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America Has the Ability, Talent to Meet Climate Challenge Aug. 25, 2008

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CHARLOTTE, N.C. -

Below are excerpts from a speech Duke Energy Chairman, President and CEO Jim Rogers gave Aug. 21 to the World Affairs Council of Charlotte.

I believe it’s time for us to move toward solutions that bridge the gap from today’s technology ideas to tomorrow’s commercial solutions. During this transition, we need to use all of the fuels we have to produce electricity. We need to use coal, natural gas, nuclear, renewables and energy efficiency. There is no silver bullet. We can’t afford to take any of them out of the equation. Job 1 for me is to provide affordable, reliable, clean electricity, 24/7.

Some people tell me we need an Apollo Project or we need a Manhattan Project approach to climate change. I think those projects were important, but their scope was relatively small compared to what we have to do today. I think the better way to think about this is a Marshall Plan approach. In the same way we rebuilt Japan and helped rebuild Germany, we need to rebuild our own economy and infrastructure – our power infrastructure. 

The reality is – through all the debates leading up to the political party conventions –there was only one question about climate change and only a scattered few about energy. The only answers we got from the candidates were platitudes and bumper sticker-type answers. What we, as the American people, should demand from those running for president or running for Congress is to hear specifics. We want to know that they understand the tradeoffs between growing our economy, maintaining our standard of living and addressing the environmental issues that are so critical to the long-term success of this country. We have not had that conversation in this country. We need that conversation going forward. 

China Making Things Happen

I have a 19-year-old grandson named Alex whom we recently took to China. It was during the 12 days leading up to the Olympics. Those 12 days gave me an insight into what we’re doing in the U.S. in terms of dealing with energy and environmental issues, and how we’re thinking about our economy for the future. 

China is a nation that is making big things happen; not only economically, but environmentally.

On our trip, we saw the Three Gorges Dam which has been under construction since 1994. When it’s completed next year, it will be the largest dam in the world and the largest generator of electricity (18,000 megawatts) on the planet. 

This was just hydropower, but China isn’t leaving anything out of the energy equation. It consumes 40 percent of the world’s coal. It’s going to build 800,000 megawatts of new coal generation in the next eight years. That’s two-and-a-half times more than the combined generation of all the coal plants operating in the United States today – plants that were built over the past 60 years.

The Chinese are looking at nuclear, natural gas, renewables and energy efficiency, and they're making it happen. Already, they are planning the world’s first eco-city designed from scratch on an island near Shanghai. It will feature electricity-generating windmills and solar-powered water taxis. China’s largest state-run power producer is developing a billion-dollar coal-fired power plant that will demonstrate how carbon dioxide can be captured and stored underground on a large scale.

China also is the top manufacturer of solar panels today, and next year it will be the largest manufacturer of wind turbines in the world. China is living the balanced portfolio approach to meeting future energy demand by using everything it has to generate electricity.

China is making things happen. Here in the U.S., we’re still only talking about it. 

Duke Energy’s Daunting Task

Let me frame the daunting challenge that Duke Energy faces in making the transition to a low-carbon world. Three numbers define our company’s carbon footprint: 3, 12, 41. Of all the companies in the U.S., Duke Energy is the third-largest emitter of CO2. Of all the companies in the world, Duke Energy is the 12th-largest emitter of CO2. If Duke Energy were one of the 192 countries in the United Nations, it would be ranked 41st in CO2 emissions. Reducing our carbon footprint is one of the biggest challenges our company faces – not just for our customers, but for our investors as well.

Duke Energy has 4 million electric customers, or a total of about 11 million families and businesses, across five states in the industrial Midwest and the Carolinas. What we have to do is help them cross the bridge to a low-carbon world. It won’t be cheap to get to the other side. That’s why I’m so personally committed to helping shape federal legislation on this issue; it needs to be designed correctly.

I have been an advocate for the regulation of carbon dioxide for many years. We need to implement a cap-and-trade system, which involves placing a cap on total emissions of carbon and ratcheting down that cap over time. We need a price on carbon so we can “bake it in” to cost estimates when making choices between building coal or gas power plants versus nuclear, wind or solar plants.

I believe our customers and the American people in general will accept higher prices only if they perceive they are being applied fairly. In my judgment, there will be no popular support for legislation that penalizes one region of the country over another. There are 25 states where more than 50 percent of the electricity is generating by coal plants.
 
We need to remember our climate-change mission: to develop technology that allows us to move to a low-carbon world. We need a sense or urgency, not a sense of panic. We need a sense of hope, not a sense of fear. (The fear-mongering on this issue has been quite remarkable.) We need the politics of possibilities – not the politics of limitation and punishment – if we’re going to successfully move forward. 

At Duke Energy, we’re doing many things. We’re building a state-of-the-art, 800-megawatt pulverized coal plant that will enable us to shut down several older coal plants that collectively generate 1,000 megawatts – and we’ve committed to make the project carbon-neutral. We’re going to build one of the largest coal gasification plants in the world. We’ve proposed a nuclear plant. We’ve investing in more than 5,000 megawatts of new wind turbines. We’ve proposed a program to invest $100 million in rooftop and ground-based solar panels

We’ve also proposed an energy efficiency program called “save-a-watt.” We’re trying to change the regulatory paradigm so that electric companies in the 21st century can make money delivering universal access to energy efficiency – just as our industry delivered universal access to electricity in the 20th century. We want energy efficiency to be as back-of-mind for our customers tomorrow as throwing the switch is back-of-mind today. 

I have been a CEO for 20 years. During that time, I’ve been judged every day. Every day when my customers throw the switch, they judge me. They judge the reliability of our system. I’m judged every month when they open their electric bills. I’m judged every quarter and every year by our investors.

I think the toughest judgment for me is going to come in the future. I’m going to be judged by Alex and my other grandchildren on how I handled the 3, 12, 41 challenge. I call it the grandchildren’s test. All those other tests are important, but the test that I really want to pass is the test of 3, 12 and 41. I have confidence that we can do it.

As a country, we have a great challenge. We can meet that challenge. We need the American people to talk about it. We need our leaders to understand these issues deep in their DNA. We shouldn’t let them off the hook with bumper-sticker answers. You’ve got a challenge; we’ve got a challenge. But I think the American people have the capability to meet that challenge and cross the bridge to a low-carbon world.

Duke Energy, one of the largest electric power companies in the United States, supplies and delivers electricity to approximately 4 million U.S. customers in its regulated jurisdictions. The company has approximately 35,000 megawatts of electric generating capacity in the Midwest and the Carolinas, and natural gas distribution services in Ohio and Kentucky. In addition, Duke Energy has more than 4,000 megawatts of electric generation in Latin America, and is a joint-venture partner in a U.S. real estate company. Headquartered in Charlotte, N.C., Duke Energy is a Fortune 500 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available on the Internet at: www.duke-energy.com.


Contact: Dave Scanzoni
Phone: 704-382-2543
24-Hour Phone: 704-382-8333
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