Surveys offer industry view of carbon policy

By Erin Voegele
Posted May 26, 2010, at 10:08 a.m. CST

Platts and PricewaterhouseCoopers LLP recently released the results of surveys that provide insight into how U.S. businesses and utilities view climate change-related policies, initiatives and government actions. Platts' survey found that 80 percent of respondents were dissatisfied with the U.S. government's energy policy performance, while PricewaterhouseCoopers survey determined that a majority of U.S. respondents do not feel that government has effectively engaged with businesses in a way that ensures environmental policies take industry views into account.

Platts analysis, which was completed in partnership with Capgemini, included a survey of more than 100 utility executives in the U.S. and Canadian electric and natural gas industries. Titled "The Platts/Capgemini Utilities Executive Survey," the analysis was designed to identify and prioritize current industry concerns, assess opinions about the future of the energy industry, measure the steps utility companies are taking to prepare for the future and gauge perceptions about the Obama administration's impact on the energy industry.

While the vast majority of respondents indicated dissatisfaction with the U.S. government's energy policy performance, utility executives also indicated that the Obama administration has succeeded in stimulating dialogue around the energy industry in general as well as specific sustainable solutions. Respondents also cited the administration's stimulus package as a positive accomplishment.

"While utility industry executives are generally pleased that the Obama administration has stimulated conversation around energy and sustainability, and that they have invested in a number of initiatives through the economic recovery package, there is considerable dissatisfaction in the lack of tangible and actionable policy and legislation," John Christens, Capgemini's smart energy services vice president, said. "Few utility executives consider the current solutions as satisfactory either in scale or feasibility. Specific concerns cited by executives included a lack of movement on CO2 legislation and action, regulations which will increase the cost of power without addressing the root issue of atmospheric carbon, and overly idealistic policies without adequate consideration to overall economic impact."

According to the Platts/Camgemini survey, the five most critical issues currently facing the energy industry include regulatory uncertainty, the environment, technology, finance and end users. The executives surveyed reported they have increased focus in the areas of regulation, the environment and technology when compared with last year. Furthermore, they reported an expectation that focus will increase the most in the area of regulatory affairs. Over the next decade, respondents also reported they anticipate an increase in electric prices for end users as well as increasing environmental regulation.

Other findings of the survey include:

•A respective 71 percent and 68 percent of respondents cited regulation and the environment as the top challenges facing the utilities industry today.

•75 percent cited carbon regulation as the most salient issue currently facing utility executives with respect to regulation; 52 percent also named lack of adequate national energy policy as a salient issue.

•42 percent of respondents ranked issues surrounding the construction of generation transmission capabilities to support renewable energy sources and increasing energy efficiency as "very important" with ratings of nine or 10 on a 10-point scale.

•In the next five to 10 years, 70 percent of respondents strongly agreed that there will be an increase in energy prices, and 63 percent strongly agreed that there will be increasing environmental regulation.

•45 percent of respondents said they foresee increases in wind, solar and biomass power generation within the next one to two years.

While the survey conducted by Platts and Capgemini focused on utilities, PricewaterhouseCoopers' analysis evaluated the opinions of business leaders around the world. The survey, titled "Appetite for Change: Global business perspectives on tax and regulation for a low carbon economy," found respondents ranked the reduction of CO2 emissions first when asked which climate change/environmental issue is expected to most significantly impact them over the next two to five years. Other responses included new regulation, energy efficiency and legislation/new laws.

"Although federal climate change legislation is uncertain in the short term, there are plenty of government and private-sector initiatives driving companies to start reducing emissions now," Kathy Nieland, leader of the sustainability and climate change practice of PricewaterhouseCoopers, said. "The Obama administration recently announced that the federal government would reduce its own carbon footprint by 28 percent by 2020. If the government were to push down that requirement through its supply chain to all government contractors and suppliers, the impact on U.S. business would be quite significant."

Results of PricewaterhouseCoopers' survey include:

•87 percent of respondents are convinced the current climate change debate is likely to result in changes for businesses, 28 percent noted those changes would be significant.

•55 percent of respondents reported that the debate surrounding climate change and the environment has already impacted the way their organizations do business.

•88 percent said tax incentives are effective in encouraging businesses to reduce their environmental impacts; however, 67 percent noted that current tax incentives are not sufficient to motivate them to change how they do business.

•Only 23 percent of U.S. respondents said government should have a primary responsibility for leading behavior changes around climate initiatives, compared to 44 percent of global respondents.

•38 percent of U.S. respondents indicated they want businesses and the market to have the primary responsibility for leading behavioral change, while only 18 percent of global respondents shared this opinion.

•56 percent of U.S. respondents do not feel that government effectively engages with business to ensure environmental policies reflect industry views, and only 17 percent of U.S. respondents reported the belief that government has a clear, unambiguous policy with regard to environmental economic instruments.

•U.S. respondents were split 50/50 on the issue of whether voluntary agreements are effective in leading businesses to reduce their environmental impact.

•44 percent of respondents noted that potential cost savings created by energy-efficiency measures is "very influential" on their organization's environmental behavior.

Full copies of the surveys are available on Platts and PricewaterhouseCoopers websites.