Business

Tuesday AM September 28th, 2010

The Baker Institute is looking at the energy market consequences of an emerging carbon management policy. Ed Mayberry reports.

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James Mulva

The two-day conference at the Baker Institute is examining energy market consequences of potential greenhouse gas emissions regulations, such as the adoption of a national carbon management initiative.  ConocoPhillips Chairman and CEO James Mulva says natural gas should be a bigger part of the solution.

“It was just six months ago that I said that gas was nature’s gift.  And that efforts to utilize it were jeopardized by ‘hydrocarbon deniers.’  These are the people who strongly, very strongly opposed fossil fuels.  They don’t acknowledge that society still needs these fuels for mobility, food production, warmth, light and power.  Fossil fuels really can’t be replaced by hitting a switch, and hoping the renewable sources come online fast enough.”

Mulva says renewable sources are expensive.

“The University of Texas found that wind power currently costs twice the average electricity price here.  So consumers would have to pay more.  This is due to higher capital costs and the need for new transmission lines to remote locations, along with the backup power required when the wind doesn’t blow.  The Baker Institute supports research and development to lower the cost of renewable sources.  And we agree.  But their use should not be mandated.”

Mulva calls on the government to provide incentives for utilities to make greater use of their existing gas-fired combined-cycle power plants.  Average utilization rates are only 42 percent now—half their optimum.  He says it’s a step that can be immediate — even as the country waits for carbon legislation — and new capital investments in generating plants would not be required.

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