Climate Change:

Senators and utility executives debate carbon policy options, nuclear power

During a panel held Wednesday morning in Washington by the Sustainable Energy Institute and Fleishman-Hillard, senators and utility executives discussed changing attitudes towards climate change in both the energy industry and among Republican lawmakers. Are mandatory limits on carbon dioxide emissions gaining support in Congress? And is nuclear power poised for a resurgence? During today's E&ETV Event Coverage, Sen. Tom Carper (D-Del.), Sen. Lindsey Graham (R-S.C.), Cinergy Corp. CEO Jim Rogers and PSEG Services Corp. President Robert Busch weigh in on these questions and more.

Transcript

Announcer: To lead our discussion this morning we are very fortunate to have Elizabeth Shogren from National Public Radio.

Elizabeth Shogren: Good morning everyone. I was very relieved to wake up this morning and have a chilly walk with my dog, because I knew that we could all just rest easy, cancel this session and have more coffee because after that record warm January we're back to normal. Well maybe not, but…I'd like to start very quickly introducing everyone on the panel. To my left we have Senator Lindsey Graham from South Carolina. To my right, Senator Tom Carper. Starting over on the right there's John Peschke from the majority staff of the Senate Energy Committee and Robert Busch. And we have over, I'm sorry, Robert Busch from PSEG. And on the left, James Rogers, the chairman and CEO from Synergy. And Bob Simon from the minority staff of the energy committee. The topic of the day is climate change and what does the country do about it? More specifically, what does the government do about it? And because it's so early I thought we'd start in a kind of unconventional way by asking each of the panelists to quickly respond in a one-word answer to a very basic question. Which is, should the federal government impose mandatory limits on greenhouse gas emissions? And we could start this way, go that way, and then we'll, Senator Carper?

Tom Carper: Maybe. No, yes.

Elizabeth Shogren: Mr. Busch?

Robert Busch: Yes, carefully.

Tom Carper: That was two words.

John Peschke: I can only speak for the Senate, on behalf of my boss and that is that the Senate may do something at some point in the future.

Elizabeth Shogren: OK. Slightly more than one word, but…Senator?

Lindsey Graham: Open minded.

Elizabeth Shogren: And that's more than one word.

Bob Simon: Open-minded also, since I'll soon be moving to the Carolinas and I understand good politics.

James Rogers: Yes, but we've got to do it right.

Elizabeth Shogren: OK. That was pretty good actually. So now comes the hard part. If the country does embark on some kind of change in regulating carbon dioxide and other greenhouse gas emissions, should it be focused on one sector? There's been a lot of talk about, particularly, the power utilities or should it be economy wide?

Tom Carper: We've got to get started. And what a number of us have proposed, Lamarr Alexander, Lincoln Chafee, Judd Gregg and I have proposed, is something to start us up, to get going. We don't want it to cost an arm and a leg for consumers. We don't want to put our economy in a death spiral or anything like that. We want to put, provide some incentives and some compelling reasons for us to get on the right track. I'll use a real quick analogy and then I'll stop. And this is not an original analogy, but I think it's a good one with respect to carbon. I suspect all of us drive cars from time to time. And the analogy that I like to use with carbon is, especially when you're thinking about Kyoto. Kyoto is like you're driving a car down the highway at 60 miles an hour and you put the car in reverse. And what we've proposed is legislation that says, using the car analogy, first, slow the car down. Stop the car. Then put the car in reverse. And what we propose to do is slow the growth of CO2 emissions, stop the growth of CO2 emissions and reduce CO2 emissions. And to do it primarily, at least initially, through the utility sector.

Elizabeth Shogren: And why the utility sector? Why start there?

Tom Carper: I think there's a change that's taken place within the sector it's self. That there is a realization that, a desire for certainty, a realization that this is a real problem. It's not going away. It's getting worse. And if you look at the lineup that's set, it's in the Congress today and the House and the Senate. And the folks who are in the White House, this is a chance for the industry to get some certainty, to stop having to worry about this patchwork quilt of states that now are imposing their own regulations. And too, to be able to deal with a single federal standard. And to have a market trading system created, that's verifiable, that will actually work. And to be able to provide carbon reductions for about $1 to $2 a ton.

Elizabeth Shogren: Senator Graham your turn. You say you're open-minded to the issue of mandatory caps or mandatory limits. What's your idea? Who should have these mandatory limits if they should be set?

Lindsey Graham: I'd rather answer the other question.

Elizabeth Shogren: OK, go ahead.

Lindsey Graham: I like the other one better. The bottom line is I think we need to do three things at once, which is hard for us in Washington. Two things is a stretch, three may be impossible. But if you leave the transportation sector out I think you've really missed the point because I think that Senator Bingaman had a chart that a lot of our CO2 problems, also fuel usage, comes from the transportation sector. So we've got a great healthy debate about hybrids. The president had it in his State of the Union. And the whole focus is to get away from dependence on Mideast oil, a national security component. I think the winning combination for this debate about climate change is to bring on the hybrid folks who are worried about national security. Get them involved and let them know the benefits to the climate if you did it, as well as national security. Take the re-energizing of the nuclear industry and make that part of this debate because without clean sources of fuel you really never get to where you want to go. So I'm a big proponent of recycling spent fuel and making the fuel cycle more efficient and increasing our nuclear footprint, as well as having emission controls on the utility industry. I think if you did all three things at once you'd have a more comprehensive solution. And you would have different political groups coming together to get this thing over the finish line. You just can't do it in isolation.

Elizabeth Shogren: Anyone else have a burning desire to answer that particular question?

John Peschke: I would make the observation that that we need a plan that brings all parts of the economy into any program that we have to reduce carbon. The way to think about it is 35 to 40 percent of the emission of carbon comes from the transportation sector, 35 to 40 percent comes from the utility industry. And maybe one utility industry can start first. But the plan ought to be a fairly clear plan that all segments of our economy are brought to play because over time that will reduce the costs and put us in better position as a country. And I think our target focus should be around post-Kyoto. And because there is no answer there, and the United States has a unique opportunity to lead post-Kyoto, but we have to go to work now to be able to be in that position.

Elizabeth Shogren: This question is for Mr. Rogers and Mr. Busch. The question comes from a statement that one of your colleagues made recently, Jeff Sterba, from New Mexico P&M, he said, "If this Congress is not the one to work with, then what one is?" Do you agree with that? Does it behoove the utility industry to get behind a push for some kind of capped emissions now while there's a Republican in the White House, Republicans control the House and Senate, rather than waiting who knows what happens in a few years?

Robert Busch: Well utility companies, in general, don't worry about which Congress it is. What they worry about is what the loss of land provides us in terms of an operating environment and how we responsibly manage our whole industry with respect to the environment. But apart from whether it's good or bad, as far as the current Congress is concerned, I think it is time to do something. And I think, going back a little bit to your first question, although we would certainly believe that an industry wide approach ultimately is not enough, it is a wonderful first start. Senator Carper's legislation we have supported consistently. We are part of a group of utilities in the United States that represent over 20 percent of all the generation capacity in the country. So I think it's time to get going. And that's why we think Senator Carper's leadership has been very valuable in terms of moving the debate forward. Is that necessarily everything we need to do? No, but it's time to begin.

Elizabeth Shogren: Is there something that you can do as part of the utility sector to, I don't know, get Congress off its duff and moving? Is there something you can do, something more?

Robert Busch: Yeah, I think, that's a very good question, I think what we can do is, fellows like Jim and I can bring our industry together to a unified position, to be able to say this is what we think is the right direction right now. And quite honestly we've been working on that pretty hard.

Elizabeth Shogren: Would you like to add something?

James Rogers: I just want to make the observation that every major piece of environmental legislation that's ever passed in this country has been overwhelmingly supported in the Senate and House. And another way to say that is it's been strong bipartisan support. I think we make a huge issue thinking of this as either a Republican issue or a Democrat issue. This is an American issue. And we need to bring people together resolve this sooner rather than later. And I think that at the end of the day, regardless the size of the owl, at least this is my aspiration and hope is that anybody that's elected in this country is going to look at the impact on the economy, look at the impact on the environment and balance those interests in a way that makes sense for the long-term. And that's my hope and aspiration, whether it's now or later.

Elizabeth Shogren: It seems that there have been, for some years, some roadblocks in Congress to moving forward on this. There hasn't been any bill marked up. There hasn't been any vote approving legislation that would do this. Would either Senator Carper or Senator Graham like to talk a little bit about what are the realities in the Senate that might prevent something like this from happening now?

Tom Carper: Mr. Busch, this Mr. Busch, had it right. A lot of times it's hard for us in Congress to come to agreement on difficult contentious issues unless there's some consensus within the industry. And in this case this is an industry that said it's strong enough, and the environmental movement is very strong as well, but this is an industry that's strong enough, I think, to block progress. We all have, every one of us, whether we're from South Carolina, Delaware or any other state, we all have the utility industry in our state. They're usually pretty prominent players. And to the extent that they are saying to us don't do anything, or we're divided, it really makes it difficult for us to get started down the right path. We're forgetting one party here, and the party is a person, it's the president. And this is an issue that cries out for presidential leadership. And when George Bush ran for president in 2000 he called for multi-pollutant legislation that included SOX, NOX, mercury and CO2. Changed his mind when he got into office. I was over there, my wife and I were over last night and actually had dinner, something we don't often do with this administration. And I got a chance to talk a little bit with the president at the end of dinner on a couple of things, including this issue. He was surprised to learn that, I think genuinely surprised to learn, that there's interest within the industry to actually accept something like mandatory capture that can be done in a way that doesn't harm consumers, doesn't kill the economy. In a way that actually harnesses market forces. And not only does the Congress need to see the, hear the messages that we're hearing from our two utility leaders, but the administration needs to hear that as well. One other thing, we were talking last night a little bit, and one of the guests at dinner last night was Lindsey, and Lindsey's been there probably a lot more than I have of late, but one of our dinner guests was King Abdullah from Jordan. And we talked a fair amount about the Middle East. And at one point in time we were talking about Iraq and what the president was hearing from our military leaders over there. And he said, "Sometimes I worry that they tell me what they think I want to hear." And I think within his own domestic arm, within the White House, sometimes they tell him what they think he wants to hear. And he just needs to hear it from folks like the people who are sitting at this table. Not just from me, not just from Lindsey, but from the industry itself.

Lindsey Graham: The politics of global warming, young people, young voters overwhelmingly believe that there is a global warming phenomenon going on. So senator, I've replaced Senator Thurmond. He was elected in '54. I was born in '55. So I've got a long view of politics. I believe it's just a matter of time. To the industry, you're running out of time. There's a growing consensus here, particularly among young people, that something's going on with our environment. There's two votes that are important, it's 99 to nothing against Kyoto. That's pretty important. If you leave China and India out you're going to have a hard time getting us to cripple our own industries when the world is not involved. But the countervailing point is, if America doesn't lead who will? So I definitely believe in that. But the 53 votes for the Bingaman resolution I believe it was, was a huge seat change in Senate politics. Even though was in nonbinding resolution, it was a statement politically that the phenomenon we're talking about is real. So Tom's legislation, whatever, there is a movement in the Senate that is undeniable. And a movement in the country that is undeniable that we're beginning to come to grips with a phenomenon that's real. And political solutions will soon follow the polling.

Elizabeth Shogren: Thank you. Senator Graham, have your own personal views changed in the last couple of years about the urgency of climate change and the need to respond to it?

Lindsey Graham: Yeah, Senator McCain is certainly one of the leaders in the country on this issue and he's a good friend. And I've gone all over the world with him, to mostly cold places looking at climate change. I've always wondered about that. But the thing I like most about the Senate is you can make a D in science and still be part of the global climate change movement. And what's scary is I feel about as qualified as the next guy on this stuff. But when you go around and you listen to the native people something is going on. That was the most compelling case to me. And just the idea that China and India's economies are just on the verge, you know, they don't really have many cars in China. One day they will. And what's the harm if I'm wrong? Now I don't want to cripple business, but the upside is huge and the downside is small. But listening to the native people in the northern region of the worlds I am convinced that something is going on out there that is man-made and contributing to global climate change. And I'd like to get ahead of it.

Elizabeth Shogren: So what keeps you on the fence about mandatory controls?

Lindsey Graham: China and India and being able to keep people in Florida, South Carolina. If you don't understand that than I think we don't understand the global economy. You're competing against labor at $.46 an hour. And environmental regulations in this country have done a lot of good, worker safety legislation has done a lot of good, but they don't have much of it in China and India. So we've got to lead and we've got to have ways to address climate change that the world will accept. We've got to export technology about clean coal. We've got to have a big nuclear footprint, except in Iran. And that's what keeps me on the fence, is what he's saying. I know we're going to lead, but we're having global changes to our economy at the same time we're having global changes to our climate. And if we're not sensitive to those global changes we could push some industries over the edge unnecessarily.

Elizabeth Shogren: Is there anyone on the panel who would like to make the argument for sticking with voluntary measures? OK. That's interesting. That was very interesting. There are people, however, on this panel who are working on voluntary measures. Am I right? Your utilities are working on those? For instance, at least this is from your web site, PSEG pledged to reduce emissions 15 percent below 1990 baseline by the end of 2008. How is that going?

Robert Busch: PSEG is a member of the EPA's climate leaders program. And we pledged, in 2002 when we joined that, to reduce our greenhouse gas emissions by 18 percent, close to 15, below 2000 levels by 2008. We've made it. We're basically there. So we have had pretty good success with that. I do want to make it clear though, we did it in a way that has consequences. It's great to wave the flag and say, wow, were we good. But we did it by building highly efficient combined cycle gas powered power plants. And those are now burning natural gas at about $10 a million BTU, which means they don't run very often anymore. And we do have a considerable issue now with the price of natural gas in the United States. The other thing though that we have been doing is we've been upgrading, and we're going to continue to do that, our nuclear plants to have higher capacity. That has zero emissions. And I hope we can get to that later, because ultimately we have got to solve the majority of this problem with nuclear power.

Elizabeth Shogren: Would anyone agree with that statement or disagree?

Lindsey Graham: About nuclear power?

Elizabeth Shogren: You would have to solve the majority of this with nuclear power.

Lindsey Graham: I couldn't agree more. How many people have been to France? About 80 percent of their economy is powered by the nuclear industry. Surely we can be as bold as the French.

Robert Busch: Senator, the French though built all their power plants on the German border and there might have been a different reason.

Lindsey Graham: Right, right, yes, good point. This is a big issue in South Carolina. We have Savanna River Site alone, rich nuclear history, 55 percent of the power in South Carolina comes from the nuclear industry. I think we've illogically taken this industry off the table for political reasons. I think it's now time to look at the fuel cycle anew. To look at the next generation of nuclear power plants and try to spread nuclear power in a reasonable fashion throughout the world, because it is a clean source of power. Relatively, I think, very safe compared to fossil fuels and the damage it presents. To leave the nuclear option off the table in terms of power generation, to me, is irrational and we can no longer afford to do that.

Elizabeth Shogren: Mr. Rogers?

James Rogers: I support Senator Graham and the belief that nuclear clearly needs to be an option. But one of the lessons that we've learned over time, there are no silver bullets. We need to be focused on energy efficiency and helping people use energy more efficiently. We also need to look at coal and clean coal technology. Today over 50 percent of electricity in this country comes from the burning of coal. We're not going to walk away from that tomorrow. And one of our great challenges is to be able to use one of our great resources to generate electricity in the future. Technologies are evolving so that we'll be able to. The other thing is that, and this is a very important point in terms of working on this issue, we're at a point today where gas prices, oil prices, coal prices are at record levels. They might well plateau at this level, but in any event they're going to be volatile. Secondly we're in the very beginning of another building cycle in our industry. And when we build power plants these are 30 and 40 year investments. And we're now making decisions, because we'll need new plants online in 2010 to 2015. We're looking at building. Do we build a pulverized coal plant? Do we build a coal gasification plant? Do we build a nuclear plant? And we've all learned the folly, and I don't, this is, Bob, not directed to you, but the folly of trying to depend on natural gas as the silver bullet. And if you look back over the last decade when 90 percent of generation in this country was built, relied on gas. That's one of the reasons gas prices are where they are today, other reasons of course including supply. Most important point is that we need to deal with these issues today because the impact on the consumer already is great from the increases in coal, gas and oil. And as a consequence of that we start to look at the CO2 issue in this context of rising prices. And decisions are being made today to build new plants that are going to lock in the burning of coal without the ability to reduce emissions of CO2. And that's why it's so critical.

Elizabeth Shogren: You brought up one of my favorite topics, which is the gasification plants.

Lindsey Graham: Right.

Elizabeth Shogren: I understand the coal, the utility industry is on the verge of making big decisions about dozens of new coal plants. But people seem hesitant still about gasification, at least if you look industry wide. What's going to change that, because wouldn't that make a big difference for this topic we're talking about today, climate change?

Robert Busch: I agree with you. I think would make a dramatic difference if we could develop coal gasification technologies. Our company had the good fortune of participating in one of the two demonstration projects that were built in the early 90s. It helped us get smarter about how to operate with syngas, they comes from coal gasification. We learned how to be able to go from natural gas to syngas and still operate reliably our facilities. We're in the process now of working with GE to build a new coal gasification, a commercialization of one, in Indiana. But at the same time a lot of other companies in the countries are looking at pulverized coal. It's a lot easier to look, and I'm going to testify before our state commission, it's a lot easier to say build pulverized coal, because that's a cheap alternative if you believe there'll never be carbon taxes or mandatory controls of carbon. So not knowing that answer biases your decision to do things that's going to increase the output of carbon in the future.

Elizabeth Shogren: Senator Carper do you have an answer for this?

Tom Carper: I'm an old navy guy, and going back to nuclear here, and I've known guys and gals who lived on nuclear power plants, on aircraft carriers and submarines and other ships. We have caucuses, Lindsey and the Republicans in the Senate have retreats from time to time, we do too. I remember our first retreat I went to, it was a brand new Senate in 2001. And the forum was energy, it was a daylong conference, and we never talked about nuclear the whole time. The whole time. And I had taken like the weekend before, taken a bunch of Boy Scouts, my sons are Boy Scouts, and we'd taken the troop from Wilmington down to the Norfolk Naval Station. We crawled all over, for a full week and we crawled all over ships and submarines and aircraft carriers. And one of the aircraft carriers we got on was the Teddy Roosevelt. And I remember the commander of the, the skipper of the aircraft carrier was talking to my scouts and our adults. He said, very proudly said, "My carrier is 1000 feet long, boys. My carrier is 35 stories high, boys. And when my carrier goes to sea with the air wing aboard, boys, we have 5000 sailors and 75 aircraft." Their eyes got pretty big. And then he added this, he said, "And boys, my aircraft carrier stops to refuel once every 25 years." I told that story to my colleagues in the caucus. Chuck Schumer turned to me immediately and said, "I have a new nickname for you." I said what's that? He said, "Radioactive." It's interesting. Last year in the State of the Union address the president was talking about energy and he talked about nuclear. And one of my colleagues sitting next to me, who was not at all a friend of nuclear energy, a very harsh critic of nuclear energy over the years, leaned over to me, Elizabeth, and he said, "You know I think the time has come to revisit nuclear energy." It's not the only solution, but it's part of what we need to do. We've only had nuclear power plants for about 50 years. And the idea that we somehow are going to have to be able to store stuff in Yucca Mountain for 100,000 years or 10,000 years. We'll have the technology in less than 50 years, I suspect, to be able to take the radioactive waste that we have now and do something positive with them and constructive with them. The other thing is conservation. I don't know if anybody's thinking about buying an air conditioner this year, but if you buy an air conditioner, a new one this year, you get something with a SEER standard of 13. What does that mean? Well the difference between a 10, a SEER 10 and a SEER 13 is 150 power plants that will not have to be built in this country over the next 15 years. So it's nuclear. It's coal, clean coal. It's wind. It's solar. We've got a company, GE, that literally has built a business model for the 21st century on just those kinds of things, sustainable renewable energy, clean energy. And they're going to make money doing it.

[End of Audio]

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