Wednesday, October 17, 2007

Why Would NRG's CEO Favor Carbon Controls?

Maria Evans of WGMD posted a comment on this on Sunday: David Crane, CEO of NRG published an op-ed in the Washington Post titled (I am not making this up): "We're Carboholics. Make Us Stop."
In it he writes:
I am a carboholic. As Americans, we are all carboholics, but I am more so than most. The company I run, NRG Energy, emits more than 64 million tons of carbon dioxide (CO2) into the atmosphere each year -- more than the total man-made greenhouse gas emissions of Norway. And we are only the 10th-largest American power generation company. Imagine the CO2 emissions of Nos. 1 through 9.
Why do we do it? Why does America's power industry emit such a stunning amount of greenhouse gases into the atmosphere in this age of climate change?
We do so because CO2 emissions are free. And in a world where CO2 has no price, removing CO2 before or after the combustion process is vastly more expensive and problematic than just venting it into the atmosphere.
Congress needs to act now to change our ways. Lawmakers should regulate CO2 and other greenhouse gas emissions by introducing a federal cap-and-trade system, which would put a cap and a market price on CO2 emissions.
Has the chief executive responsible for Delaware's dirtiest power plant suddenly gotten religion? Has he recognized the error of his ways? I suspect not. Instead I can think of three reasons why an executive in his position would publicly endorse carbon controls.
First, power plants require enormous capital expenditures. Those putting their money down on big ticket capital items don't like uncertainty. A recent MIT study put the cost of carbon controls at 20 percent or higher. What investor would want to take on that kind of risk for average returns? GE CEO Jeffrey Immelt made a similar point when he came to Wilmington last year.
Second, operators of coal plants would like to be able to pass on the cost of carbon controls to their customers, which is what NRG did when it submitted its proposal for "clean coal" as part of the RFP process that led to the decision to build an offshore wind farm in Delaware. NRG's proposal would have placed the cost of future carbon controls with the ratepayers.
Third, NRG already knows it will have to clean up the Indian River power plant. It's in the company's interest to see to it that every coal power plant be required to do so or pay for expensive carbon offsets. In August, NRG agreed to reduce its emissions in response to a new regulation promulgated by DNREC. It's in the company's strategic interest that all of its competitors that operate coal fired plants be held to similar requirements.
So when David Crane writes, "Please make us stop," I'm guessing he really means "Make all the other dirty coal power plants clean up their act as well."

3 Comments:

Blogger Jerry W. Northington, DVM said...

Make others clean up as well may be one reason for Crane to speak up, but his endorsement of cap and trade is more important seems to me. The latest proposals under cap and trade do little to reduce emissions enough. We need really stringent regulations that make the costs painful enough to push alternative energy onto the playing field. If we fail to make changes soon enough and large enough much of Delaware's coastline may recede well toward the middle of the state as global warming progresses and ocean levels rise.

11:36 AM, October 18, 2007  
Blogger TommyWonk said...

From what I've learned so far, which isn't that much, the success or failure of a cap and trade system lies in the details. For instance, how are carbon emissions measured and valued?

Also, a cap and trade system cannot replace other emission controls for pollutants like mercury, which is poisonous, period.

9:39 AM, October 19, 2007  
Anonymous wolfy said...

Seems reasonable. If WE want clean air WE need to pay for it and WE need to understand that WE control that.

-M

5:17 PM, October 19, 2007  

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