In the last year of a two term presidency, President Bush proposed setting targets on greenhouse gas emissions that will stop their growth by the year 2025.

My question is; why now? Has he discovered global warming is a threat to our environment? Maybe he has. But I think the real reason is because not having a global warming policy is now hurting us economically. One consistent thing about George Bush’s presidency is that he has promoted business development and has had favorable policies to the energy industry.

The problem is that without a global warming plan or a national energy plan, the risks for developing new energy projects are going up. If a utility wants to build a new coal-fired power plant, how can they be sure that carbon emission restrictions in the future will not inhibit their ability to operate the plant? If they can’t operate the plant for its full life cycle, how are they going to recover their investment? Will the Public Utilities Commission (PUC) allow them to keep the cost of the plant in the rate base, even though it is not producing any power for their customers? The recent experience has been that PUCs have not been willing to make these guarantees to the utilities and coal plants are being cancelled.

For the environment groups, challenging coal plants on their pollution has not been successful because the plants are designed to conform to EPA regulations on emissions and the PUC is charged with providing inexpensive power to their customers. Utilities have been challenged successfully on their plans to build new coal plants because of economic concerns about the future viability of the plant.

Other energy projects like the conversion of coal to diesel fuel, developing oil from tar sands, or developing oil from oil shale, release a large amount of carbon dioxide (CO2) for the amount of usable fuel produced. They all require huge up-front capital investment. Will developers be allowed to recover this investment and produce a profit for the investors?

An energy policy is needed to allow businesses to know what types of energy projects will be permitted and whether they will be allowed to recover the cost of their investments. The energy policy will need to map a course into the future that will hopefully reduce the emission of CO2. The policy will need to anticipate the amount of energy that will be needed in the future and map out how much CO2 emissions will be allowed for each unit of energy produced. Trading emission allowances could be part of this type of plan.

Setting 2025 as a date to stop the growth in emissions seems much to long to halt the growth in emissions. We really should have a plan that reduces CO2 emissions each year starting in maybe 2015 with the goal of completely eliminating CO2 emissions by the year 2055. How good are my dates? They would imply reducing CO2 emissions at a rate of about 2.5% per year starting in 7 years. The 7 year lead time is about what it takes to plan and develop a large energy or fuel producing plant. That would give the country time to build the new infrastructure required to produce and use alternative energy sources.