Energy efficiency is no longer the "polite" thing to do but rather is "starting to become a cultural imperative," the COO of Pace Global Energy Services said Tuesday.

Pace, an energy consultant headquartered in Fairfax, VA, hosted an afternoon energy forum in Houston. The company's top analysts offered their perspective on what's ahead for the power and natural gas markets in the United States.

"The signals are all pointing toward regulation of carbon" and other greenhouse gas (GHG) emissions, said Pace COO Gary Vicinus. No one is sure how strict the new regulations may be, but in any case, he said the energy industry should begin preparing for the "inevitable" rules now.

"The Supreme Court raised the stakes last week and sent a strong message to the Bush administration," Vicinus said, referring to the U.S. Supreme Court's unanimous ruling that the Environmental Protection Agency (EPA) was in error when it rejected a request to initiate a ruling to regulate GHG emissions (see Daily GPI, April 3).

TXU Corp.'s decision to pull back on its plans to build new coal-fired plants in Texas and the significant amount of California environmental legislation are "clear evidence of change," Vicinus said. "It will be critically important to begin positioning for the coming months and years."

The Pace executive said significant carbon regulations could be in place as early as 2010.

"There is a clear energy mandate gaining momentum for actually taking action," Vicinus said. "The auto industry will lead...followed by the utilities and then the rest of the industrial sector."

The Supreme Court decision created "momentum for the EPA and Congress to act, but this could be delayed until this administration is over," he noted. "That's the only question. We do expect some form of carbon regulation," which he said will have some effect across the energy sector.

"It could be five to seven years out in the future," Vicinus said of GHG regulations. "But in any case, it's considerably shorter than we thought only six months ago. We cannot separate energy from the environment any longer."

By Pace's calculation, conventional fossil fuels will continue to be the dominant energy source for several years, but "there is angst and uncertainty in the fuel community about the uncertain future...questions about which fuel to use...natural gas, coal, nuclear...All signs point to the United States investing in new technology for carbon and greenhouse gas."

Two "major forces" are on a collision course, he noted. Global energy demand is expected to grow 25% over the next 10 years, but at the same time, this increasing energy demand is clashing with the growing momentum to clean up the environment.

"We are convinced that the United States will be a leader and will meet the demand in an environmentally acceptable way," Vicinus said. "But there are regulations coming, and industry should consider them as an opportunity instead of a constraint."

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