Responding to a letter from U.S. House Energy and Commerce Committee Chairman John Dingell (D-MI) and Subcommittee on Energy and Air Quality Chairman Rick Boucher (D-VA) for perspectives on global climate change policy options, the Interstate Natural Gas Association of America (INGAA), urges lawmakers to recognize the importance of clean-burning natural gas as a critical bridge fuel in any policy effort to reduce greenhouse gas (GHG) emissions.
The INGAA response outlines a number of critical design criteria the Committee should consider as it examines federal policies to encourage the reduction of GHG emissions. Dingell and Boucher had written to INGAA and numerous other organizations on Feb. 27, 2007, requesting answers to a series of climate change policy-related questions.
Highlights of INGAA’s response to the House Energy and Commerce Committee’s questions follow:
- INGAA supports an economy-wide program that recognizes and accommodates the unique features of different sectors in the U.S. energy economy (i.e. differences in fuels and their end-use applications). An appropriate policy approach may involve different thresholds, regulatory mechanisms and possibly schedules for each sector based on its unique attributes.
- Given the global nature of the climate issue, and interstate commerce considerations, INGAA – which represents companies with linear, interstate pipeline assets – strongly prefers a consistent national greenhouse gas (GHG) reduction program over competing, potentially conflicting and inefficient state and regional initiatives currently taking form.
- INGAA urges lawmakers to design a program that will slow, stop, and then reduce GHG emissions gradually. This would allow time for the economy to develop and deploy efficient, cost-effective climate change mitigation technologies and replace capital intensive energy infrastructure and equipment in an orderly manner.
- CO2 from fossil fuel combustion accounts for approximately 81 percent of total U.S. GHG emissions. INGAA advocates, as a starting point, the regulation of CO2 from fossil fuels at the point of combustion. The reduction of emissions from other greenhouse gases should be managed through an offset program. Other sectors and gases could be brought into the program as it matures.
- The need for a safety valve will be determined by the key program design features, most notably timing, targets, banking and borrowing of allowances and the availability of low-cost offsets.
- Congress should determine the need and basis for allowance allocation in a cap and trade program. INGAA supports 100 percent free allocation to sectors that are subject to comprehensive economic regulation. Still, if such regulated sectors must pay for allowances, they also must have a guaranteed ability to pass through costs to the end user (consumer).
- Offsets are an important tool to encourage emission reductions not otherwise covered under a conventional cap and trade system. Such reductions would provide immediate, low-cost options that would help control program compliance costs. There should be no limit to the amount of offsets one can generate so long as they are real, quantified, verified, surplus, and have clear ownership.
- Early reduction credits should be available to industries, like the natural gas pipeline industry, that have already made significant GHG reductions.
- The U.S. can promote international participation in GHG reductions by taking a leadership role in the development of an efficient, achievable and cost-effective GHG reduction program. U.S. innovation and the development of advanced technologies will not only contribute to global emissions reduction but will also help to create business opportunities for U.S. firms.
- A cap-and-trade program alone will not lead to new technology development. Funds raised through a regulatory GHG program should support R&D for a variety of new and advanced technologies to provide low carbon energy services, increase efficiency of end-use consumption and sequester CO2. Such a program should not pick winners based on current expectations but should fund the development of all feasible approaches to low carbon infrastructure, including: natural gas supply and production technologies, efficient natural gas-fired electric generation, mechanical drive and gas compression technologies, and efficient end-use gas technologies.