Will the federal government ever take more control of the nation's energy policy? At the Carbon Economy conference in Washington in mid-November, Duke Energy (DUK) CEO Jim Rogers stole the show when he broached that idea.
Today, each state has tremendous power to manage its own energy needs; governors and state public utility commissioners decide how much electricity is generated, from which sources -- renewable or traditional fossil-fuel -- and how much the electricity will cost. And renewable portfolio standards, which mandate that more electricity come from renewable-energy sources, have been entirely state-run initiatives.
An Honest Conversation
For generations, leaving energy policy decisions to the states has worked fine. But today's energy and climate debate includes many quandaries, as Rogers explained at the conference. "I hear people talk about renewables," he said, "but on the other hand, they don't talk about eminent domain to allow transmission lines to be built. They talk about low carbon, but they don't want to talk about nuclear power as part of the solution. They talk about decoupling, but they don't talk about giving incentives for investment. From my standpoint, we need to get beyond these half-measures, and go to work on a solution which encompasses a new energy federalism. And let's have an honest conversation about it."
And Rogers wasn't the only one at the conference suggesting that the U.S. explore giving the power of making decisions about energy to the feds. "The fundamental colonial notion of local control over energy will not allow us to achieve a safe and secure 21st-century energy system," said Jason S. Grumet, founder and president of the Bipartisan Policy Center think-tank, whose advisory board includes former Republican Senators Bob Dole and Howard Baker, and former Democratic Senator Chuck Robb.
But considering the struggle in Congress over government-run health care, what are the chances for a government-run energy program? The U.S. would have to "confront the constitutional challenge of the president being able to get a laser pointer and say, 'We've got to build plants here or here,'" Grumet acknowledged. "I think we're seeing the Senate begin to wrestle with this idea. It's going to be an important step."
Congress is doing just that. The current iteration of the House's Waxman-Markey climate-and-energy bill includes provisions for a renewable-electricity standard, a federal mandate for all states to generate a percentage of electricity from renewable sources. Rogers testified in support of Waxman-Markey, but the utilities lobby had willed similar provisions to the renewable-energy standard from earlier climate and energy legislation. When I asked Rogers at the conference about his support of Waxman-Markey, he replied, "I read the IPCC report" -- the 2007 report by the Intergovernmental Panel on Climate Change -- "and I didn't see any reference to renewables in it."
That's true but irrelevant. The report was a scientific finding about the consensus view on global warming. Renewable-energy pathways have been among a number of potential policy solutions to address climate change -- but even a global-warming skeptic knows the difference between a scientific report and a policy statement.
Still, Rogers said, "What we really ought to have is not a renewable standard but a low-carbon standard" that would include wind, solar, nuclear, and energy-efficiency measures. That sounds awfully close to the RES provision in the Waxman-Markey bill -- with one critical exception that's very dear to Duke Energy, the third-largest provide of nuclear power: the bill doesn't include a nuclear provision.
Against Clean Coal
Responding to a question about the safety of nuclear power, Rogers offered a surprisingly candid critique of carbon capture and sequestration. Rogers said that all the nuclear waste ever created would fill a football field, 7 feet high -- a very small space, he said, compared with the volume needed to capture and sequester carbon. "To sequester just 20% of a 630-megawatt plant would take 10 cubic miles of underground storage," he said.
Duke Energy parted ways with the coal lobby in September, but it seemed somewhat breathtaking to hear a major utility executive argue against clean coal. Then again, maybe it shouldn't have been surprising; even author Bill McKibben, a leader in the climate-change discussion and the author of 1989's groundbreaking The End of Nature, has endorsed using nuclear power.
Preparing for the Senate
The panel's moderator, Economist deputy editor Emma Duncan, made a disquieting observation: "The circumstances for addressing climate change are as propitious as they could possibly be -- and yet it also looks so very fragile. It pretty much comes down to what happens in this city" -- what Congress decides to do (or not do) about carbon legislation. Rogers's stance is clear: the climate-and-energy bills will have to be substantially rewritten to pass the Senate.
"Twenty-five percent of the Waxman-Markey vote in the House came from two states -- New York and California," Rogers said. "These two states have only 4% of the vote in the Senate. I think we will come up with meaningful legislation, but it's got to have more of a centrist view. You're going to see a more centrist bill that reflects the Midwest and the manufacturing base of our country."
Grumet put a bleaker spin on things. "Most members of Congress just don't understand what a cap-and-trade system means," he said. "So when you take a program that people don't understand in the midst of a recession and seething unemployment, and add to that the feeling that people are being manipulated by the coasts, I don't think there's anything that makes that work."
But Grumet later backtracked from his gloom-and-doom. "if the health-care debate resolves itself successfully, without absolute vitriolic bitterness, then the government can function, and we can concentrate on climate change," he said. "And if the economy and unemployment crests, and we start to recover, then we have a pretty decent shot."
Mark Svenvold, author of Big Weather: Chasing Tornadoes in the Heart of America, teaches at Seton Hall University in South Orange, New Jersey.
Entering the nuclear age? A utilities CEO wants federal control on energy