Economy

Texas businesses fret about climate change bill

FT. WORTH, Texas — While many Texans see the need to address global warming, the potential impact of climate-change legislation narrowly passed by the U.S. House of Representatives on Friday is stirring concern among businesses and industry groups in Texas.

John Fainter, president of the Texas Association of Electric Companies, said his organization is worried about the Waxman-Markey bill’s effect on power generators and electricity consumers.

It is virtually certain to mean higher costs for consumers, whose utility bills are already raised by the state’s torrid summers, Fainter said. Texas also uses huge volumes of power because of industrial activity such as petroleum refining and chemical manufacturing.

"Obviously, the impact is going to be different for different regions," Fainter said. "But I think it’s going to affect Texas more than a state like Connecticut."

Power generators are concerned about what effect the legislation, designed to rein in emissions of carbon dioxide and other greenhouse gases, might have on the fuel mix they use to generate electricity, Fainter said. Coal, natural gas and nuclear power account for most of Texas’ power generation, while wind and hydroelectric power also contribute.

'Million-dollar question’

Lisa Singleton, a spokeswoman for Dallas-based Energy Future Holdings, the former TXU Corp. and corporate parent of retail electric provider TXU Energy, said the legislation would "obviously" have "a lot of impact to us on the generation side." But what the specific impact will be "is the million-dollar question," she said.

Luminant Generation, an EFH subsidiary, is the state’s biggest electricity generator. In 2008, the company generated 66 percent of its electricity from coal, 28 percent from nuclear power and 6 percent from natural gas, even though natural gas units constitute 44 percent of its total generating capacity. Gas-fired plants have generally been more costly to operate in recent years, and some are used only during peak power demand.

EFH, according to its Web site, has supported "mandatory national limits designed to slow, stop and reverse the growth of greenhouse gas emissions." The company has also committed to a $1 billion plan to reduce emissions from its coal-fired plants to 20 percent below 2005 levels while increasing the plants’ total generating capacity by more than 25 percent.

'One step’

Natural gas and oil exploration and production companies have generally had mixed feelings about the climate-change legislation, although many could benefit from it because natural gas is a cleaner-burning, less-polluting fossil fuel than coal or oil. Fort Worth is the corporate headquarters for gas producers such as XTO Energy, Range Resources and Quicksilver Resources. Some industry observers have recently called the Barnett Shale the nation’s biggest natural gas-producing field.

Jeff Schrade, a spokesman for the Natural Gas Supply Association, representing natural gas producers and marketers in Washington, said the organization has "some member companies that are for [climate-change legislation] . . . and some who are opposed. As a result we’ve taken no position."

"This is one step in the legislative process," Schrade said of Waxman-Markey. "There still has to be action taken by the Senate. We understand that the Senate is working on its own climate-change legislation. We expect that legislation to be different than the House bill. How far different, nobody knows at this point."

Cap and trade

The Air Transport Association, a trade group that represents U.S. airlines, said it opposes the House bill because it would put in place a cap-and-trade program on fuel. Airlines purchase billions of gallons of fuel each year.

"This bill is supposedly an environmental initiative, except [it] is basically going to tax us and reduce our ability to buy new aircraft and put in new avionics retrofitting our aircraft as we have done," said Nancy Young, ATA’s vice president for environmental affairs, adding that those are fuel- and carbon-saving initiatives.

In recent years, airlines such as Fort Worth-based American Airlines have tried to cut fuel consumption and carbon emissions with initiatives such as allowing planes to taxi on one engine and retiring older, less fuel-efficient aircraft. Young said that between 1978 and 2007, airlines improved fuel efficiency 110 percent, reducing carbon dioxide emissions by 2.5 billion metric tons.

'Very concerned’

In a letter to the Texas congressional delegation, the Fort Worth-based Texas and Southwestern Cattle Raisers Association urged lawmakers to reject Waxman-Markey, saying the cost would outweigh any benefit.

The organization can’t support legislation that "would push more family ranches in Texas out of business," said association President Dave Scott, a rancher from Richmond, near Houston.

"We are very concerned about the increased costs of fuel, electricity, feed, fertilizer, equipment and other production costs necessary to maintain a successful ranching operation should this bill become law," he said.

'Incredibly complex’

Railroad giant BNSF Corp., based in Fort Worth, led the Trucost report’s Industrial Goods & Services sector’s list of "least carbon-efficient companies" in terms of minimizing greenhouse gas emissions. Trucost is an environmental research organization.

Suann Lundsberg, a BNSF spokeswoman, had not seen Trucost’s report but said the company is introducing more fuel-efficient locomotives. And she pointed out that trains move freight using less fuel than trucks.

"We are heavily engaged in optimizing the fuel-efficiency advantages and alternate fuel options for rail, but equally concerned about the economic impact of this legislation on our fragile economy," Lundsberg wrote in an e-mail. "Much more needs to be done to stimulate clean-coal technologies and understand the full consequences of this legislation."

She called Waxman-Markey "incredibly complex."

"We’re sorting through it right now," Lundsberg said.

Staff writers Andrea Ahles, John Austin and Barry Shlachter contributed to this report.

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