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Emissions Trading
- "Does Integrys Energy Group support the idea of emissions trading?"
- Yes, we do.
Background
Emissions trading programs, sometimes referred to as "cap and trade" programs, provide companies with flexibility in meeting air emission limits. A cap (or maximum amount of emissions allowed) is set for a nation or a region to protect air quality. The total emission "allowances" are then split up and distributed among companies that produce emissions. Generally, if a company emits less than its share of allowances, it can keep the unused allowances for future use or sell them to others. If a company emits more than its allowances, it must purchase allowances from others.
The Integrys Viewpoint
Integrys Energy Group supports the idea of emissions trading programs because these programs have proven to be effective. The end result of emissions trading is that communities achieve their emission-reduction goals, and air quality is improved. At the same time, companies have flexibility in how to reduce emissions, so they can make reasonable choices for their circumstances. Companies can balance the need to meet emission requirements with the need to protect jobs for employees, save money for customers and manage shareholder investments. In addition, they invest in equipment or controls, which is good for the economy.
We believe:
- The electric industry has made dramatic reductions in emissions while supplying an ever-increasing demand for electricity. Since 1980, the electric generation industry has reduced sulfur dioxide (SO2) and nitrogen oxide (NOx) emissions by more than 40%, while at the same time increasing electric supply.
- Emissions trading programs have a successful track record. The Acid Rain Program was the first major attempt to use trading to reduce emissions. Its goal was to significantly cut SO2 emissions from electric power plants across the nation, in an economically efficient way. The program has achieved nearly 100% compliance. By 2000, SO2 emissions were reduced about 40% from 1980 levels. By the end of this decade, emissions will be reduced about 50% from 1980 levels. Hundreds of millions of dollars have also been saved each year as a result of emissions trading.
- A federal cap-and-trade program does not preclude regulators from addressing local solutions. Debate has occurred over whether emissions trading creates hot spots in local areas. There is much evidence that this has not occurred. But despite a federal program, federal and state regulators can still require emission reductions where needed, addressing local needs.
Our Actions
Integrys Energy Group considers emissions trading as one of many options available to us as we strive for environmental sustainability. We are:
- Reducing our emissions. Between 2002 and 2007, our emission rate of SO2 and NOx (tons emitted per megawatt-hour of electricity produced) has decreased. As we add electric generation to keep up with increasing consumer demand, it becomes increasingly difficult to decrease our total emissions. However, as we use improved technology, we can improve the efficiency of our units and our emission rating.
- Investing in emission-control equipment. An example of this investment is Weston 4, a new power plant recently built by Wisconsin Public Service near Wausau, Wisconsin. Weston 4 represents the modernization of our fleet of electric generating units. It is achieving significant reductions in emissions for each megawatt-hour of electricity generated, as compared to our traditional units. Weston 4 is one of the most efficient generating units in the country, with state-of-the-art environmental controls. Its construction has allowed us to eliminate or reduce the operation of older, less efficient units with higher emission rates.
- Limiting our emission allowance purchases. Our regulated business
complies with emission-reduction goals through a combination of capital
investments in controls that reduce emissions, and emission allowance
transactions. Wisconsin Public Service, for example, will invest in
emission-reduction projects that cost less than the market price of emission
allowances. If these projects reduce emissions beyond target levels, the utility
will sell or carry forward any emission allowances it creates. If capital projects
cannot meet target emission levels cost effectively, the utility purchases
allowances, which support cost-effective emission-reduction projects at facilities
not owned by the utility.
Integrys Energy Services, our nonregulated subsidiary, develops assets and invests in opportunities while fully considering the current and expected environmental costs and opportunities. The business then optimizes its delivered cost of energy by pursuing the most cost-effective emission-management approach. In other words, Integrys Energy Services sells allowances when market prices for allowances are elevated and the company will not need them for several years, or purchases allowances when it has an expected future need. - Investing in cleaner technologies. In 2008,
Integrys Energy Services and Wisconsin Public
Service announced substantial investments in cleaner technologies:
- Integrys Energy Services introduced a new business segment focusing on renewable energy, energy efficiency and energy conservation. This includes several projects producing energy from the sun, wind and landfill gas.
- Wisconsin Public Service announced two new wind generation projects. While the utility has been involved in wind generation for more than a decade, new wind projects will help it meet renewable energy requirements in Wisconsin.
Resources
Kinsman, John. "Emissions Trading — Hot, Not Hot Spots," Electric
Perspectives. Edison Electric Institute, January/February 2003.