An informal poll of energy and utility execs taken at the 2009 KEMA Utility of the Future conference indicates that a majority of the audience believes the US will have some kind of carbon legislation by 2010. US Administration could take three potential paths to limit carbon emissions.

The utility industry expects to see new policy limiting carbon emissions during the current administration, which has three options to implement carbon limits.

• Legislation – the American Clean Energy and Security (ACES) Act, also known as the Waxman-Markey Bill, has passed the U.S. House of Representatives and is currently pending Senate consideration. It is considered the most aggressive and proscriptive carbon legislation to come forward thus far, seeking to reduce emissions through a cap and trade mechanism.

The allocation of carbon credits is seen as the most contentious element of the bill. If the money from the credits is used to invest in clean energy, energy efficiency, storage and carbon capture, it could be effective in reducing emissions, but if the funds from the sale of credits are used to lower bills for customers, then it may eliminate price incentives to reduce energy use which could weaken the goals of the legislation to reduce greenhouse gases.

• EPA regulations – Should legislation fail to pass, the Obama administration could leverage a recent court determination that identifies carbon dioxide as a danger to public health. Through this ruling, EPA has legal authority to regulate emissions of the gas.
• Multilateral carbon treaty – Finally, the administration could make commitments through an international treaty, either post-2010 Kyoto negotiations, or, through participation in U.N. negotiations to set international offsets.

Even without these measures, there is an emerging voluntary carbon market in the US. The number of international companies entering the US for allowances and renewable energy credits and exploring offset development projects is an indication that a competitive carbon market is already taking shape. In addition, the pending ACES Act provides incentives for emitters to participate in pre-compliance markets by offering credit for that participation under ACES.

A more detailed summary of the executive-level energy and utility industry dialog held at KEMA’s 2^nd annual Utility of the Future conference – including the Impacts of Carbon Policy panel – is available on-line and as a download at www.kema.com/utilityfuture2009.