By Martha M. Hamilton and Curt Suplee
Washington Post Staff Writers
Friday, December 12, 1997; Page A41

Achieving the ambitious reductions in greenhouse gas emissions in the Kyoto global warming agreement could require the United States to take steps as dramatic as building new nuclear power plants and eliminating coal, the fuel that provides more than half of the nation's electricity.

But the Clinton administration is counting on more modest tools, including fuel-efficient technology, such as hybrid gas and electric cars, and business incentives, such as tax breaks, to do the job.

Policymakers and industry leaders indicated yesterday that cutting U.S. emissions by 7 percent of 1990 levels, or about 18 percent below today's levels, may require a wide array of tools designed to reduce emissions caused by houses, factories, cars and consumption.

Perhaps the most sweeping measure under consideration is the distribution of tradable carbon permits. The owner of a coal mine, oil well or gas deposit, for example, would be allowed to emit just so much carbon in a year. To stay within the allotment, emission producers could buy permits from another source.

Exactly how such a system would work is expected to be determined during the coming year and adopted at another international meeting in Buenos Aires.

Other measures may require massive changes in industry, including weaning the electric utility industry off coal, which provides 56 percent of the fuel used in power plants, building a system of pipelines to carry natural gas to those plants instead, importing liquefied natural gas and extending the lives of existing nuclear power plants 20 years beyond the 40 years for which they now are licensed.

Even if the Senate rejects the Kyoto treaty, as some energy industry officials are urging, the nation has started down a path toward reducing emissions that probably won't be reversed, some industry leaders said yesterday.

"We see it as the beginning of the debate, not the end," said Red Cavaney, president of the American Petroleum Institute, which represents major oil companies. But Cavaney, who has urged President Clinton to reject the treaty, said it doesn't allow enough time to reduce emissions without inflicting massive damage on the economy.

Cavaney said that industry and government together need to develop technology to reduce emissions from the burning of fossil fuels, which provide 90 percent of the nation's energy. He warned that if the time horizon is too short to allow for a technological fix, meeting the targets might require rationing of the World War II sort or higher taxes on energy to discourage consumption.

The "lowest-cost method" of forcing down consumption of carbon-based fossil fuels, and thereby cutting carbon dioxide emissions to the Kyoto levels, would be a carbon tax, said economist Robert N. Stavins of the John F. Kennedy School of Government at Harvard University.

"It would probably take a tax of $150 per ton of carbon content on fossil fuels," Stavins said. "That would mean an increase in coal prices of about 350 percent, and about 100 percent on petroleum and natural gas."

At the consumer level, that would mean an average increase in the prices of gasoline and residential electricity and gas of about 40 percent nationwide, he said. It would amount to about $200 billion per year every year, or about 3 percent of gross domestic product. "That's approximately the cost of complying with all other environmental regulations combined," Stavins said.

The Clinton administration, however, has ruled out any new taxes, including a carbon tax, to accomplish the goals in the agreement.

Dan W. Reicher, the Energy Department's assistant secretary for energy efficiency and renewable energy, said technology will play a major role in producing the needed reduction in emissions. He noted that President Clinton has called for $5 billion in incentives for technological development. That could include tax incentives as well as additional funding for research and development, he said.

"If you can depend on the ingenuity of the marketplace, you're going to be better off," said John H. Gibbons, Assistant to the President for Science and Technology.

There are massive opportunities for reducing energy consumption -- and therefore emissions -- by making industrial plants, automobiles, appliances and houses more efficient, Reicher said. In fact, changes already underway in the electric utility industry that would allow consumers to shop for electric power suppliers are creating a market for "green power" from renewable sources that could expand that market, he said.

At present, energy from hydropower, geothermal sources and other renewable sources accounts for less than 7 percent of the nation's energy needs.

Electric-utility executives said yesterday that making the changes required to reduce emissions may be costly and only a drop in the bucket toward achieving the emissions reductions.

Meeting the targets "would require us to burn heroic amounts of gas," said E. Linn Draper Jr., chairman and chief executive of American Electric Power Co. of Columbus, Ohio, one of the nation's largest utility companies. Coal represents about 88 percent of the fuel used by American Electric Power and Draper said converting to cleaner natural gas would create huge logistics problems and costs for the company.

Nuclear power is even cleaner than natural gas, which has led to serious discussions of extending the lives of existing nuclear power plants.

The nuclear energy industry also has been working for seven years to lay the groundwork for building nuclear plants in the United States, said Angelina S. Howard of the Nuclear Energy Institute.

If the nation is going to meet Clean Air Act requirements and targets for reducing greenhouse gas emissions, "we're going to need it all," she said. "Renewables are going to play a part, but so should nuclear."

Kyoto Protocol

Details of Thursday's agreement:

Reductions

Industrialized nations would reduce "greenhouse" gas emissions from 1990 levels between 2008 and 2012 by just more than 5 percent overall. The reduction would vary by country. The United States would reduce them by 7 percent, the European Union by 8 percent, and Japan by 6 percent. Some nations would face smaller reductions, and a few would not face any now.

Gases Involved

Emissions of six gases would be affected: carbon dioxide, methane, nitrous oxide and three halocarbons used as substitutes for ozone-damaging chlorofluorocarbons.

'Offshore' Reductions

Countries that do not meet their own emission targets could strike deals with nations that do better than required, to buy the excess "quota." This may encourage reductions to be made where most cost-effective.

Enforcement

The treaty parties will meet later to decide on "appropriate and effective" ways to deal with non-compliance.

Third World

Developing countries, including major greenhouse gas emitters such as China and India, would be asked to set voluntary reduction targets.

Next Step

The accord would take effect once ratified by 55 nations, representing 55 percent of 1990 carbon dioxide emissions. It would be binding on individual countries only after their governments' complete ratification.