TCS Daily

Sen. Bob Smith Sees Incentives and Innovations as Best Regulators for CO2, Mercury, Etc.

By James K. Glassman - May 18, 2001 12:00 AM

New Hampshire Sen. Bob Smith's tenure at the helm of the Senate Environment and Public Works Committee has taken both liberal and conservative camps by surprise. While he voted for the Clean Air Act back in 1990 and opposes exploring for oil in the Arctic National Wildlife Refuge, he sees the Kyoto global warming treaty as "basically a pie-in-the-sky dream that just doesn't work." Nonetheless, Smith seeks to find a way to cut carbon dioxide and other emissions. For more than a year, he has been at work on legislation that would make use of a "cap and trade" system to reduce emissions from utilities. Smith recently talked with Tech Central Station Host James K. Glasssman about incentives and technology overtaking command-and-control regulation as the next course for remaining true to the environment.

James K. Glassman: Senator, let`s talk about CO2 for a second. What is your position on emissions of CO2?

Sen. Bob Smith: My position on emissions of CO2 is that it makes no sense to try to regulate CO2 at the end of the pipe, if you will. What I want to do is get a system of "cap and trade" exchange, reducing emissions from NOx, SOx, and mercury, and also explore options for a voluntary, market- based incentive approach to reducing carbon.

For example, if a company was willing -- in return for some forbearance on new source review on some old coal-burning utilities -- to put new technology on one of their utilities that would reduce emissions of NOx, SOx, and mercury, we would be willing to give them credits for carbon reduction if they were to purchase rain forests, forest land, or plant trees, seal off natural gas pipelines, or if they invest in renewable energy, such as solar, wind, hydro, ocean, or sea coral reefs.

All of that reduces carbon. So, that`s what we`re talking about. We`re talking about a system that gets voluntary reductions in carbon so that regulation becomes irrelevant. And I believe that we can do that. I think that we would start by bringing utilities under a bubble concept - air knows no state boundaries. So it needs to be a regional and/or a national bubble that brings all of these utilities in. We agree on whatever the acceptable emission reduction is for the Big Three - SOx, NOx, mercury - and at the same time, give credit for carbon reduction without regulating it under the bubble.

Glassman: On the question of CO2, though, the assumption seems at the base of the program you just outlined is that, in fact, there is something dangerous about CO2, emissions. Is that right?

Smith: No. Carbon is emitted through, as you know, natural sources. Of course, it also is emitted from some of our utilities and other manmade sources. What I`m trying to do is to get off the debate where we constantly focus on the regulation as opposed to the innovation. I want to reinvent. Gore tried to reinvent it, but it didn`t work very well. But I want to reinvent innovative environmental technology. I want the innovations to be so good that regulation becomes irrelevant.

Glassman: So, you would do that in an area like new source review, which basically deters utility companies from doing any innovation. Is that correct?

Smith: Exactly. If you had a company which has four or five coal-burning plants that are old, bad for the environment, and in violation of all the Clean Air Act, and you impose the new source review on them, they`ll spend probably millions saying, "No, it`s not new source review. It`s upgrades." They`ll fight it in court. And all those millions of dollars would go to nothing, except lawyers.

What I want to do is say to them, "All right. We`re willing to provide you some forbearance. When can you promise us you`ll take these plants off line? And what can you do in return to bring us into compliance on the emissions on the larger scale under the bubble?"

They might say - and I`m just using this as an example here - "Well, we`re willing to purchase rain forests and reduce carbon. We`re willing to create some coral reefs. We`re willing to seal off natural gas. Or maybe we`d be willing to invest in a solar company which needs investment to get started."

The point is to get the best of all worlds. We get a few old plants that are left on line. They don`t have to fight the new source review. They take that money and invest it in either new technologies to make their other coal-burning plants better, and/or they could invest in purchasing forest land or whatever to reduce carbon.

So the bottom line is we get there. We get where we want to get, and we`re really focusing on the creation of new technology.

The other thing I would add, and this is not under this bubble that I`m talking about, is automobiles. Automobiles contribute about 50 percent of our emissions, if not more. It depends on what part of the country you`re in. Now, why not say to the automobile manufacturers, "Create hybrid cars, maybe even hydrogen cars. Do it as soon as possible. What can we do to help you do that?"

And they might say, "Well, we`d like some tax incentives or credits or whatever."

So, we`ll say, "Fine. We`ll give you a break on the CAFE standard or the end of pipe emissions," which basically prolongs the life of the gasoline engine.

What I`m trying to do is get to the innovative part. I`m not suggesting - I want to make it very clear - I`m not suggesting we bring the automobiles under that bubble. But in essence, they`re going to parachute into that bubble at some point in the future simply by their innovation. The reductions that take place from automobile emissions are going to have a tremendous impact on the need to reduce utility emissions. In the long run you would get to the top of the line a lot sooner than through regulation.

Glassman: So, basically, this is really a revolutionary idea, to get out of what you could call the "command-and-control" factors at EPA?

Smith: Absolutely. That`s my goal, and it is not an anti-environment goal. It`s a pro-environment goal. I might add two things: I`m perfectly happy to hammer my side. We can hold the hammer and say, "Look, if you don`t do this, and you don`t try this new innovation, then we`re going to hold you accountable. But if you try it, we`re willing to take the chance that it`ll work. We`re not going punish you if it doesn`t, but you`ve got to implement the technology."

Secondly, in Europe - I talked to the Dutch Parliament a few weeks ago -- we had members of the Green Party and the conservatives in the same Parliament all nodding their heads in agreement in that they went with pilot projects. They`re similar to us. They couldn`t get their EPA to agree on anything: whether to move away from command-and-control, or whether we should stay with command-and-control. They were all arguing about it just as we`re doing now in our country. They finally said, "Well, let`s try a few pilot projects and see how it works."

They would take a company or a few utilities, and they`d say, "Okay, fine. You`re out from under the regs. You go ahead and do your thing. Let`s see how it works out." They gave the forbearance. They began to set things up, and away they went. Next thing you know, another pilot project was created, then another one, and then another one. The guy from the Green Party told me this himself. He said, "First thing you know, we had so many pilot projects, we just decided that we didn`t even need command-and-control anymore." It`s working pretty well.

EPA Administrator Whitman is very interested and familiar with what happened in Holland, because she has visited there. I`m hoping to do the same thing.

Glassman: What is your opinion of President Bush`s decision about Kyoto?

Smith: I think the President is totally correct for this reason: Kyoto is basically a pie-in-the-sky dream that just doesn`t work. You`ve got one country, I think, out of 140 or so nations that agreed, that has ratified the treaty, number one. Number two, you`re going to have a bunch of nations that will not comply with it. And you`ve got many nations who can`t comply with it, which means that nations like the United States, would be forced to pick up most of the slack. That`s the bad news.

The good news is there`s a better way. And that way is, why not take the technology that I`ve spent the last five or ten minutes talking about and invest in the new renewable technologies, invest in solar? When these Third World countries begin to buy automobiles and begin to build utilities, let`s make sure they have state-of-the-art technology that the West is selling them so that they`re producing hybrid cars or hydrogen cars in the future. They`re going to produce utilities that get 30 to anywhere from 60 to 70 percent NOx, and SOx reductions, and an 80 percent reduction in mercury. In fact, therefore, they will be reducing carbons all because of this new technology. In other words, export our technology throughout the world to countries who can`t or won`t comply with Kyoto and you don`t need Kyoto. You get the job done because innovation is racing so much faster than regulation.

If you look back 30 years ago, we know that these regulations that came up -- these command-and-control regulations -- were necessary then. They were painful for business, and a lot of us complained about it. But the truth is that if you can burn the top of a river, something`s wrong. If your landfills are polluted, and you`ve got Superfund sites all over the country - toxic waste dumps - and you can`t breathe your air, something`s wrong. We`ve got to do something about it, and we did. We reacted with command-and-control.

All I`m saying is I`m not criticizing that. It worked. It helped. Now let`s move beyond that. Let`s go to the next level. Let`s go to innovation. Let`s encourage companies to go to new, innovative technology. If it works, we keep the hammer in the holster. I believe it will work. There`s plenty of evidence that it will work. We can try it for a few years. We`re not going to punish a company if it doesn`t work. We`re going to punish a company on the regulation side if they don`t try it. So that`s the difference. It`s a big difference.

I`m very excited about it. I have spent a lot of time on this thing. About a month ago, I met with a solar company lamenting the fact that they can`t get anybody interested in investing. They know it`s slow in picking up. It`s only about one percent of all the energy that`s provided now.

I said, "Well, would you be willing to give credit to a coal-burning utility - give forbearance - to allow them another five or 10 years to finish the life cycle of an old plant that`s not doing very well in order to give you some investment in solar?"

They said, "Absolutely, we would." That`s the future because once we get the solar and other renewables, we`re going to be free of all this fossil fuel.

Finally, let`s not forget conservation. I mentioned the cars, and that`s obvious. But let`s also talk about energy efficiency. Let`s talk about insulation and all that kind of stuff. Anything we can do to reduce energy is good for the environment, and it`s good for the cost of energy.

Glassman: Your web site says that the federal government should "ensure that we use the best, peer-reviewed science." What do you think the best, peer-reviewed science says about climate change?

Smith: I think the best, peer-reviewed science says about climate change that warming is occurring. I went up to Woods Hole in Massachusetts and talked to the scientists up there. What they say is, "Yes, there is warming occurring. The questions are, is this a cyclical thing that`s happening anyway? Or is it entirely caused by carbon and fossil fuels? Or is it a combination of both?" The answer is, it`s probably a combination of both. We do know that warming is occurring. We don't know what 100 of the cause is, but we know that too much carbon emission is not good. But let`s not shut down the world economy without all of the facts.

I think that we can begin to make inroads and reduce carbon through this "cap and trade" voluntary program. We don`t regulate carbon or mercury, as you know. Some have said that we ought to regulate them both, but if we can reduce 80 percent mercury in coal-burning utilities, what do we need to regulate it for? We`re doing it on our own, and companies are willing to step up to the plate.

I want to say that the companies that I`ve talked to in just about every region of the country - almost every utility -- they`re very, very interested in improving the environment not only for their customers, but for all of us. They want to help; they want to be a player. I believe we can use their technology and their innovation, and that`s what I`m excited about. You`ve got to be careful not to be Carl Sagan and be so far out into the future, that people don`t understand what you`re talking about. But I don`t think it`s too far out in the future to say that in 10 to 15 years, we can each be driving a lot of hybrid cars in this country. That`s what the auto manufacturers tell me. They`re able to get 60 or 70 miles to the gallon. We`ve just got to get one that a guy like me, who`s six feet six, can sit in. Give me an SUV that gets 60 miles to the gallon that`s a hybrid car, and I`m there to buy it.

I think we`ll do it. If we challenge the automobile manufacturers to do that and say, "Here`s your tax incentives, your credits. Let`s get going on this," we reduce carbon. We reduce all the other emissions, and we don`t regulate anything. When we get to where we don`t need fossil fuel, we don`t need to regulate fossil fuel. That`s in the future. But we`ve got to get there, so we do it through a combination of things. You take your pick -invest in renewables, conservation, nuclear power, clean coal, natural gas, oil - all of those things. Put them together and have reasonable diversification. We`ll get good energy, and we'll have a clean environment.

Glassman: Just one last question. In a speech - I think it was in February - you talked about this technology that can reduce mercury levels by 81 percent, NOx by 76 percent and SOx by 44 percent. What is that particular technology?

Smith: It is an advanced catalytic technology developed by a New Hampshire company.

Glassman: But why is this not being implemented right now?

Smith: It is. What`s happening is this is a company called Power Span. It`s using a way to take the particles out of emissions, and it`s being tested. This is the pilot project that I was telling you about.

It`s a New Hampshire company that`s taken - and there are others, I`m not just trying to play up New Hampshire -this thing to a plant in Ohio, and it`s really working. The technology is good. If it turns out to be as good as they think it is in their preliminary results, it`s going to take off like wildfire to the utilities. There`s no question about it.

Glassman: Great. Well, I really appreciate your time, Senator.

Smith: I just want to close by saying that we can`t be focused on just one or two things. We need diversification. An energy policy is what we desperately need, but an energy policy that has environmental considerations. We can do both, but we just need a plan. We need to have the short-term; we don`t want $3-a-gallon gasoline. And we don`t want our air so dirty that we can`t breathe. So, you put all this together and give the innovators a chance.

If the innovators can`t produce, then we can go back to command-and-control. But if you go back too hard on command-and-control, you`re going to run energy costs up, and that`s not what we`re about. I`m as excited about this as anything I`ve done since I`ve been in the Congress. If we can get people talking about it, and get people focused on it, we can make this happen. If the automobile manufacturers get demand for hybrid cars, they`re going to build them. It`s that simple. And they can build them. They`re on the road now.

Glassman: Okay. Well, thanks again.

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