Duke Energy: We can ‘decarbonize’ without painful electricity price hikes
Major coal utilities are now publicly endorsing electricity decarbonization, an all but unimaginable position even 12 months ago. And although Duke is a member of USCAP, which was the basis of Waxman-Markey, it remains remarkable that the company has joined the call for strong climate action (see How does Duke CEO Jim Rogers sleep at night, generating so much coal-fired CO2: “Lunesta”).
Jim Turner, chief operating officer of Duke Energy Corp, explains the utility’s view in an Energy Daily (subs. req’d) column:
For over 100 years electricity has powered the economic growth of this nation. In the last 30 years, the real price of electricity has declined on average, even as reliability improved to meet the demands of an increasingly automated economy. This combination powered a period of economic ascendancy that is without historical precedent in this country or in the world.
Best of all, these dramatic gains in efficiency and productivity occurred even as our economy was investing hundreds of billions of dollars to reduce the environmental footprint of industrial America. Utilities participated actively in this effort with capital investments that have substantially reduced emissions of sulfur dioxide, nitrogen oxide, mercury, particulate matter and other pollutants from America’s coal-based generation.
This context is important as Congress discusses the prospect of regulating carbon dioxide (CO2) for the first time in human history. The debate has been and will continue to be spirited and robust, as it should be.
But there is one thing we should not debate, and that is the importance of ensuring that the United States has the cleanest, but also the most affordable and reliable, supply of electricity to be found anywhere in the world. It is the relentless pursuit of these parallel objectives that will keep existing businesses on our shore, attract new industry and jobs to our country, and position America to continue its pre-eminent role in the world’s economy.
This objective should seem obvious. Yet, almost daily we hear people calling for Congress to use climate legislation to achieve other social objectives. Some have argued that we should push the real price of electricity higher so that renewable energy resources can flourish even though already heavily subsidized.
More recently, on the pages of this publication we heard an argument in support of an “auction and recycle” approach to climate regulation, which appears to have as its central theme a desire to raise electricity prices high enough to force price-responsive behavior by consumers. In other words, reduce CO2 by making electricity so expensive no one will want to consume it.
Undeniably, enhanced renewable energy and energy conservation are laudable objectives and should be part of a comprehensive solution to climate change. But our ultimate objective must be to transition to a lower carbon economy in a manner that inflicts the least economic pain on America’s consumers and businesses.
Electricity can be the low-cost and reliable engine that transports us into a prosperous and “decarbonized” future, but not if we allow it to be used as a high-priced sledge hammer to pound out other societal priorities or as shock therapy to induce an energy starvation diet.
If the Waxman-Markey bill is any indication, Congress appears to have come a long way in understanding the complexities of addressing climate change in a responsible manner and appears eager to move forward in a fair and responsible manner, recognizing that climate legislation will impact different regions differently.
The cap-and-trade approach embodied in Waxman-Markey is not unprecedented. We need look no further back than 1990, when Congress passed the Clean Air Act Amendments and ushered in huge reductions in sulfur dioxide and other pollutants in a manner that improved air quality and advanced our economic growth.
Technology and American ingenuity will allow for the development of lower carbon technologies that propel our economy forward. Cap and trade along the lines proposed by the Waxman-Markey bill can be the catalyst for that to happen. Making unreasonable demands on business, industry and consumers to achieve different social objectives will not accelerate the decarbonization process, but would decelerate an economic recovery. Our country can’t afford that.