NEW YORK - Adopting a "cap-and-trade" market on greenhouse gas emissions would not by itself stop the United States, the world's largest fuel consumer, from wasting lots of energy, the chief executive of private equity company Good Energies said.

"One of the things that worries me about cap and trade, is that we act as though that is a silver bullet solution," Richard Kauffman, chief executive of the green energy investment company, said at the Reuters Global Climate and Alternative Energy Summit in New York.

The market mechanism is a key part of climate legislation being mulled by the U.S. Congress. President Barack Obama supports development of such a system. Backers say the plan would push heavy polluters, like power utilities and concrete makers, to invest in clean energy sources by penalizing them for emitting pollution and rewarding them for cutting it.

"It would be a fantastic first step if there is such a bill, but the real hard work begins" once passed, said Kauffman, whose company has several billion dollars invested in solar and wind power, as well as energy efficiency.

Noting that profits for power generators have long been linked to how much electricity they can sell, Kauffman said profits should be "decoupled" from power generation, perhaps by rewarding utilities for helping customers to save energy.

More investments should be made in energy efficiency, he said -- for example, real-time power meters that show electricity customers see how much prices jump at peak usage hours and push them to save energy. But such products have only begun to be developed. Efficiency investments are less than 10 percent of the Good Energies' portfolio, Kauffman said.

DIRTY LITTLE SECRET

"If we decided it was really important to tackle climate change, and were concerned about energy efficiency, then we have to change the incentives and the regulatory environment of electric utilities," Kauffman said about U.S. energy policy.

Energy policy has historically been much more expensive in Europe which has helped it to conserve fuel. Meanwhile, the United States has become the world's top per capita polluter of the gases blamed for global warming, and the second overall polluter of the gases, behind China.

The United States has some of the world's largest coal reserves, giving the country access to cheap electricity but also encouraging construction of buildings that waste power.

New discoveries of natural gas are helping keep power prices low compared to many other parts of the world. Low prices for natural gas have led to an incremental boosting of power generation from that source, a "dirty little secret" that has had a "chilling affect" on the adoption of wind and solar power this year in the United States, Kauffman said.

Source: Reuters

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