NEWS

February 18, 2008

New U.S. president must lead on energy issues,
Experts at Beaver Creek conference conclude

Carbon tax expected, but panelists say it will take years

BEAVER CREEK, CO–A panel of experts in finance, energy and the environment said during the Beaver Creek Energy Conference that the next U.S. president must show true leadership on global energy issues, drive funding into the American infrastructure and support deployment of new power generation technologies–including nuclear.

And, panelists declared, the next American president must lead a federal initiative to expand electric transmission corridors throughout the U.S. to underserved areas and show leadership in managing the world's vast natural gas reserves to avoid "methane wars."

The two-day Beaver Creek Energy Conference Feb. 5 and 6, sponsored by E3 Consulting of Denver and Calyon Corporate and Investment Bank, brought together more than 60 leading executives, managers, consultants, engineers and analysts in electric power generation and transmission, project finance, natural gas, nuclear power, renewable energy, coal mining and marketing, carbon sequestration and climate change. It was the 7th year conferees had gathered in the confidential setting to examine the current and future state of the U.S. and global energy sector.

Panel moderator James F. Guidera, Calyon Managing Director, asked panelists to share what advice they would give the new U.S. president in a private meeting.

"We are without leadership in this country in regard to energy," responded John Buehler, Managing Partner at Energy Investors Fund Group. "The challenge would be to exert leadership to convene a national or international energy forum here in the U.S. that brings together leading thinkers in the global energy sector and financing sources who are responsible on the issues to talk about common problems and solutions that affect us all. That's what we all do in our daily business and I am perplexed that we do not do that on a national level."

Donald Hurd, President and CEO of E3 Consulting, said he would urge the new president to boldly approach testing of new power generation technology, particularly in conversion of coal to liquids and gas that can be burned to generate electricity. "There's just a huge gap and lack of understanding in what we are trying to accomplish in the coal to liquids process," said Hurd. "I would beg them to become more educated, and to understand that technological advancement comes from deployment, trying new and promising technologies."

Trudy Harper, President of Tenaska Power Services, said she would focus on the importance of the federal role in expanding electrical transmission systems throughout the U.S. "The federal government is the only entity that can really get built the major thoroughfares of high voltage transmission across the jurisdictions of the various states," Harper said.

"If the U.S. is to move seriously to carbon abatement, nuclear is the only viable option because of its zero carbon footprint," declared Bob Percopo, Executive Vice President of Global Marine & Energy for AIG. "You really have to move on nuclear."

Another panelist said he would advise the new president to focus on more federal funding for America's critical infrastructure because "that's what greases the wheels of the economy." And, as the world moves away from an oil economy toward a natural gas economy in decades ahead, another panelist said the new president would be well advised to take a global leadership role in bringing gas-producing nations together to coordinate fair pricing and adequate distribution for the benefit of all mankind to avoid "methane wars."

CARBON TAX AND CAP AND TRADE

Despite pockets of anti-coal sentiment in the U.S., coal-fired generating plants are still being built at robust rate. And, domestic coal mining, sales and exports are still strong.

Panelists agreed that there will be a greenhouse gas emissions cap and trade program of some kind adopted during the next presidential administration, no matter who wins office. However, what form that program will take is unknown, and "it will face a rocky road," said one panelist. Another said that based on the European experience with cap and trade, the U.S. energy industry can expect "inadequate policing" of the domestic program–if it comes about. Also, some panelists forecasted here will be a carbon tax placed on fossil-fuel burning electric power generators at some point in the future. However, because developing a carbon tax program would be highly controversial and extremely complicated, the group agreed that definitive action will not be taken in the first four years of the next presidential administration, but might be enacted and in force in the next presidential term beginning in 2013.