Dynegy says carbon issue needs federal leadership

NEW YORK (Reuters) - Dynegy Inc. (DYN.N: Quote, Profile, Research, Stock Buzz) Chief Executive Bruce Williamson said on Wednesday that a lack of federal leadership in Washington will hamper meaningful progress to curb carbon dioxide emissions in the United States.

Williamson, who heads a growing independent power company with coal and natural gas-fired power plants in the U.S. Midwest, Northeast and West, is less concerned about whether a tax or trading program is implemented to restrict growing carbon emissions, as long as the program covers all states equally.

"Does the government of the U.S. want to get serious about it and deal with the problem? Or does the government want to give it some lip service and make some sound bites and make some proposals and not really act on it?" Williamson asked at the Reuters Global Energy Summit in New York.

Williamson credited action by California and a coalition of Northeastern states with putting the carbon issue into the spotlight and "for pushing the issue which makes Washington sit up and take notice."

While electric generation is the largest source of carbon dioxide emissions, reducing carbon is a new challenge, Williamson said.

Unlike the industry's ongoing effort to cut emissions of sulfur dioxide, nitrogen oxide and mercury, Williamson said power generators don't yet have all the technological solutions to capture and store carbon dioxide.

"The industry broadly doesn't know how to deal with it," Williamson said. "That doesn't get enough attention."

The worst outcome in Williamson's view for generators and consumers alike would be a patchwork of state carbon legislation, eventually topped by a federal program. That scenario could lead to excessive administrative costs and limited results.

Williamson sees no federal action until after the next presidential election.

"Washington seems to spend a lot more of their time on partisan politics than they do in coming together and figuring out what are realistic solutions and finding a consensus and bipartisan solution to things," Williamson said.

He is also worried that elected officials don't understand how the cost to capture, store or convert carbon will boost monthly power bills for all consumers.

Williamson estimated carbon limits could raise consumer power rates by as much as 30 percent to 40 percent which could lead to a backlash against carbon limits.

He wants to see the proceeds collected from a carbon tax or trading program used to create programs to subsidize electric bills for low-income consumers as well to finance needed research technology and efforts to increase U.S. energy efficiency.