IMPA recognizes the importance of reducing carbon (CO2) emissions, but realizes it is also a global problem with global consequences and global solutions. Any attempt to limit CO2 emissions must take a worldwide, economy-wide approach, and must include the U.S. and all other countries such as China, India and any other nation with a rapidly emerging economy and industrial base.

The United States Congress is currently considering legislation designed to reduce greenhouse gas emissions associated with global warming. As Congress deliberates CO2 legislation, we continue to support a cap and trade approach that is fair, balanced and affordable for those who consume, and pay for, electricity. Such a policy should include:

• a true cap and trade program that places a declining limit on emissions over several years and allows utilities to meet the cap by reducing emissions or purchasing allowances from others
• a no-cost emission allocation system, NOT an auction process or carbon tax, with allowances being provided only to entities that directly serve consumers with power from carbon emitting resources.
• utilities should receive up to 100 percent of the allowances needed to comply with the mandate in order to minimize the rate impact of the cap and trade program. Allowance prices should have a “safety valve” to mitigate price spikes.
• allowances must be allocated to all existing coal-fired facilities, as well as future coal-fired projects that are planned and under construction prior to the enactment of any legislation.
• a reasonable and achievable emissions reduction target level. 17 percent below 2005 levels by 2020 is unrealistic and should be amended to provide breathing room for utilities to invest in carbon reduction technology without dramatically increasing our Indiana electric rates, hopefully preventing the further loss of business and industry.
• a market-based approach with price signals to ensure cost effectiveness and flexibility to help spur research and technological innovation, investment, efficiency and conservation

The volatility of the economy and high fuel costs already have customers reeling. As a state with traditionally cost competitive energy prices, we cannot afford to close down all existing coal-fired generation in favor of expensive and technologically unproven generation.

All proposed solutions to global warming that Congress is considering will have a significant impact on Indiana’s customers – residential, commercial and industrial. The overall goal of federal legislation should be long-term in nature with a clear time frame, and allow the economy and the industry the necessary time to adjust to the changes that lie ahead.