them solve the problem,” Rogers said in an interview Feb. 27.
Duke, based in Charlotte, North Carolina, fell 55 cents, or 4.1 percent, to close at $12.92 in New York Stock Exchange composite trading today and has dropped 14 percent this year.
The company owns electric utilities in the U.S. Southeast and Midwest and is one of the country’s biggest coal users. Power utilities account for 40 percent of U.S. greenhouse-gas emissions, which contributes to higher temperatures and sea levels.
Rogers has long called for a “cap-and-trade” program, which would set a mandatory limit on global warming pollution and let companies trade emissions allowances on an open market.
AEP, PPL, Edison
In 2007, Rogers joined CEOs from American Electric Power Co., PPL Corp., and Edison International in Washington for the introduction of a measure offered by Senate Energy and Natural Resources Chairman Jeff Bingaman, a New Mexico Democrat, that would have capped the price of carbon emissions while giving away some credits.
Senator Barbara Boxer, chairman of the Environment and Public Works Committee, and House Energy and Commerce Committee Chairman Henry Waxman, both California Democrats with prime jurisdiction over climate legislation, support Obama’s approach.
Rogers said he could support an auction of as many as 20 percent of the trading permits, with the revenue going toward research and development of low-carbon technologies.
Carbon Tax
An auction of 100 percent of the allowances, as assumed in Obama’s proposed budget, is “nothing more than a carbon tax,” according to Rogers.
“He’s not talking cap and trade, he’s talking cap and tax,” Rogers said.
A White House spokesman, Ben LaBolt, declined to comment.
Obama submitted a $3.55 trillion budget plan to Congress last week that assumes $78.7 billion in revenue in 2012 from the sale of greenhouse-gas emission permits to polluters.
The administration acknowledges that its plan would boost energy costs for some lower- and middle-income consumers and seeks to use some of the money raised in an auction to offset the increase.
Tax Credit
Obama also wants to use a portion of the funds to finance a tax credit for some workers as well as invest in clean energy initiatives.
The Democratic president’s plan assumes that Congress will pass cap-and-trade legislation by early next year. Rogers and other critics, including Republican Senator John McCain of Arizona, say it will be difficult to get lawmakers to support Obama’s version of an emissions trading system.
“It will break down to a regional issue, not a Republican versus Democrat issue,” Rogers said. “It pits the states heavily reliant on coal with those that aren’t.”
Electricity prices in states most dependent on coal-fired power plants, such as Indiana, may go up as much as 40 percent, Rogers said.
Obama will likely have to cut the amount of allowances sold to about 30 percent to 50 percent of the initial total to win support in Congress, according to Abyd Karmali, the London-based head of carbon emissions for Merrill Lynch & Co., the New York investment bank bought by Bank of America Corp.
Karmali, speaking in an interview last week, said the U.S. may reach 100 percent auctioning by about 2020.
Rogers, who supports a cap on greenhouse-gas emissions, says the problem with Obama’s plan, unveiled last week as part of a $3.55 trillion budget, is it assumes an auction of all trading permits, bringing in $645.7 billion by 2019.
The CEO is among business leaders and lawmakers who favor giving away permits to some industries to offset the cost of the transition to a low-carbon energy economy. Rogers, who backed Obama in the election, said he’s concerned that some of the money raised may not be used to promote “clean” energy. Also, consumers in the states that are the biggest users of coal for energy would be hit with higher electricity costs, he said.
“They would be asking people in these 25 states to carry a heavy burden and then not get the money to help them solve the problem,” Rogers said in an interview Feb. 27.
Duke, based in Charlotte, North Carolina, fell 55 cents, or 4.1 percent, to close at $12.92 in New York Stock Exchange composite trading today and has dropped 14 percent this year.
The company owns electric utilities in the U.S. Southeast and Midwest and is one of the country’s biggest coal users. Power utilities account for 40 percent of U.S. greenhouse-gas emissions, which contributes to higher temperatures and sea levels.
Rogers has long called for a “cap-and-trade” program, which would set a mandatory limit on global warming pollution and let companies trade emissions allowances on an open market.
AEP, PPL, Edison
In 2007, Rogers joined CEOs from American Electric Power Co., PPL Corp., and Edison International in Washington for the introduction of a measure offered by Senate Energy and Natural Resources Chairman Jeff Bingaman, a New Mexico Democrat, that would have capped the price of carbon emissions while giving away some credits.
Senator Barbara Boxer, chairman of the Environment and Public Works Committee, and House Energy and Commerce Committee Chairman Henry Waxman, both California Democrats with prime jurisdiction over climate legislation, support Obama’s approach.
Rogers said he could support an auction of as many as 20 percent of the trading permits, with the revenue going toward research and development of low-carbon technologies.
Carbon Tax
An auction of 100 percent of the allowances, as assumed in Obama’s proposed budget, is “nothing more than a carbon tax,” according to Rogers.
“He’s not talking cap and trade, he’s talking cap and tax,” Rogers said.
A White House spokesman, Ben LaBolt, declined to comment.
Obama submitted a $3.55 trillion budget plan to Congress last week that assumes $78.7 billion in revenue in 2012 from the sale of greenhouse-gas emission permits to polluters.
The administration acknowledges that its plan would boost energy costs for some lower- and middle-income consumers and seeks to use some of the money raised in an auction to offset the increase.
Tax Credit
Obama also wants to use a portion of the funds to finance a tax credit for some workers as well as invest in clean energy initiatives.
The Democratic president’s plan assumes that Congress will pass cap-and-trade legislation by early next year. Rogers and other critics, including Republican Senator John McCain of Arizona, say it will be difficult to get lawmakers to support Obama’s version of an emissions trading system.
“It will break down to a regional issue, not a Republican versus Democrat issue,” Rogers said. “It pits the states heavily reliant on coal with those that aren’t.”
Electricity prices in states most dependent on coal-fired power plants, such as Indiana, may go up as much as 40 percent, Rogers said.
Obama will likely have to cut the amount of allowances sold to about 30 percent to 50 percent of the initial total to win support in Congress, according to Abyd Karmali, the London-based head of carbon emissions for Merrill Lynch & Co., the New York investment bank bought by Bank of America Corp.
Karmali, speaking in an interview last week, said the U.S. may reach 100 percent auctioning by about 2020.