Entergy and the Environment

The American Power Act (Kerry-Lieberman bill)

“Senators Kerry and Lieberman are to be commended for their leadership in introducing meaningful climate change legislation and, in doing so, helping the United States take a major step forward in solving the biggest challenge of our time. With vital assistance from Senator Graham, Senators Kerry and Lieberman have provided the Senate with an excellent proposal for a comprehensive legislative package that will reduce our country’s greenhouse gas emissions.

“Entergy supports the bill’s market-based approach, which will put a price on carbon dioxide. This is the most effective and efficient way of achieving reduction of greenhouse gases and spurring innovation and investment into new carbon-reducing technologies. The company also supports the bill’s incentives for the development of retrofit carbon capture and sequestration technologies, a critical component to effectively addressing emissions from this country’s coal fleet and the world’s rapidly growing number of coal plants. Additionally, the bill’s hard price collar is a critical cost-control mechanism that will provide an adequate and durable CO2 price signal while preventing unacceptable CO2 price spikes. Finally, the bill’s provision to provide additional assistance to low and middle income consumers is crucial to preventing the regressive impacts of higher energy costs on American families.

“Entergy applauds Senators Kerry’s and Lieberman’s leadership and tireless efforts to bring this proposal forward. We look forward to learning more about the bill, and we hope that it becomes the basis for the enactment of comprehensive climate change legislation.”

- J. Wayne Leonard Entergy Chairman and CEO

Entergy's Position on Climate Change Legislation

Entergy believes meaningful action is needed now to address climate change and supports reductions of 70 to 80 percent by 2050. The longer we wait, the more difficult the challenge becomes.

Given Entergy’s firsthand experience with hurricanes, storm surges and a disappearing coastline, employees have a good idea what could be at stake in the future if the world experiences catastrophic climate change partly as a result of rising CO2 emissions.

Entergy believes climate change legislation must include the following key elements:

• A large-scale, government-funded demonstration program with appropriate focus on retrofit carbon capture and sequestration (CCS) technology.

• A robust research, development and deployment effort with appropriate focus on retrofitting existing coal plants with CCS technology.

• An adequate and durable CO2 price signal that sufficiently acts as a cost control mechanism to prevent politically unacceptable CO2 prices, which would have a chilling effect on capital investment.

• Targeted incentives for CCS comparable to the incentives that other technologies receive.

• A faster transition to 100 percent auction to provide both an impetus for utilities to seek cleaner generation technologies and a revenue stream for investment in clean generation research and development.

The American Clean Energy and Security Act of 2009 (Waxman-Markey bill)

"We support a market-based cap-and-trade system as it is a major step forward in solving the biggest challenge of our time. The Waxman-Markey bill moves toward establishing the necessary price signals for carbon dioxide to drive innovation and investment in energy efficiency and new energy technologies."
- J. Wayne Leonard Entergy Chairman and CEO

To curtail CO2 emissions, Congress is currently considering the American Clean Energy and Security Act of 2009. If enacted, the bill, also known as the Waxman-Markey bill, would limit greenhouse gas emissions (the “cap” part of a cap-and-trade program). It would require high-emitting industries to reduce their output to specific targets by the middle of this century.

Entergy’s point of view on the Waxman-Markey bill

Although it’s not a perfect bill, Entergy believes the legislation provides a good start to address the climate change issue because it stands to:

• Significantly reduce greenhouse gas emissions.

• Provide incentives for the development of affordable carbon capture and sequestration technologies.

• Provide assistance to American families.

A solid provision for reducing the impact on American families was critical to gain support from Entergy and other electric utilities, and the company believes the provisions should be expanded to include more low- and middle-income families.

Entergy supports the Waxman-Markey bill’s market-based, cap-and-trade system as a major step forward in solving the biggest challenge of this generation. Entergy estimates the Waxman-Markey bill’s greenhouse gas provisions will increase residential bills by less than 3 percent through 2020. Under Entergy’s proposal for a 100 percent auction of allowances, the increase in electricity costs for Entergy customers, both commercial and residential, will be significantly less than customers in other parts of the country, due to the company’s relatively clean generation portfolio.

However, Entergy believes the provisions for renewable electricity standard should be removed or expanded to include energy efficiency programs and nuclear generation. As the bill is currently written, a renewable electricity standard would reduce some CO2 emissions but at twice the cost per ton of CO2 reduction that could be achieved through a cap-and-trade program.

Quick Facts about the American Clean Energy and Security Act of 2009

• The bill covers 85 percent of the overall economy, including electricity producers, oil refineries, natural gas suppliers and energy-intensive industries like iron, steel, cement and paper manufacturers.

• Regulated industries would need to acquire and surrender one emission permit for each ton of greenhouse gas emission. Emission permits are commonly referred to as “allowances” or “offsets.” Approximately 75 percent of the allowances would be given away at no cost at the start of the program, with the percentage of free allowances decreasing over time.

• Of the remaining allowances 25 percent would be auctioned off. If a company cuts its emissions and has excess allowances, it could sell the excess allowances to other companies or bank them for future use (the “trade” part of a cap-and-trade program).

• Regulated companies would be allowed to purchase carbon offsets to meet a portion of their required emission reductions—meaning they could fund clean-energy projects elsewhere instead of cutting their own emissions. This could lower the cost of complying with the new law.

• The bill also creates a renewable electricity standard that would require large utilities to supply an increasing percentage of their retail electricity sales from renewable sources such as hydro, wind and solar.