Step By Step; A Coal Executive With a Cleanup Mission By STEVE LOHR - From The New York Times on the Web (c) The New York Times Company. Reprinted with Permission.
March 7, 2007
On a frigid February morning in Washington, when snow had delayed the opening of government offices, James E. Rogers was up early, already campaigning, making the case for a national policy to curb global warming.
The United States, Mr. Rogers insisted, should move as quickly as possible to set mandatory limits on how much carbon dioxide, one of the main greenhouse gases, can be spewed into the air. His arguments were informed, nuanced and persuasive — and paradoxical, given the source.
Mr. Rogers, 59, is the chief executive of Duke Energy, a big coal-burning utility in the Midwest and Southeast. Coal, of course, is the dirtiest of fossil fuels, and Duke is one of the country's largest producers of carbon dioxide emissions. Even as he takes a green stance in Washington, Mr. Rogers is seeking approval to build a large coal-fired plant in North Carolina.
There is no shortage of corporate chiefs proclaiming themselves friends of the environment and enemies of global warming. But Mr. Rogers, perhaps more than any other American corporate leader, is walking a climate change tightrope. His company has a huge stake in global warming policy, since 70 percent of Duke's power comes from coal plants. So Mr. Rogers has a powerful incentive to shape the carbon-control legislation that is expected to come up in the next couple of years. The outcome will determine if Duke can gradually make investments in carbon-cleanup technologies and alternative energy sources, or if it will face a more wrenching transition.
Duke was one of 10 companies, including General Electric, DuPont, Alcoa and Pacific Gas and Electric, that joined with leading environmental groups in January to call for nationwide limits to reduce carbon dioxide emissions by 10 to 30 percent over the next 15 years. Mr. Rogers is chairman of the Edison Electric Institute, the utility industry's trade group, whose members provide 60 percent of the nation's electric power. He prodded the group into declaring a set of climate change principles in February.
On his trip to Washington last month, Mr. Rogers testified before a Senate subcommittee on energy, met with members of the House and Senate and spoke at a conference on energy efficiency.
As a coal-utility executive who is a champion of carbon control legislation, Mr. Rogers can be considered an enlightened progressive or a calculating opportunist.
"To some degree, I understand the criticism," he said. "There is an inherent tension that seems contradictory in trying to deliver affordable, available and clean energy."
Clean technology, efficiency programs, federal caps on carbon emissions and regulation to shape market incentives, he said, are all vital in any program combating global warming without hobbling the economy.
"There is no silver bullet here," Mr. Rogers said. "What we need is more like silver buckshot, a lot of things working together."
Mr. Rogers does not see contradictions or hypocrisies, but trade-offs and consensus-building to make progress. "We've got to find common ground among the stakeholders -- consumers, industry, regulators, policy makers and environmental groups," he said. "They won't all be entirely satisfied, but there has to be enough common ground so each of them can buy in."
Mr. Rogers brings an eclectic resume to the task, not merely as an industry executive but also as a former regulator and one-time utility critic. One of his first jobs after law school was as a public advocate in Kentucky. "I fought electricity rate increases," he recalled.
The framework for curbing carbon-dioxide emissions, Mr. Rogers said, is essential. "We need to know what we're shooting for long term," he said. "And we need to start now, because the longer we wait the more difficult and expensive this is going to be."
By all accounts, Mr. Rogers has made a career of being ahead of his industry on environmental issues. Over the years, policy makers and colleagues said, he has consistently tried to shape regulatory ground rules instead of instinctively resisting regulation. His background helps: he served two stints on the Federal Energy Regulatory Commission. In Washington, Mr. Rogers also became a partner at the law firm Akin Gump Strauss Hauer & Feld, where he worked with Robert S. Strauss, the former Democratic Party chief and diplomat. "It was a very sophisticated political environment," Mr. Rogers observed.
Mr. Rogers said he enjoyed the political bargaining and the intellectual challenge of public policy. For years, he has been a regular at the Aspen Institute and the World Economic Forum in Davos, Switzerland.
"Jim Rogers is someone who, frankly, gets ahead of where the markets and policy are headed," said Philip R. Sharp, the president of Resources for the Future, a nonprofit research group, and a former representative from Indiana. (Mr. Sharp was a board member of Cinergy, the Midwest utility Mr. Rogers headed before it was acquired last year by Duke.) "And in getting ahead of the curve, he's being pragmatic, of course," Mr. Sharp added.
Fred Krupp, the president of Environmental Defense, recalled that he first met Mr. Rogers in the late 1980s, when Mr. Rogers was chief executive of Public Service Indiana. Mr. Rogers endorsed federal legislation to control smokestack emissions of sulfur dioxide, a pollutant that causes acid rain. The sulfur dioxide curbs were included in amendments to the Clean Air Act of 1990.
"He was about the only utility executive supporting acid rain controls," Mr. Krupp said.
By 2000 or so, Mr. Krupp said, Mr. Rogers had begun speaking publicly about setting limits on carbon dioxide emissions. "Utilities are now coming around to where Jim Rogers has been for years," Mr. Krupp said.
Today, Mr. Rogers is a vocal advocate for mandatory carbon controls, a position that he developed after much study.
In 2000, when the utility industry tended to dismiss global warming as an implausible cause celebre for tree-huggers, Mr. Rogers took another path. He invited Robert N. Stavins, director of the environmental economics program at Harvard University, to the Cincinnati headquarters of Cinergy.
Mr. Stavins brought along an expert on climate change from the Massachusetts Institute of Technology, and they spent a day briefing the company's senior management team on the science, policy and economics of global warming.
"That was most remarkable at the time, and even now it would be unusual," Mr. Stavins said.
The same year, Mr. Rogers hired Kevin Leahy, a trained engineer, former Peace Corps program manager and graduate of Harvard's Kennedy School of Public Policy, to investigate the issue of climate change on the company's behalf. Mr. Rogers told him, as Mr. Leahy recalled: "We've got to figure out what it means to us. And what our response to it should be."
Duke's current position is that mandatory carbon dioxide emissions should apply to the entire economy, not just the utility industry. The company supports a cap-and-trade system, capping carbon dioxide emissions and then giving or selling allowances to companies, effectively permitting them to generate a certain amount of emissions.
In the early years at least, Mr. Rogers said, power companies heavily dependent on coal should be given more allowances -- pollution permits -- than other companies. Otherwise, he said, regions heavily dependent on coal, mainly the Midwest and Southeast, would take an economic battering.
A cap-and-trade system, in theory, would set a price for a ton of carbon dioxide emissions. Companies that clean up quickly could sell their allowances to others. And the market would stimulate investment and innovation in cleanup technologies and energy sources like wind and solar power.
Mr. Rogers and his company are not yet supporting any of the global warming bills being introduced in Congress. Some climate change measure, industry and environmental lobbyists agreed, stood an excellent chance of passage in this Congress or the next. The most contentious issues, they said, would be the levels set for carbon dioxide emissions and the division of pollution-permit allowances.
In North Carolina, Mr. Rogers is seeking state approval to build two 800-megawatt coal-fired generators at a plant west of Charlotte. Duke says that it is needed to meet electricity demand, and that it will be cleaner and more efficient than conventional units, allowing Duke to retire some older, dirtier plants. The proposed plant, using so-called supercritical technology, has qualified for a $125 million federal tax credit to encourage cleaner coal generators.
Environmentalists oppose the plant, saying the state's power requirements could be met with efficiency programs and investments in renewable energy. Duke is trying to get approval for the coal plant, the environmentalists say, to get more pollution allowances once climate change legislation is passed, and to avoid the higher cost of the cleanest technology -- coal gasification and carbon capture.
"Jim Rogers is saying one thing, but Duke is doing something very different locally," said Marily Nixon, a senior attorney for the Southern Environmental Law Center.
In testimony before the state utility commission in January, Mr. Rogers said: "We're going to argue that we ought to have an allocation here. I think it gets grandfathered because it's perceived by the government as we perceive it, as a clean coal plant."
Mr. Rogers said the proposed North Carolina plant was another calibrated balancing of interests. The plant also reflects his commitment to coal. Half of America's electricity comes from coal, and, he said, he did not think the alternatives could replace coal. Pointing to the estimates that America has a 250-year supply of coal, he said, "It's a cliche to call us the Saudi Arabia of coal, but I do think there is an energy security issue."