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CNX Gas COO: Thumbs-down on cap-and-trade proposals
Business editor
mbradwell@observer-reporter.com
The chief operating officer of CNX Gas said Friday that proposed cap-and-trade carbon legislation will erode good-paying jobs in the region, showing projections that passage would create losses in the country's gross domestic product while creating substantial increases in electricity prices in most of the country.
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Both bills propose emissions trading or so-called cap-and-trade measures that would be used to control pollution by providing economic incentives for achieving reductions in the emission of pollutants.
Under the proposals, a governmental body sets a limit or cap on the amount of a pollutant that can be emitted. Companies are issued emission permits and are required to hold an equivalent number of allowances or credits that represent the right to emit a specific amount. The total amount of allowances and credits cannot exceed the cap, limiting total emissions to that level. Companies that need to increase their emission allowance must buy credits from those who pollute less, with the transfer of allowances referred to as a trade.
According to DeIuliis, the costs of such legislation will far outweigh the benefits.
"The cost side is going to be substantial, and it's not going to be good from a jobs standpoint," he said, adding, "the benefits of the legislation will be minuscule with what is going on in the environment."
He showed figures from a study that projected that the U.S. would gain 3.5 million green jobs, but lose 6.6 million to 11 million jobs, or more than two jobs for every green job created.
"These are real jobs that will be lost, with 401(k)s, health care and pensions," he said, adding that "we need to think through" the proposals before making a decision about whether cap-and-trade makes sense for the economy.
For major energy companies like Consol Energy, of which CNX Gas is a part, DeIuliis noted that some of its hourly employees make six-figure incomes. The legislation would also be costly to Consol, the nation's second-largest coal producer, and its CNX Gas unit, which is also the largest producer of natural gas in the Appalachian Basin.
He added that the proposals in Congress are not shaping up as a bipartisan issue but regional ones, and showed projections that if cap-and-trade under Waxman-Markey were to be put into place by 2012, most states would not have enough allowances to cover their emissions from electricity generation.
DeIuliis quoted information based on Energy Information Administration and Congressional Budget Office data and presented by the Heritage Foundation, that the shortfall would lead to higher electricity costs for consumers in all but about 10 states. To make up for the shortfall, most states would have to seek higher-cost, non-carbon emitting electricity sources, reduce electricity production and consumption or purchase allowances from the handful of states that possess ample non-CO2 energy sources.
The region taking one of the biggest dollar losses include Pennsylvania, which would see electricity costs go up by $636.7 million; Ohio ($642.5 million); and West Virginia ($684.1 million). Illinois would see a jump of $763.5 million, but the biggest loser would be Texas, which would see electricity costs go up by about $1 billion.
The legislative proposals tend to directly oppose surveys regarding Americans' opinions about global warming. DeIuliis quoted a Rasmussen Report from September that found that 65 percent of Americans say creating jobs is more important than taking steps to stop global warming, and that 56 percent said they aren't willing to pay more in taxes and utility costs to generate cleaner energy and fight global warming.
DeIuliis said a federal proposal to reduce CO2 emissions by 83 percent by 2050 would reduce the country's emissions to 1910 levels, when the U.S. population was only 90 million. At those levels, he said, the U.S. would be at 2.5 tons of CO2 per capita. The only countries currently at that level, he said, are Belize, Mauritius, Jordan, Haiti and Somalia.
Despite his opposition to the cap-and-trade proposals, DeIuliis said he supports the idea of drawing energy from a variety of sources.
"We need a true portfolio of energy," he said. "We need coal, gas, nuclear, and we're going to need renewables."
That diversification will be needed as the world will continue to need to provide cheap electricity for continued economic development around the world, he said.
As for promoting the importance of carbon-based energy, DeIuliis acknowledged the Appalachian region needs to do a better job. He said Consol Energy will produce the energy equivalent of 100 million barrels of oil in coal and gas from Greene County alone in 2009. By 2015, the company expects to extract the equivalent of 150 million barrels of oil from Greene.
"This region of the country is the continental United States version of Prudhoe Bay," he said in reference to the massive oil field on Alaska's North Slope. "We don't do a good enough job of promoting."
DeIuliis and others in the gas industry could see some help coming from Washington.
U.S. Rep. Tim Murphy, R-Upper St. Clair, who attended Friday's meeting, announced the formation of a Natural Gas Caucus, which he is co-chairing with U.S. Rep. Dan O'Brien, D-Okla.
