Why can't utility execs stand up for the climate?
The electricity industry historically has played the biggest role in the U.S. greenhouse gas emissions problem. It has an even greater potential to be an even bigger part of the solution, but its leaders must speak up.
Questioner: "Has it been proven that carbon dioxide is the primary cause of climate change?"
"No, certainly not. Is climate change happening? Certainly. It has been happening for millennia."
That is not Scott Pruitt answering the question. Rather, it is Tom Fanning, long-serving CEO of Atlanta-based Southern Company, speaking last week on CNBC's Squawk Box. You are to be forgiven if you thought it was Pruitt, because Fanning sounds exactly like the new EPA administrator. (Indeed, Utility Dive initially misattributed the quote to Pruitt — Freudian slip!)
Contrast Fanning's answer with the recent statement by Jeff Immelt, chairman and CEO of General Electric — a company whose steam turbine division would benefit from a resurrection of coal-fired generation — criticizing the Trump administration's executive order on carbon regulation; and the revelation that post-Rex Tillerson ExxonMobil had written a letter to the Trump administration advocating that the United States remain party to the Paris Agreement.
On so many levels, Fanning's position is a gut punch to those of us in and around the electricity industry who care about saving future generations from the ravages of global warming — but who also believe that working in our industry is an honorable calling, providing an essential service that empowers virtually every aspect of modern society and enables value creation and lifestyle enhancement to a level unimaginable to the pre-electric world.
Fanning's statement is a gut punch to those of us in and around the electricity industry who care about saving future generations from the ravages of global warming — but who also believe working in our industry is an honorable calling.
For me personally, it's doubly difficult, because I know Fanning pretty well. I like him very much and respect him. He is the consummate professional executive, driven by data, and absolutely committed to the success of his storied company in the short, medium and long term (the last of which you cannot say about all that many CEOs).
And, while his statements need to be taken at face value, I don't believe for a minute that he has any personal doubt that anthropogenic GHG emissions are the primary cause of climate change.
I always found Fanning to be open-minded and, even more important, he wanted his deeply red state company to be open-minded as well. I received only three speaking invitations from utilities during my 12 years as CEO of the nation's largest independent power producer. Not surprisingly, the first invitation came from Jim Rodgers, as he wrapped up his run as CEO of Duke Energy; the second was from Mary Powell, the famously progressive and customer-centric CEO of Green Mountain Power in Vermont; and the third came from Fanning, who invited me a few years back to speak to his extended leadership team at Southern Company.
When I arrived at the meeting, I discovered that he also had invited Bruce Nilles, director of the Sierra Club's "Beyond Coal" campaign. Fanning was so open-minded that I actually was being positioned to the audience of Southern Company executives as the moderate. The radical leftist? That was Nilles.
As the meeting progressed, I indeed found much to agree on with Fanning's management team. They were working so hard at the time, as they are still, on showing the path to a decarbonized future through nuclear power (its Vogtle power plant) and decarbonized coal (Kemper). Indeed, one Southern executive confronted Nilles by asserting, to loud applause from the room, that nobody — not the U.S. Government, not any environmental NGO, certainly not the Sierra Club — was doing as much to fight global warming as the Southern Company and my own company at the time, NRG Energy.
What a gut punch Fanning's statement must be to those executives and employees.
And what a question mark his statement raises over the rationale for ratepayers in Georgia and Mississippi to continue to underwrite the stupendous cost of Vogtle and Kemper. If the investment in those state-of-the-art carbon-free power plants can't be justified, at least in part, by reducing anthropogenic carbon emissions, then why build something that is multiples more expensive than the conventional fossil fuel-fired alternative?
As far as I can tell, the utility sector is utterly content, possibly even pleased, to have a nonbeliever in climate science as its leader and spokesman.
To make matters worse, Fanning serves as chairman of the Edison Electric Institute, the influential trade association of investor-owned utilities. As such, his statement of climate skepticism reflects upon the entire utility sector. Of course, it could be disavowed by EEI officially, but it hasn't. Its effect might have been mitigated by a spontaneous outpouring of condemnations and clarifications from CEOs of other major utilities, such as AEP and Exelon, but it hasn't. We've heard crickets.
As far as I can tell, the utility sector is utterly content, possibly even pleased, to have a purported nonbeliever in climate science as its leader and spokesman.
This is important because, with the federal government on the sidelines for at least the next four years, the climate movement looks to the electric industry to be a key leader in the fight against global warming. As I frequently say, the power industry historically has been the biggest part of the GHG emissions problem in the United States but we have an even greater potential to be an even bigger part of the solution.
Historically, as the former head of a major independent power company, I always thought that our sector of the industry was destined to lead the fight against climate change, perhaps in alliance with the municipals and co-ops, which provide about 15 percent of U.S. electric service. I always thought the major investor-owned utilities, such as Southern, who make up the biggest part of the electric industry, either would slow-walk the necessary transformation from brown to green or resist it altogether.
Unfortunately with the munis and co-ops limited in their capabilities to adopt and deploy new clean energy technologies — and with the IPPs severely weakened by the slow drain on merchant power markets caused by renewables penetration, anemic electric demand and distributed generation — we have no alternative but to look to the investor-owned utilities to lead the way.
At some level, don't we deserve to be served by an electric industry that has core principles that do not shift with the political winds?
I get that utility CEOs have to be political, but how political do they have to be? At some level, don't we deserve to be served by an electric industry that has some core principles that do not shift with the political winds? If, for example, the Trump administration, consumed by deregulatory zeal, were to cancel all workplace safety regulations and zero out OSHA in the federal budget, would we start to hear industry executives say things such as, "I am not sure the connection between robust LOTO (lock out/tag out) procedures and worker safety has been firmly established yet"?
The final words of this piece belong to Immelt, who explained his climate criticism of the Trump administration last weekend on CNN:
"I think we're cowards if we don't take a position occasionally on those things that are really consistent with what our mission is and where our people stand."