July 15, 2008

Kilowatt-hour tax is fairest approach

Coal: from solution to problem

Building coal plants was a key part of our energy policy in the 1960s and 1970s. The 1974 Arab oil embargo pushed our country toward energy independence and discouraged the use of oil in power plants. The federal Fuel Use Act of 1978 prohibited using natural gas for new power plants until its repeal in 1985. Three Mile Island stopped the nuclear industry in its tracks in 1979.

The fact is that electric utilities were encouraged—and in many cases, directed—to build coal plants to meet customer demand. These decisions occurred decades before any widespread concern about carbon dioxide and climate change.

Finding ways to reduce CO₂ has been on my agenda since the beginning of the decade. It’s time to move, but we must move toward solutions that bridge the gap from today’s technological ideas to tomorrow’s commercial solutions. I believe that funding technology is the key to moving to a low-carbon economy.

A fair tax

A more fair and transparent way to fund R&D might be a surcharge on every kilowatt-hour of electricity sold in America. A three-tenths of a cent surcharge per kilowatt-hour would raise about $11 billion annually and cause minimal rate impact. This compares to about $1.38 billion budgeted for energy research and development by the U.S. Department of Energy in 2008.

This substantial injection of capital would advance technology across the board—in energy efficiency, renewable energy, nuclear, natural gas, clean coal, and carbon sequestration—and benefit every consumer of electricity in the nation. Under this approach, customers with higher electric rates would pay a lower percentage of their bill to support technology development, while coal-dependent customers with lower rates would pay a higher percentage of their bill for these developments.

Addressing climate change should not be a partisan issue splitting Democrats and Republicans. We need to follow the example of the Clean Air Act and other major environmental legislation, which passed with broad bipartisan support. We need to embrace the politics of possibilities rather than the politics of limitations or punishment.

—Jim Rogers is chairman, president, and CEO of Duke Energy Corp.