Duke Energy is a $12.7 billion Fortune 500 Company headquartered in Charlotte, North Carolina. Through its twenty coal plants and a mix of nuclear and renewable energy facilities, Duke generates 35,000 megawatts of electricity and serves more than 11 million people in five states -- North Carolina, South Carolina, Ohio, Kentucky and Indiana. Duke Energy is one of the largest electric utilities in the U.S. and one of the nation's top industrial polluters.
In 2007, the Company outlined a plan to de-carbonize by 2050. It has played a leading role in galvanizing new energy policy and efficiency innovations. Heather King talks with CEO Jim Rogers about Duke's collaboration with Fred Krupp of Environmental Defense Fund (EDF), his advice for Energy Secretary Steve Chu, and a future where the appliance is "the customer."
As the country's third biggest polluter, what is your business case for reducing carbon?
In the late '90s, we became aware of 'global warming'. We recognized our huge risk, precisely because we're such a large emitter of CO2. We recognized a need to understand the issue, get ahead of it, and help shape a solution. In 2004, we started to build a coalition of stakeholders to collaborate and proactively work on the challenge.
We foresee a carbon-constrained future, and we want to make sure that we're one of the lowest cost energy suppliers in that new world. The sooner we get started, the better. The more we can smooth out cost increases, the better.
You have forged a number of partnerships with significant NGOs, most notably EDF in your work on USCAP. What advice would you have for other corporate leaders in working with NGOs?
A company cannot be sustainable over the long term unless it takes a stakeholder approach to operating a business. Stakeholders include customers, employees, investors, the communities you serve, policymakers, and NGOs. It's important to discuss issues with people who may not share your views or your goals or your timelines. Real change in America is not going to come by government edict, but by NGOs, corporations and community organizations working together.
In 1990, Fred Krupp of EDF and I worked on the Clean Air Act Amendments and we supported a cap-and-trade approach for SO2. These measures were good for consumers and achieved ambitious environmental goals at a lower than expected cost.
I encourage other companies to recognize the importance of building relationships, understanding differing perspectives and cultivating consensus.
In the wake of a defeated national cap-and-trade initiative, what do you think it will take to pass meaningful energy and climate legislation? What would you do if you were Energy Secretary Chu?
There are a couple of things at play. The administration decided to put the stimulus, healthcare, and financial reform before the energy issue. We also have a fragmented national voice. A perceived transfer of power from the states to the federal government has also impeded moderate Democrats' and Republicans' focus because their power base has shifted. And, Republicans have demonized cap-and-trade -- a system that they heralded as the free market answer to our environmental challenges when Bush passed the Clean Air Act in the 1990s.
Secretary Chu's challenge is to regroup, reframe the issue, and rebuild a base of support. This requires an old-fashioned, person-to-person approach.
With or without climate legislation, a revised energy policy is a worthy objective. By 2050, our world's population will grow from 6 to 9 billion people. The battle over scarce resources will accelerate. One thing people understand is the link between prosperity and electricity. Such a future requires a change in the regulatory paradigm. And, it requires us to redefine our business.
How has your approach to energy policy shaped the broader utility industry?
When I was chairman of Edison Electric Institute, a leading industry association, I worked hard to have my fellow CEO's recognize the imperative to seek carbon regulation instead of voluntary measures. We needed the surety of a coherent and consistent policy to manage our capital-intensive business.
We also worked hard to improve energy efficiency -- the first critical step in energy reform. Last century, the utility industry's mission was to provide universal access to electricity. We enabled air conditioning, which transformed the South and Southwest. We enabled MRIs and X-rays and laser surgery. We enabled cell phones, computers and the Internet. In the 1980's, there were three electrical devices per household. Today, there's an average of twenty-five. Our country has become increasingly dependent on electricity for our way of life.