NJ PSEG Calls on Congress to Enact National CO2 Cap & Trade Program

Ralph Izzo, chairman and chief executive officer-elect of New Jersey’s Public Service Enterprise Group (PSEG) called for a national CO2 cap and trade program in testimony March 29 before the House Subcommittee on Energy and Air Quality of the Energy and Commerce Committee.

“PSEG believes that global climate change represents a real environmental threat and significant business challenge, as well as opportunity. We support mandatory greenhouse reductions on a national level and a cap-and-trade mechanism to achieve those reductions,” said Izzo, who heads a diversified energy company with $28 billion in assets, including 16,000 megawatts (MW) of electric generation capacity of which 2,400 MW is coal-fired capacity. Under an economy-wide cap-and-trade system, the company estimates that the value of emissions allowances will exceed $40 billion annually (assuming a carbon dioxide [CO2] price of $7/ton). Izzo explained that options to reduce emissions are commercially available already: (1) end-use energy efficiency; (2) supply-side energy efficiency; (3) renewable energy technologies; (4) nuclear energy technology; and (5) a wide range of greenhouse gas offsets. Izzo asserted, “In order to achieve significant greenhouse gas reductions, we need to create incentives for the rapid deployment of existing renewable and energy efficiency technologies and for the development of new compliance options such as carbon capture and storage. In short, we need to transform the ways in which we use and generate electricity.” PSEG made its recommendations in part based on its experience in the development and implementation of several national and regional cap-and-trade programs for sulfur dioxide (SO2), nitrogen oxide (NOx), and CO2. Izzo pointed out that the cap-and-trade systems for NOx and SO2 have worked and have shown to encourage least-cost compliance solutions by allowing the market to select a variety of compliance strategies. Overall electric industry SO2 emissions have been reduced about 44% and NOx emissions have been cut about 36% since 1990. SO2 emissions were reduced at a cost well below what was originally anticipated.
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