[Mb-civic] Industry Energized by Kyoto Pact James Flanigan LATimes

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JAMES FLANIGAN

Industry Energized by Kyoto Pact
 James Flanigan

 October 10, 2004

 Global warming is suddenly looking like a hot business opportunity.

 With Russia's recent assent, an international treaty that had long
threatened U.S. industry with onerous regulation is moving closer toward
global ratification.

 The funny thing is nobody seems to fear the Kyoto Protocol anymore. In
fact, some might even get rich off it.

 Adopted by about 100 countries in 1997, at the behest of international
environmental groups demanding reductions in emissions of carbon dioxide and
other gases said to warm the Earth's atmosphere, the treaty would have
forced disproportionate cutbacks on U.S. companies. As a result, the U.S.
Senate voted 95 to 0 to reject the accord.

 Now, though, Russia's move on Kyoto comes as anxiety among the American
business community is increasing about the high cost and low availability of
energy.

 In turn, U.S. companies are being forced like never before to think about
the ways in which they use power. And increasingly, they're recognizing that
they must do so both conservatively and without harming the atmosphere,
which if not a matter of law today could well be tomorrow.

DuPont Co., for example, has curtailed carbon emissions from its plants in
the United States and around the world by 67% since the Kyoto treaty came
along. Far from penalizing its operations, the company says, these
reductions have made DuPont's factories more efficient and "positioned our
businesses for the marketplace of 20 to 50 years from now."

 Those facing the greatest challenge, of course, are electric power
generators. But they too are stepping up to today's realities.

 Take American Electric Power Co. The utility giant recently unveiled plans
to build a $1.6-billion plant that will use a process called coal
gasification. The facility will turn coal into synthetic gas before burning
it, sharply reducing emissions including carbon dioxide.

 Coal gasification isn't cheap, particularly when compared with the
conventional coal-fired approach to power generation. Yet AEP says it has
little choice when it looks long term.

 "Our challenge," says AEP Chairman Michael Morris, "is to build a power
plant that takes into account Š environmental prospects over a 30-year
life."

 Others are also making moves in this arena. General Electric Co. last week
announced a partnership with power plant builder Bechtel Group Inc. to
develop a standard commercial model for gasified coal generating stations.

 This year GE acquired a subsidiary of ChevronTexaco Corp. that produces
synthetic gas by infusing oxygen into the methane found in coal.

 To be sure, few businesspeople see global warming as an immediate threat.
But recognition is now widespread that changes in climatic and environmental
conditions demand new approaches, especially if future energy needs are to
be met.

 Attention is thus focusing on coal, the most abundant energy resource in
the United States, China and many other countries.

 Coal is more polluting than other fuels, but it remains essential. The
black carbon energy source provides 52% of America's electricity. And
worldwide use of coal is expected to grow 40% in the next two decades.

 "Given these facts," says Eileen Claussen, president of the Pew Center on
Global Climate Change, a Washington think tank, "it seems highly unlikely
that we can meet the world's energy challenges without coal."

 So research and business investment is turning to making coal more "clean"
to use.

 Price volatility and uncertainty are also forcing American industry to
think more about diversification of energy sources, including into some
areas that once seemed the province of tree huggers.

 For instance, wind power is enjoying increasing usage in Europe. Denmark,
for one, harnesses North Sea breezes off its coast to turn electric
generators.

 Wind may not be the total answer to energy problems, but it is one option
"in an average company's portfolio of fuel sources," says Stephen Zwolinski,
head of GE's wind energy operations. The company last week announced an
order to supply 660 wind turbines to power a 1,000-megawatt generating
station in Canada.

 Signs of things to come are also evident in fuel cells. It may be a decade
or more before these nonpolluting devices power automobiles. But in the
coming months, they may replace or augment batteries in electronic gadgets.

 By next year, "demonstration models will show how fuel cells can extend
battery life of laptops and cellphones," says James Balcom, president of
PolyFuel Inc., a Mountain View, Calif., firm that has developed a low-cost
membrane for the essential fuel-cell task of converting hydrogen to energy.
And by 2006, he predicts, such fuel cells "will be in widespread use."

 In the seven years since the Kyoto treaty was first adopted by the European
Union and others, it has sparked more political heat than economic light.
Finally, though, the clouds are parting.


James Flanigan can be reached at jim.flanigan at latimes.com. For previous

 columns, go to latimes.com/flanigan.




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