Climate

Alstom's MacNaughton discusses utility-only proposals in Senate

With Senate Democrats expected to make a decision on how to proceed on energy and climate by the end of next week, how would utility-only proposals affect industry? During today's OnPoint, Joan MacNaughton, senior vice president of power and environmental policies at Alstom Power and a former senior energy official in the United Kingdom, gives her take on the utility-only proposals circulating the Senate and explains how they would influence clean energy investments.

Transcript

Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. Joining me today is Joan MacNaughton, senior vice president of power and environmental policies at Alstom Power and a former senior energy official in the United Kingdom. Joan, it's great to have you here.

Joan MacNaughton: It's a pleasure.

Monica Trauzzi: Joan, Senate Democrats are busy negotiating a climate and energy package and they've scaled back all the bills and are now focusing on a utility only option. How likely is it that a scaled-back version will even get the votes for passage this year?

Joan MacNaughton: Well, I think people are very concerned about getting the bill passed because without the bill we don't have the clear signal we need to stimulate investment in clean technologies and in clean power. It's hard to say, at this moment, whether the scaled-back bill will be just enough to get over the 60 vote hurdle in the Senate. I mean we all hope so. We're all keeping our fingers crossed that the senators concerned can be successful.

Monica Trauzzi: With this idea of doing utility only, what are the pros and cons? I mean we're only tackling one sector, so it's not going to have as big of an impact as a comprehensive package.

Joan MacNaughton: That's true, but at least it's starting somewhere. Now, if you were only to do a utility's bill and leave it at that, I think the power sector would be right to be concerned. I think if it's a utility's bill as a step towards more wide-ranging legislation, in due course, when the concepts have been proved, the practicalities have been worked through, that will be fine, because at the moment there's no doubt that the jury is out for a large number of people in this country about whether a cap-and-trade scheme can work. Of course, in Europe we've seen that it can work and it does work and we think it's going to help us to maintain the investment, to keep jobs in Europe at a time when lots of other countries are making huge investments in clean technologies. So, I think it could be good for jobs and for the economy, as well as necessary to help decarbonize power, which you've got to do if you're going to tackle planet change.

Monica Trauzzi: But can't we continue to make investments in clean energy technologies without having a cap-and-trade scheme?

Joan MacNaughton: You could if you had the right incentives or the regulation or some other form of making those clean investments come forward. Our position in Alstom Power is that cap and trade, a market-based system if you will, is probably the most effective way of doing it and the most cost effective. Of course, if you do it through incentives, then you're just adding to public expenditure at a time when maybe there's concern about the deficit too.

Monica Trauzzi: Specifically, which proposals that are on the table at this point does Alstom support?

Joan MacNaughton: Well, we're in favor of cap and trade. We would prefer to see cap and trade economy wide and, as I say, as a first step to start with the utility's sector, we think that could be a necessary station on the journey if you will. We're actually also in favor of regulation to try to prevent people from building unabated stations which are not going to be good investments in the long term. But precisely how you do that I think actually has to be a matter for careful consideration and I don't think we have a strong view on the detail of that, provided directionally the government's going in the right way.

Monica Trauzzi: If a cap of some sort does not pass this year, will it be considered dead moving forward?

Joan MacNaughton: I hope not. I don't think one should ever say never really. Of course, the received wisdom is that the complexion of the Congress could affect the reaction to future proposals for a cap. If a cap can be introduced, that will be the best way to incentivize innovation and help the private sector to do what it has to do through that market-based mechanism. If it can't, if in a year or two's time it looks as if a cap is not going to find enough favor on the Hill, then I think people have to think very imaginatively about alternative mechanisms.

Monica Trauzzi: So, we have a few different alternatives here. There's utility only, there's an energy only option and then there's EPA regulation that we're also looking towards. What would these different options mean for Alstom? Break it down for us in terms of your investments and business operations.

Joan MacNaughton: Alstom has the whole portfolio of technologies. It also offers its services to make power stations more efficient, which helps to reduce the emissions for any given unit of power that's produced. We're developing a big play on carbon capture and storage, which is a way of taking the carbon out, and, therefore, any of these options actually, if they create certainty in the market, would be helpful to Alstom. I mean we have made big investments in this country over even the last year. We've created 300 plus jobs at Chattanooga where we've invested hundreds of millions of dollars in a big turbine factory. We've created another 300 million -- 300 jobs, I beg your pardon, 300 million would be the answer to all of your concerns.

Monica Trauzzi: It would!

Joan MacNaughton: In Texas, in a wind turbine factory. So, we've got the whole suite of solutions and we can take advantage of these different pieces of legislation in different ways because of the portfolio that we offer. But we do need to have some action and, of course, that means the legislators have to pass some legislation.

Monica Trauzzi: Senators Rockefeller and Voinovich have introduced a bill that promotes carbon capture and storage technology and it could be rolled into a broader energy package. How important are the incentives in that bill to getting CCS on line?

Joan MacNaughton: I think they're very important. I mean CCS is going to be vital to help take the emissions out of the existing power plants and, you know, the emissions in 2030, from the power sector, 60 percent of them will come from power plants that are already built. So, CCS is really important. Those incentives can help with the first mover costs and with helping companies who want to be clean leaders in this field to make the right investments at a time when we're not absolutely certain what the framework is going to be, what the policy framework is going to be, when we've still got some engineering issues to resolve in the field as it were.

Monica Trauzzi: OK, we'll end it there. Thank you for coming on the show, nice to see you.

Joan MacNaughton: Thank you.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

[End of Audio]

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