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Flexibility Mechanisms are Crucial in Meeting Reduction
Goals
FAIRFAX, VA, March 14, 2001 - ICF Consulting released
today the industry's first integrated study of carbon emissions,
analyzing the impact of various potential carbon regulatory
scenarios on the electric generation and natural gas sectors.
The Carbon
Emissions Market Outlook concludes that utility emissions
can be reduced to levels experienced a decade ago without
severe impacts on the generation sector, but not without incorporating
crucial flexibility mechanisms such as international emissions
trading and offsets.
Limiting carbon emissions from the electric power sector is
feasible, but will require substantial flexibility to make
compliance costs manageable for the electric sector and to
keep electric prices sustainable for the economy. Given that
2010 electric sector emissions are forecast to be 50 percent
higher than 1990 levels, flexibility is essential to any policy
that would require the utility industry to return to those
levels. A policy centered solely around "on-system" reductions
(costing well over $100/tonne) would be prohibitively expensive
for the utility industry and the United States economy because
of the impact on wholesale power prices.
"Our analysis shows how potential carbon regulations expose
power companies and coal producers to considerable risk. Companies
can manage that risk by taking a proactive role in the policy
debate and by capturing high quality, low-cost carbon offsets,"
says John Blaney, Senior Vice President and Managing Director
of ICF Consulting's private sector environmental practice.
"ICF Consulting is unique in its capabilities to work with
companies to minimize the risks and capture the opportunities
associated with a potential carbon policy."
Optimizing Compliance Decisions in the
Face of Regulatory Uncertainty
The release of ICF Consulting's Carbon Emissions Market
Outlook sheds light on the huge regulatory uncertainty
now facing electric generators and the rest of the economy
as the industry tries to grapple with potential restrictions
on carbon emissions. While President Bush recently decided
against regulating electric sector carbon emissions, legislative
bills are being reintroduced in Congress to regulate carbon
emissions as part of a comprehensive multipollutant regulatory
strategy. The President's announcement only serves to add
to the tremendous uncertainty facing the electric power, coal,
and natural gas industries.
The study goes beyond simple sensitivity analysis, providing
an in-depth assessment of carbon regulatory developments.
The Carbon Emissions Market Outlook provides a detailed
discussion of the Kyoto Protocol and its flexibility mechanisms,
including international trading, the Clean Development Mechanism
and Joint Implementation. The study also incorporates the
most up-to-date information regarding opportunities for non-carbon
dioxide (CO2) greenhouse gas reductions (methane and other
high global warming potential gases) to assess the importance
of incorporating these greenhouse gas offsets into a utility's
carbon compliance mix.
"A major challenge facing owners of generation assets today
is to determine which emission offset investments make economic
sense in the face of tremendous carbon regulatory uncertainty.
Our Carbon Emissions Market Outlook shows that the
economics of many "legitimate" offset decisions are attractive
across a broad range of alternate carbon regulatory scenarios,"
observed Blaney. "We believe that an integrated analysis of
the dynamic electric, fuel, and emissions market impacts of
existing and potential future regulations is the only way
to evaluate air compliance decisions."
Impacts of Regulatory Uncertainty on Natural
Gas Markets Analyzed
ICF Consulting's Carbon Emissions Market Outlook includes
an in-depth view of the natural gas market and its ability
to deliver the gas necessary to comply with alternative restrictions
on carbon emissions from the utility industry.
"Absent major technological breakthroughs, gas is the compliance
tool of choice for utilities that need to reduce their CO2
emissions," says Blaney. "Our analysis shows that under a
1990 stabilization policy that includes no flexibility, we
are looking at total gas consumption of 35 trillion cubic
feet (TCF) per year in the United States. This includes utility,
commercial, and residential use. Our extensive analysis of
the gas resource base indicates to us that there will be sufficient
resources to meet this tremendous increase in gas demand.
We also believe that the infrastructure can be put in place
to support such demand. That being said, the costs may be
prohibitive. Our Carbon Emissions Market Outlook outlines
a variety of potential carbon scenarios and evaluates the
gas demand and well-head price resulting from the relative
stringency of each carbon cap facing the electric utility
sector."
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ICF International (Nasdaq: ICFI) partners with government and commercial clients to deliver consulting services and technology solutions in the energy, environment, transportation, social programs, defense, and homeland security markets. The firm combines passion for its work with industry expertise and innovative analytics to produce compelling results throughout the entire program life cycle, from analysis and design through implementation and improvement. Since 1969, ICF has been serving government at all levels, major corporations, and multilateral institutions. More than 1,800 employees serve these clients worldwide. ICF’s Web site is http://www.icfi.com.
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For Immediate Release
Contact: Douglas Beck
1.703.934.3820
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