Sustainable Energy Institute Climate Change Discussion

Michael Bradley,M.J. Bradley & Associates, Inc.

September 24, 2004

Recent Developments

• New Bush Administration report “Our Changing Planet” implicates human causes of climate change

• States continue to develop mandatory CO2 reduction programs

• Cover Stories on Climate Change in BusinessWeek and National Geographic

• Attorneys General from 7 states and NY city filed suit against the 5 largest CO2-emitting electric generating companies

• Shareholders have demanded climate change risk reports from many of the largest companies

CEG Companies supporting CAPA

• Calpine Corporation• Entergy Corporation• Exelon Corporation• Florida Power & Light• NiSource, Inc.• PG&E Corporation• Public Service Enterprise Group, Inc.• Sempra Energy

Clean Energy Group supports Multi-Pollutant Legislation

• Multi-Pollutant Legislation:– Provides business and investment certainty– Is more cost-effective than dealing with one pollutant at a time– Can utilize market forces to minimize costs

• CAPA addresses CO2 in the context of multi-pollutant legislation to provide investment certainty:

– Controlling greenhouse gases (GHG) is inevitable; more than 25 states have already established GHG initiatives

– CAPA establishes a flexible, market-based approach that stabilizes CO2 emissions at today’s levels and creates the framework for more robust CO2 control efforts

– CAPA creates a national level playing field in terms of regulatory requirements

Targets under CAPA

2009: 2005 Levels (2.6 Billion Tons + Flexibility/Offsets)

2013: 2001 Levels(2.4 Billion Tons + Flexibility/Offsets)

GHG Coalition Members

• BP America, Inc.• Calpine Corporation• Consolidated Edison, Inc.• National Energy and Gas Transmission, Inc.• Northeast Utilities• Pfizer, Inc.• Public Service Enterprise Group, Inc.• United Technologies Corporation• Waste Management, Inc.

RGGI(Regional Greenhouse Gas Initiative)

• Step in developing a national model (which is the preferred level of action)

• Strong Preference for Multi-State approach instead of state-by-state

• GHG coalition members participating at forefront of RGGI