Climate Change:

Southern Co.'s Chris Hobson details the company's stance on global warming

Officials at Southern Company -- the largest coal-burning utility in the country -- have long opposed mandatory limits on greenhouse gas emissions. But as other major power producers call for new climate change policies, will Southern follow suit? During today's OnPoint, Chris Hobson, Southern Co.'s senior vice president for research and environmental affairs, outlines the company's strategy on global warming. He describes plans to build an IGCC clean coal power plant in Florida and the potential for carbon capture and storage technology. Plus, Hobson discusses why he is not optimistic about the potential for expanding renewable energy capacity in the Southeastern United States.

Transcript

Brian Stempeck: Hello and welcome to OnPoint. I'm Brian Stempeck. Joining me today is Chris Hobson of Southern Company, where he is senior vice president for Research and Environmental Affairs. Chris thanks a lot for being here today.

Chris Hobson: Thank you, good to be here.

Brian Stempeck: Now prior to this taping of this interview you were testifying in the Senate Energy Committee, hearing a wide range of opinions on climate change. Give us a sense briefly of what you had to say before the committee.

Chris Hobson: Well, I told the committee that I thought that it was important for us to focus our resources and our energies on developing new technologies going forward. If we can develop some cost effective, low CO2 emitting technologies that will help us address the climate change issue in the future. And at the same time meet the increased demand for electricity in our service territory and in the country as a whole.

Brian Stempeck: A lot of the other companies were testifying at this hearing, you had Duke Energy, you had Excelon, you had Wal-Mart, a wide range of interests. A lot of them were saying that they were ready for Congress to take kind of a go slow approach here. They wanted to see some kind of a climate policy, nothing too extreme yet, but they are ready for a climate policy. Would you disagree with that?

Chris Hobson: Well, let me say this about our position relative to other companies. We are a very diverse industry. We have fuel mix the differences. We have regional differences that make us look at problems a little differently. And that's a healthy thing. It gives us the opportunity to debate among ourselves, positions, and ultimately makes us better as an industry. We empathize. We feel very strongly that mandatory policies, whether it's a tax or whether it's a cap and trade, in the absence of technologies that allow us to comply, really doesn't make much sense at this point in time. And so I'm not sure I can answer for them why they are taking the position that they think that mandatory controls are the appropriate way. But their differences from our differences really isn't a bad thing. It really makes us all better.

Brian Stempeck: At the same time pretty much all of the industry has kind of changed its tune in the past year or two. We've had American Electric Power, Cinergy, Duke, a lot of these companies saying that they feel that it's time to have mandatory action on climate change. They're willing to move forward with this. Do you feel like Southern Company is going it alone right now?

Chris Hobson: Well, no I don't necessarily think we're going it alone because I think there are an awful lot of utilities behind those that you just mentioned that feel very much the way we do. See we're in a region in the Southeast where growth is very strong. And for us to give a good hard look at our emissions, we've got to think about how we're going to meet that growth and at the same time reduce our emissions. That's not true for every utility. Their growth rates may be different. Their fuel mixes may be different. And I think you just have to look to those regional differences to understand why each company is taking the position that it is.

Brian Stempeck: Southern Company is of course the biggest coal burning utility in the country. Do you think that's playing in here? I mean some of the speculation is that some of these companies that are more willing to do something on climate change is because they have a bigger nuclear portfolio, bigger than natural gas. How much is that affecting this?

Chris Hobson: Fuel mix, fuel diversity is very important. We are a large coal-burning utility. But that's not what's driving our policy going forward, as much as the fact that we understand that coal needs to be a part of the energy mix of this country going forward. And so how we burn coal, how we've used coal in the past is not necessarily going to look the same as it does going forward. IGCC technology gives us a great opportunity to burn coal or to use coal in ways that we never thought of before. So I don't think that our position is so much about how we look today, it's how we see ourselves looking in the future.

Brian Stempeck: A lot of the companies have also said that they think right now might be pretty much the best time they're going to see in the near future to get a climate bill passed from the Congress. You have Republicans in control of the House and Senate and the White House. They're thinking that in 2008, 2000, the election for this fall, if you see a different mix, Democrats taking back the House or the Senate, you could be looking at tougher climate controls. Would you agree with that?

Chris Hobson: No I don't, because I don't think environmental issues in general, and this big environmental issue in particular, is really being driven by one party or the other. It really is an enormous problem going forward and I think that it really crosses over party lines. So I don't see an ability to create a better deal with one party over another has any advantage whatsoever.

Brian Stempeck: What exactly is the company's policy on climate change? Let's talk about the science little bit. I mean is that something that, recently there was a report that you put out to the shareholders about some environmental issues. Where does Southern Company stand in terms of agreeing with the science that global warming is in fact happening? Is that something that the company believes is accurate?

Chris Hobson: Well, we think, let me give you a couple of characteristics of what we think about climate. We think that it is clearly a global issue and it is a long-term issue. And we think that there is an enormous amount of the science that we don't know. But we also take the position that it is a big enough issue that we need to be thinking about what kind of actions to take today. And so we don't really focus too much on the science. We follow the science, but we're not in the business of necessarily critiquing the science. We see our pathway to the future as a pathway that leads us to less carbon emitting technologies. So regardless of what the science says, we're moving in that direction. And we think the development of those low carbon dioxide emitting technologies is critical to our future.

Brian Stempeck: I mean do you believe the science? You mentioned that there's a lot that we don't know. And I think people would agree with that, but at the same time you're seeing some mainstream acceptance of the fact that global warming does seem to be going on. We're looking at the cover of Time magazine, National Geographic, documentaries coming out on this. It seems to me kind of left and right, at least you're seeing the mainstream media kind of adopt this approach that this is happening right now. I mean do you think that's an inaccurate portrayal?

Chris Hobson: Well, I'm certainly not the one qualified to say that. Thankfully there are a lot of people around the country and around the world who are far better equipped to take a look at the science and really offer opinions on it. I go back to I think that we are making our decisions not without having the science in mind, but outside of the science. And just understanding what this whole issue means to us going forward.

Brian Stempeck: Southern Company is working on an IGCC plant, one of these ultra clean coal power plants in Florida. What's been the experience there so far? And is this something that you're kind of looking at doing elsewhere as well?

Chris Hobson: We are. In fact, we're very excited about this opportunity with DOE and Orlando utilities. It will be a 285 megawatt IGCC plant. We will do a little work around carbon capture and sequestration, but this will be a commercial scale power plant. We think that this will open the door for this technology, for us and for others. So we are excited about this project. And we are excited about IGCC in the future.

Brian Stempeck: How far away do you think IGCC is from being mainstream? And this of course is the technology that basically allows you to separate the carbon dioxide, bury it underground and store it, a potential major solution for coal being a source of CO2. How far away do you think that is from kind of being a more mainstream reality in terms of either retrofitting old plants with this kind of technology or building new plants?

Chris Hobson: Well I think IGCC, gasifying coal and using it in high-efficiency turbines, is a technology that's right here with us today. We have to demonstrate it, but I think it's with us today. But now if you add on that the ability to capture and to sequester the carbon dioxide emissions from those power plants, that's still a ways down the road. That's probably 10 years or more down the road. We have not had, at this scale, demonstrations that show us that we can capture it. And more importantly no demonstrations to show that we can store it in the ground and have it remain there. And those are critical components that must be demonstrated. In fact the FutureGen project, which is an alliance with DOE and utilities and coal companies, one of its main focuses is to show the carbon can be captured and sequestered. And that will go a long way to demonstrating the viability of that technology.

Brian Stempeck: Southern Company has also been talking about building more nuclear power plants. What's kind of the outlook there? How are things progressing on that front?

Chris Hobson: Well I still think there are a lot of questions, but clearly we are moving down the pathway, in partnership with other companies and in the new start process, to answer lot of questions about the licensing and construction of the new generation nuclear power plants. Obviously there are technology questions that still have to be answered. And then there are public policy questions that have to be answered, but we think that is a key to the future as well.

Brian Stempeck: Kind of covering the whole suite of options here. I wanted to ask about renewable energy as well. This seems to be something that your company really isn't bullish on at all. In that recent report that I mentioned you said quote, "It is unlikely that renewables will provide more than a few hundred megawatts of generation in the Southeast." We're seeing a lot of wind farms in the Northeast, a lot of solar farms in California. A lot of parts of the country are adopting renewable energy. Why not the Southeast?

Chris Hobson: Well because each region has its advantages and disadvantages from a renewable resource standpoint. Unfortunately the Southeast doesn't have the wind that they have in the Midwest and in the West, so it's very difficult to take advantage of wind resources in the Southeast. And likewise, even though we think about the sunny south, there's not a high percentage of the time that the sun is actually shining. So the Southeast is really pretty constrained. We are working with Georgia Tech to develop a feasibility study of putting a wind farm off the coast of Savanna, Georgia, which is on our southeastern coast. And hope that we could tap into the wind resources out there. We are committed to renewables to the extent that we can. For instance we see some, some possibilities for us in developing biomass in the Southeast and maybe some resources from landfill methane. But unfortunately in renewables each region has its advantages and each region has its disadvantages. And we see a lot of disadvantages in the Southeast.

Brian Stempeck: All right Chris, we're out of time. Thanks so much for being here today. We appreciate it.

Chris Hobson: My pleasure.

Brian Stempeck: I'm Brian Steinbeck. This is OnPoint. Thanks for watching.

[End of Audio]

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