Published: March 07, 2009 09:23 pm      

Obama proposal angers coal industry, including Southern Indiana's Duke Energy

Carbon emissions limited; rates a concern for Duke Energy

A White House proposal to use a cap-and-trade system to reduce emissions has drawn criticism from top Indiana officials and those in the coal industry.

The proposal — included in President Barack Obama’s recently released budget — is meant to curtail the release of the green house gas carbon dioxide, or CO2. Many scientists believe the gas to be a primary culprit behind global warming.

Under the proposal, companies would buy federal emissions permits in order to continue to release green house gas.

A 2008 Brooking Institute Study said the Louisville metro area, which includes several counties in Southern Indiana, has one of the worst carbon footprints among the nation’s metropolitan areas. Duke Energy, Southern Indiana’s primary electric provider, has a coal fire plant in New Albany.

“The president’s plan calling for auctioning 100 percent of carbon allowances is nothing more than an unfair carbon tax, the bulk of which will be borne by electric customers in the 25 states that depend on coal for most of their electricity,” Duke Energy said in a statement provided by Communications Manager Lew Middleton.

“This will punish coal states for decisions approved by state utility commissions decades ago when building coal plants was a key part of our national energy policy,” the statement said.

The company estimates electricity rates could increase by 40 percent in Indiana. Kentucky could see a 30 percent rise in rates.

The program would set a cap on carbon emissions. If a company wants to go over the cap, it has to buy an allowance at a cost of $20 per ton of carbon.

At a meet and greet in Jeffersonville last week, Gov. Mitch Daniels, a Republican, expressed dismay at the proposal.

“People on the coast … have pointed a giant cannon at states like Indiana and Kentucky,” which use coal for energy, he said.

“I honestly hope that we will think twice before we pile another enormous burden on this economy.”

Rep. Baron Hill, D-Ind., said he’s committed to working with the administration on energy issues. However, he said, coal has to be a part of the solution.

“Coal currently accounts for 50 percent of the electricity generated in our country, including about 92 percent of power in Indiana,” Hill said.

“We must recognize that clean coal — along with many other new sources of energy — will be a part of our future, and take steps to further the deployment of new technologies.”

Duke Energy would like the carbon allowances initially allocated at no cost and then eventually be auctioned.

That way, electric rates would increase gradually and carbon emissions would still decrease.