CNBC's Carbon Council Backs Cap and Trade
Finding the right response to climate change is an issue I have worked on for more than 15 years. I first testified before Congress on the issue in 1992. In 2004, the bipartisan National Commission on Energy Policy, which I co-chaired, recommended a Cap-and-Trade system. I believe that Cap and Trade is actually the cheapest way of addressing climate change. To minimize the burden on our economy and consumers, we need a market-based approach that rewards and supports the low-cost solutions. Exelon supports Cap-and-Trade legislation because it incentivizes companies like ours to find the cheapest options.
As part of Exelon 2020 – our program to reduce, offset, or displace our entire carbon footprint – we analyzed all the options for reducing CO2 emissions and determined the price per metric ton of CO2 needed to make each option economic. The most cost-effective options are improvements in energy efficiency and capacity expansions at our existing nuclear plants.
Ironically, governmental actions so far tend to subsidize the expensive solutions. For instance, the government has long promoted wind generation, which costs between $45 and $80 per metric ton of avoided CO2 emissions. Federal loan guarantees support new nuclear plants, which are economic at prices of roughly $75 per metric ton of avoided CO2. Coal with carbon sequestration costs $150 per metric ton, and solar costs nearly $700 per metric ton of CO2. Each of these options is ultimately more expensive to American electricity consumers than Cap-and-Trade legislation.
While addressing climate change will cost money, doing nothing is not an option and, in fact, will cost more. If the U.S. Congress does not act, the U.S. EPA will. The result of such a command-and-control approach will be more arbitrary, more expensive, and more uncertain for investors and industry than a reasonable legislative solution. Furthermore, without prompt action, American companies will be caught in a carbon purgatory: we will lack the legislative certainty we need to make the substantial investments required to move toward a low-carbon future.