WASHINGTON -- Even as a proposed treaty on global warming faces an uncertain future in the Senate, big companies are maneuvering to push through legislation giving them valuable credits for early actions to control the waste gases that the binding treaty would strictly limit.
The proposed treaty, negotiated in Kyoto, Japan, and signed by the Clinton administration last year, requires steep reductions in the industrial nations' emissions of heat-trapping greenhouse gases. If the Senate eventually approves it despite widespread opposition from major industries, companies want to be sure they get credit for any reductions they achieve before the treaty takes force in 2008.
The legislation would mark a significant shift in the debate in the Senate over climate change, potentially moderating the opposition to the treaty among big industry groups and linking their financial interests to the goals of treaty supporters. And if it succeeded, it could revive the longstanding efforts of the administration to persuade industries to cut their emissions voluntarily, which have met with mixed success.
"This is a potential winner," said Eileen Claussen, executive director of the Pew Center on Global Climate Change and a former treaty negotiator for the administration. "It helps get the United States moving. It is voluntary. It is supported by industry. It seems to me there should be a way to get legislation like that through Congress."
For some companies, credits earned now could be applied against strict limits they would face later. Companies able to make even deeper cuts in emissions now could sell their surplus credits for billions of dollars under an emissions trading system that the administration wants to set up.
With so much at stake, big companies, joined by influential environmental groups and policy analysts, are already lobbying hard for Congress to guarantee credits for early action.
Three senators, led by John Chafee of Rhode Island, the leading Republican environmentalist in the Senate, introduced legislation late in the last session that would assure the companies that their early reductions would earn credit under any mechanism the government eventually establishes to limit emissions of greenhouse gases. The bill is also supported by Sens. Joseph Lieberman, D-Conn., and Connie Mack, R-Fla.
In a speech last month to the National Association of Manufacturers, Chafee, chairman of the Senate Environment Committee, said he would make the bill a priority as soon as Congress reconvened.
"While the climate debate will indeed continue over the next few years, we strongly believe that there is a voluntary, incentive-based approach which can be implemented now," he told the group, which has opposed the Kyoto treaty.
"The good guys who take action now will be rewarded by having these actions count," Chafee said. "This credit program may also make early greenhouse gas reductions financially valuable to the companies who make them."
That could mean a windfall for companies that have recorded reductions in greenhouse gas emissions since 1991, a period when the nation's overall annual emissions ballooned by more than 10 percent despite the administration's voluntary plan to curtail them.
As drafted, the bill gives ton-for-ton credits to any of the more than 150 companies that can document reductions in their greenhouse gas emissions under various voluntary federal programs.
The DuPont company is one example. The biggest chemical producer in the United States, DuPont has taken steps that will cut its own emissions of greenhouse gases far more and much faster than the treaty would require.
Company officials said DuPont would cut its annual greenhouse gas emissions to much less than half of 1991's levels by the year 2000. Under the treaty, the United States as a whole would have to cut emissions 7 percent below 1990's level between 2008 and 2012.
"If you did not recognize our voluntary work, you would punish us for stepping out in front," said Darwin Wika, director of safety, health and the environment for DuPont. "And the laggards who did not step up to the plate would be rewarded."
By DuPont's calculations, by the end of this year it will have reduced its annual emissions by the equivalent of 90 million tons of carbon dioxide. Economists' estimates of the value of carbon credits in an emissions trading scheme vary widely, but depending on the crediting rules, DuPont's savings alone could someday be worth billions of dollars.
Some big environmental groups, like the Environmental Defense Fund, which favors emissions trading and other market-based pollution controls, have published detailed proposals for granting credits to companies that move early, and have advised lawmakers on drafting legislation. There are at least five such proposals spelled out by various advocates, including one by Niagara Mohawk, the New York utility company.
But some environmentalists have criticized the bill offered by the three senators.
John Stanton, legislative director for the National Environmental Trust, a pro-treaty advocacy group, said the bill "does not provide sufficient guarantees that emission reductions credited under it will actually result from reduced emissions, as opposed to phantom paper reductions."
With Chafee planning hearings soon, the lobbying is sure to intensify.
"You are creating a new currency called carbon-dioxide tons," said Alden Meyer of the Union of Concerned Scientists, another treaty advocacy group. "There is a lot of money involved, and there is going to be a lot of ferocious jockeying to control who gets the money. It is going to be pretty intense."
For now, the most active proponents of credit for early action are a closely knit coterie of former government officials, policy analysts, environmental advocates, lobbyists, lawyers and corporate officials who have been working for months to build support for the credit idea.
Along with the Environmental Defense Fund and the Pew Center for Global Climate Change, they include law firms and lobbyists like Van Ness Feldman and Alcalde & Fay, both of which represent several electric utilities, and a number of individual companies, several of them aligned with the Pew Center.
Hundreds of companies, big and small, could benefit from the proposal.
In 1997, the latest year for which data is available, companies participating in voluntary reductions of greenhouse gases reported to the Energy Department that they had reduced greenhouse gas emissions by the equivalent of 137 million tons of carbon dioxide. Under the bill, all of them would qualify for credits.
The companies, which filed detailed reports about more than 1,200 emission control projects, included 156 participants in more than a dozen different industries. Most of them are electric utilities, but other types of companies are increasingly participating.
Even one individual filed a report in 1995. Carter Lewis III, who at the time was a consultant for the Energy Department, claimed to have cut his personal emissions of carbon dioxide by between three and four tons by never having more than one light at a time turned on in his house, and by commuting to work outside of rush hours to save gasoline.
"I just wanted to demonstrate what the ordinary citizen could do," he said. "You don't have to be a gigantic power plant to reduce carbon dioxide emissions." (The reductions he claimed, however, would have only a trivial market value.)
Although the number of participants has increased steadily, for the past few years the amount of reductions in emissions that they claimed has been falling. In 1996 it was the equivalent of 154 million tons of carbon dioxide, and in 1995 it was 183 million tons.
There is considerable debate whether actions taken years ago should be granted credits.
"To the extent the credit is regarded as an incentive to spur industry to make greenhouse gas reductions that would not otherwise occur, there is little basis for rewarding reductions already achieved," said the report, written for the Pew Center by Robert Nordhaus and Stephen Fotis of Van Ness Feldman.
On the other hand, they noted, companies that signed onto the administration's voluntary programs may have relied on the government's representations that they would be granted appropriate credits.
The General Accounting Office, which investigated the Energy Department's reporting system, found some flaws that suggest that the claims may be exaggerated.
The agency noted that the Energy Department does not verify that claimed reductions are actually achieved.
Companies have used many different strategies for reducing their emissions.
DuPont, officials said, not only has cut its energy consumption, but invested millions of dollars changing its processes for making adipic acid powder, a chemical feedstock. The new approach eliminates most emissions of nitrous oxides, like carbon dioxide a potent greenhouse gas that would be controlled by the treaty.
American Forests, a conservation group, has filed annual reports with the Energy Department describing hundreds of tree-planting projects that could offset carbon dioxide emissions because growing trees remove carbon dioxide from the atmosphere and store the carbon as wood.
So far, the organization has planted more than 8 million trees, which it calculates will offset 2.3 million tons of carbon dioxide or lock up 634,000 tons of carbon. Credits for those tons could easily become worth millions of dollars to the organization in the future.
Many electric utilities have argued that they have achieved reductions in carbon dioxide emissions by operating their nuclear power plants more efficiently, reducing the need to burn coal in other power plants. Some utilities have filed reports with the Energy Department claiming millions of tons of reductions of this kind, even as their total emissions of carbon dioxide have continued to increase.
Duke Power Co., for example, reported that its total annual emissions of carbon dioxide increased from about 24 million tons in 1990 to about 36 million tons in 1996, an increase of 50 percent.
It said, however, that its more efficient use of nuclear power between 1993 and 1996 prevented an additional 35 million tons of carbon dioxide from being added to the atmosphere. Credit for those tons could be very important to Duke if it is told to sharply limit its emissions between 2008 and 2012 to help comply with the global warming treaty.
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