Contrary to what some of his colleagues might believe, NRG Energy Inc. CEO David Crane says that carbon — its presence in the environment and what that means for global warming — is of preeminent importance to the power industry.
“We’re talking about the type of business issue that comes along perhaps only once in a century. That is, an issue like worker safety at the beginning of the 20th century, which transcends bottom-line impact,” Crane told attendees at the Merrill Lynch Global Power and Gas Leaders Conference Tuesday.
As a power industry executive, Crane would have a long way to go before anyone mistook him for a 21st century Upton Sinclair on the carbon issue. However, after describing NRG’s carbon-cutting initiatives, he had some sharp words for the power industry at large. Carbon emitters and their industries that are already doing something to cut emissions stand a better chance of having a “seat at the table” when the tipping point is reached and carbon takes center stage in the public policy debate.
“Those companies that deny the issue will be marginalized and ignored,” warned Crane, who added he was pessimistic about the power industry being taken seriously in the upcoming debate.
“While some forward-thinking power industry executives have taken a stand on carbon, the broader utility industry view, as represented by the utility trade associations, can best be described as: see no carbon, hear no carbon, speak no carbon.
“More specifically, for those of you who do not know, the official utility industry view is that carbon restraints should be entirely voluntarily. A carbon position based on voluntary restraints to me is unwise and ultimately self-defeating because it’s increasingly out of touch with the rapidly hardening position of mainstream America on the issues of carbon emissions and global warming.”
What Crane said will be particularly galling to carbon-conscious Americans is the “blatant cynicism” of the industry’s position on voluntary restraints at a time when it is proposing construction of nearly 100 GW of new coal-fired generation. He said that if all of the traditional coal-fired plants proposed in the United States are built, it will add an incremental 700 million tons of CO2 emissions every year, “an incremental amount of carbon equal to the total carbon emissions of Spain and France combined.”
For its part, Crane said that NRG is pursuing several initiatives that will cut its CO2 emissions. These are replacing baseload coal-fired generation with nuclear as evidenced by the company’s South Texas nuclear project (see NGI, June 26). NRG also is growing a wind generation portfolio through the recent acquisition of Padoma Wind Power. NRG is promoting future carbon sequestration through the development of 2,000 MW of new integrated gasification combined cycle (IGCC) generation in the Northeast and advocacy of carbon capture research and development.
Crane said that some analysts have suggested NRG and other power generators may stand to get a “carbon windfall” embedded in favorable allocations of carbon credits under a future cap and trade scheme. He sought to squash that kind of speculation.
“I believe that people who really believe that the power industry is in line for a carbon windfall severely underestimate the intelligence and objectives of America’s environmental regulators.”
Any element that can move a utility executive to speak highly of environmental regulators is potent indeed, but not potent enough to induce forgetfulness of shareholders and the profits they demand.
“We don’t expect to be rewarded economically for emitting carbon,” said Crane, but in the carbon regimes of the future we do expect to be rewarded economically, either directly or indirectly, for displacing baseload coal, for generating zero emissions with wind, for separating sequestration-ready CO2 through IGCC, for bringing one or more carbon-capture technologies to commercial realization.”
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