|
|
Enron Mail |
Today's IssueAlert Sponsors:=20
[IMAGE] Utilities are experiencing tough franchise negotiations as cities link=20 undergrounding agreements to renewals of franchises. Communities apply=20 tremendous political pressure on utilities to underground systems in their= =20 commercial as well as residential neighborhoods. SCIENTECH's "Electric=20 Utility Undergrounding" report analyzes existing undergrounding programs, a= nd=20 provides an understanding of how regulatory bodies and utilities around the= =20 country resolve this challenging problem. If your company is involved in t= he=20 undergrounding of power lines, you need to read this report. View the table= =20 of contents at: www.SCIENTECH.com/rci [IMAGE] Rapidpartsmart is the newest, most powerful online parts search engine in t= he=20 power industry. Rapidpartsmart is the complete source to locate, buy and se= ll=20 engineered parts worldwide. Rapidpartsmart integrates over 5 million supply= =20 items into asset management and work management systems to ensure that you= =20 know all supply sources, all the time. Rapidpartsmart increases supply=20 options, reduces outage risks and cuts inventory investment. Contact John= =20 Kelly at (727) 669-3006 for more information or go to www.rapidpartsmart.co= m [IMAGE] The most comprehensive, up-to-date map of the North American Power Systemby= =20 RDI/FT Energy is now available from SCIENTECH. The Wall Map measures 42" x= =20 72"; the Executive Map Set consists of 18 11" x 17" maps. Visit our website= =20 at www.scientech.comfor a detailed description of these valuable maps and= =20 complete ordering instructions.=20 [IMAGE] [IMAGE] June 15, 2001 Kyoto Protocol Becomes New Albatross for Bush Administration=20 By Will McNamara Director, Electric Industry Analysis=20 [IMAGE]President Bush and European leaders "agreed to disagree" over a glob= al=20 warming treaty, as the president sought to reassure allies that sharp polic= y=20 differences would not hamper relations between Europe and the United States= .=20 During several closed-door sessions, Bush and his European counterparts=20 confronted one of their most contentious areas of disagreement: the=20 president's rejection of the Kyoto Protocol on global warming. "We agreed t= o=20 disagree," Swedish Prime Minister Goran Persson told reporters. "The Europe= an=20 Union is sticking to the Kyoto Protocol. The United States has chosen anoth= er=20 policy."=20 Analysis: It is rather amazing how prominently energy issues have factored= =20 into the first six months of the Bush administration. In contrast to the=20 eight years of the Clinton administration, when energy policy often took a= =20 backseat to other concerns, President Bush=0F-a result of California blacko= uts,=20 a national shortage of natural gas, sky-high electricity prices, and a=20 controversial energy task plan=0F-been comparatively consumed by energy iss= ues.=20 Now, in a political legacy from the previous administration, President Bush= =20 finds himself grappling with another contentious energy problem that has=20 global ramifications. Departing from what appears to be an international=20 consensus, President Bush has declared the Kyoto Protocol an ineffective=20 treaty and has instead decided to further examine the greenhouse gas proble= m,=20 which has raised further questions about the president's commitment to=20 environmental issues.=20 First, let me provide some background. The Kyoto Protocol developed out of= =20 meetings held in December 1997 in Kyoto, Japan, during which time the Unite= d=20 Nations Framework Convention on Climate Change agreed in principle to a=20 series of strategies to reduce greenhouse gas emissions. About 170=20 governments of various countries, including the United States, participated= =20 in the Protocol and agreed to reduce their aggregate carbon dioxide (CO2)= =20 equivalent emissions by at least 5 percent below 1990 levels by 2012.=20 Noticeably exempt from the Protocol were developing countries such as China= =20 and India=0F-of the largest greenhouse gas emitters in the world—which= =20 resisted taking on any sort of formal reduction plan until industrialized= =20 countries proceeded with their own. This marked the central flaw in the=20 Protocol in that participants such as Europe, Japan and the United States= =20 argued that it would be impossible to reach the Protocol's goals without th= e=20 active and controlled participation of developing countries. Consequently,= =20 the United States could not garner two-thirds support from the Senate, whic= h=20 would be required to ratify the Protocol, despite endorsement from the=20 Clinton administration. The United States is the largest emitter of CO2,=20 accounting for one-quarter of the world total per year, and thus its=20 participation in the Protocol has been considered essential.=20 The Protocol's emissions targets include all major greenhouse gases: carbon= =20 dioxide, methane, nitrous oxide (NOx), and greenhouse gases created by=20 industrial processes, which are artificial chemicals called halocarbons=20 (CFCs, HFCs and PFCs) and long-lived gases such as sulphur hexafluoride=20 (SF6). The Protocol requires the main developed countries to reduce their= =20 emissions of the greenhouse gases by varying amounts: 8 percent for Europea= n=20 Union countries, 7 percent for the United States and 6 percent for Japan. = =20 With the onset of his new administration, President Bush announced last Mar= ch=20 that the United States would not support the Kyoto Protocol, again arguing= =20 that developing nations were not included and the goals were not realistic.= =20 Further, Bush has voiced the concern that ratifying the Protocol would=20 severely damage the U.S. economy as it would restrict industrial production= .=20 The president has also pointed out that, although European nations espouse= =20 support for the Protocol, none of the EU members has yet to ratify the=20 treaty. Instead, President Bush has adopted a "go-slow" approach toward=20 global warming and has vowed to spend more money to investigate the problem= =20 and work with other nations to produce a better plan. =20 A new report from the National Academy of Sciences, requested by the Bush= =20 administration, found that global warming is indeed occurring as the result= =20 of human activity. Specifically, the report found that the Earth's=20 temperatures could rise between 2.5 and 10.4 degrees Fahrenheit by the end = of=20 this century. On the other hand, the report could not reliably establish ho= w=20 much of the warming trends result from natural variations, how fast future= =20 warming will occur or how corrective actions might correct it. Thus, the=20 president asserted that these unanswered questions warranted further=20 investigation into the greenhouse gas problem. =20 The president has come under fire both domestically and abroad for what is= =20 perceived as a policy that gives preference to business over the environmen= t.=20 In addition to his opposition to the Kyoto Protocol, President Bush also=20 announced in March that he opposes any domestic restrictions in CO2 emissio= ns=20 from the nation's power plants, retracting on a pledge that he had made=20 during his campaign. Carbon dioxide is not classified as a pollutant by the= =20 Clean Air Act, and thus the White House said that Bush's original promise w= as=20 a "mistake" inconsistent with the president's broader goal of increasing=20 domestic energy production. Toward that end, the Bush administration has=20 focused on the construction of some 1,900 new power plants across the count= ry=20 to resolve a growing supply / demand imbalance. On the other hand, business= =20 groups have applauded the president's approach, echoing his belief that the= =20 Protocol would harm the nation's economy and that domestic, technology-base= d=20 solutions represent a better solution.=20 This is obviously a political story packed with passion on both sides of th= e=20 debate. I won't use this space to criticize or defend President Bush's=20 environmental stand. Instead, I think it will be useful to clearly identify= =20 the two polarized approaches that world leaders are taking toward the Kyoto= =20 Protocol. European leaders have vowed to enact the Protocol without the=20 United States, which may not be possible. The Protocol can only be enacted = if=20 nations that produced 55 percent of the industrialized world's carbon dioxi= de=20 in 1990 decide to ratify it. Japan could be the wild card in the debate, as= =20 it is leaning toward the Protocol but has not yet officially ratified it. I= f=20 Japan does participate, proponents of the Protocol would have 57.5 percent = of=20 1990 emissions (enough for ratification). =20 Nevertheless, here is how the two approaches shake out:=20 The Bush Approach We were given the best indication of the approach Preside= nt=20 Bush plans to take in his own environmental proposal (expected some time th= is=20 summer), in a recent radio address. "With new technology, sound regulation= =20 and plain good sense, we can expand our energy production while protecting= =20 the environment," the president said. The Bush administration's previously= =20 released energy plan is primarily focused on building the nation's energy= =20 supply through the expedited construction of new generation (including=20 nuclear power plants). Further, the president has said that "energy=20 production and environmental protection are not competing priorities" and c= an=20 both be achieved with new technology. =20 While the president has not made any specific references to new provisions= =20 for limiting CO2 emissions from existing or new plants, the new technology = to=20 which he has referred most likely includes clean-coal technologies that can= =20 be implemented to reduce emissions from coal-fired plants. As noted in the= =20 3/27/01 IssueAlert, new, clean-coal technologies are being tested and=20 developed by various companies throughout the United States. One example is= =20 the integrated gasification-combined cycle (IGCC) technology that first=20 converts coal into a combustible gas, cleans the gas of virtually all=20 pollutants, then burns the gas in a turbine much like natural gas. More tha= n=20 99 percent of sulfur, nitrogen and particulate pollutants can be removed in= =20 the process. Three gasification power plants have been built in Florida,=20 Indiana and Nevada. As coal remains the United States' most abundant fuel= =20 source, constituting 95 percent of our nation's fossil energy reserves, muc= h=20 of the nation's plan for reducing emissions will focus on coal-fired=20 generation. It is important to note, however, that most of the clean-coal= =20 technologies currently being developed eliminate SO2 pollutants and NOx, bu= t=20 may do little to address CO2 emissions, which is the primary focus of the= =20 Kyoto Protocol.=20 President Bush has also stated that his administration will fully fund high= =20 priority areas for scientific research into climate change over the next fi= ve=20 years, and help developing nations such as China and India to match the U.S= .=20 commitment.=20 The Kyoto Protocol Approach European Commission President Romano Prodi has= =20 said that the 15 European Union countries will proceed with ratifying the= =20 Kyoto Protocol. As noted, the participation of another large industrialized= =20 country such as Japan is needed to officially enact the Protocol. If the=20 Protocol is enacted, an international conference will be held in Bonn,=20 Germany, this July to spell out how the specific goals of the treaty will b= e=20 reached. Toward this end, French President Jacques Chirac recently commente= d=20 that, "Now is not the time to conduct new studies. These studies have alrea= dy=20 been done. We have to set objectives." Specifically, European countries wil= l=20 proceed with setting specific and targeted cuts in their emission gases suc= h=20 as CO2 produced by power plants powered by fossil fuels. The EU has said=20 that, if ratified, it will comply with the Protocol's standards for emissio= ns=20 reduction by 2012 and go "significantly further" to reduce emissions beyond= =20 that date. Yet, interestingly, across the Continent, nuclear power, which= =20 produces no CO2 emissions, has undergone a resurgence and presently generat= es=20 an increasing percentage of the power in countries such as France and=20 Germany. =20 However, we have a good indication of the specific measures from negotiatio= ns=20 that took place during the Clinton administration. Most of the emissions=20 targets of the participating countries will be reached through=20 emission-trading mechanisms. Trading emission of greenhouse gases allows=20 industrialized countries to buy emissions rights from each other at a price= =20 commonly agreed. In other words, industrialized countries that do not meet= =20 emissions targets can strike deals with other industrialized nations that d= o=20 better than required. This may encourage reductions to be made where they a= re=20 most needed. However, critics have suggested that the mechanisms amount to= =20 loopholes that would allow large polluting countries to continue polluting,= =20 while smaller countries trade credits that do not amount to significant=20 reductions.=20 Moreover, the two approaches being pursued by President Bush and the Europe= an=20 Union represent inherently different philosophies regarding the urgency of= =20 emissions control and methods that should be employed to reduce greenhouse= =20 gases. There is little possibility that President Bush will change his stan= d=20 and include the United States in the Kyoto Protocol. Without U.S.=20 participation, the Protocol may once again be stalled unless another large= =20 industrialized country such as Japan decides to join. On his own, President= =20 Bush now moves forward with constructing a plan for the United States that= =20 attempts to balance the reduction of emissions while aggressively expanding= =20 the country's generation supply. This will be a difficult balance to achiev= e,=20 but the president remains confident that environmental protection and=20 industrial expansion do not need to be mutually exclusive.=20 An archive list of previous IssueAlerts is available at www.scientech.com Reach thousands of utility analysts and decision makers every day. Your=20 company can schedule a sponsorship of IssueAlert by contacting Nancy Spring= =20 via e-mail or calling (505)244-7613. Advertising opportunities are also=20 available on our website.=20 SCIENTECH is pleased to provide you with your free, daily IssueAlert. Let = us=20 know if we can help you with in-depth analyses or any other SCIENTECH=20 information products. If you would like to refer a colleague to receive ou= r=20 free, daily IssueAlerts, please reply to this email and include their ful= l=20 name and email address or register directly on our site. =20 If you no longer wish to receive this daily e-mail, send a message to Issue Alert, and include the word "delete" in the subject line.=20 SCIENTECH's IssueAlerts(SM) are compiled based on the independent analysis= =20 of SCIENTECH consultants. The opinions expressed in SCIENTECH's IssueAlert= s=20 are not intended to predict financial performance of companies discussed, = or=20 to be the basis for investment decisions of any kind. SCIENTECH's sole=20 purpose in publishing its IssueAlerts is to offer an independent perspecti= ve=20 regarding the key events occurring in the energy industry, based on its=20 long-standing reputation as an expert on energy issues. =20 Copyright 2001. SCIENTECH, Inc. All rights reserved.
|