By Cassandra Sweet
Of DOW JONES NEWSWIRES
SAN FRANCISCO -(Dow Jones)- Among U.S. polluters, power generator Southern Co. (SO) stands to pay the most for its carbon dioxide emissions under a proposed U.S. cap and trade program to cut greenhouse gas emissions, while nuclear power generator Exelon Corp. (EXC) stands to gain the most, a carbon market study concluded Monday.
In addition to Southern, of Atlanta, which owns and operates a large fleet of coal-fired power plants, American Electric Power Co. (AEP) and Duke Energy Corp. (DUK), which also own sizable coal fleets, could be vulnerable to large costs associated with purchasing emission allowances, research and consulting firm Point Carbon said in the study. The group used a climate change proposal in the U.S. Senate as the basis for its study.
The group's calculations are based, in part, on each company's annual CO2 emissions, the number of CO2 emissions allowances each company is likely to get for free from the federal government under the U.S. Senate climate bill, and estimates of how much each company would have to spend on additional allowances bought on the market to cover its emissions, assuming a price of $15 a ton of carbon dioxide equivalent.
Among coal-fired power generators Southern would likely have to pay the highest amount, about $393 million a year, to offset its carbon emissions, Point Carbon concluded. Exelon, by contrast, which owns a large fleet of nuclear power plants that emit no CO2, could see large revenue increases, as much as $1.7 billion a year, the group said. FirstEnergy Corp. (FE), Edison International (EIX) and PG&E Corp. (PCG) would also likely see gains from carbon cap and trade legislation, Point Carbon said.
Point Carbon also looked at oil and refining companies, which would be similarly exposed to carbon costs under a cap and trade program, particularly for emissions associated with combustion of their refined products. The group predicted that the oil companies with the highest U.S. CO2 emissions, Exxon Mobil Corp. (XOM), Chevron Corp. (CVX), ConocoPhillips (COP), BP Plc (BP) and Royal Dutch Shell Plc (RDSB, RDSB.LN) would likely be able to recover most of their carbon costs through surcharges on gasoline and other fuels they sell.
The group predicted that net carbon costs, after cost recovery from customers, would be lowest for Chevron, at about $247 million, while BP and ConocoPhillips would have the highest net carbon cost, at $355 million and $285 million, respectively. The differences are due to the ratio of local refining, which is eligible for free emission allowances, to total U.S. sales, as well as efficiency of U.S. refining operations.
Southern Co. produces 149 million tons of CO2 emissions a year, according to the Carbon Disclosure Project, which publishes companies' voluntary greenhouse-gas emissions reports. AEP produces 156 million tons of carbon a year, Duke 101 million tons, Exelon 10 million tons, FirstEnergy 53 million tons and PG&E 2 million tons, according to the CDP. Exxon Mobil produces 397 million tons of CO2 a year, Chevron produces 360 million tons, ConocoPhillips 327 million tons, BP 240 million tons and Shell 205 million tons, according to the CDP.
-By Cassandra Sweet, Dow Jones Newswires; 415-439-6468; cassandra.sweet@dowjones.com