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2007 CEO Forum: Greenhouse Gauntlet

Tackling climate change is a monumental challenge. Power-company CEOs discuss long-range plans for a climate-friendly energy economy.

Fortnightly Magazine - June 2007

certain benefits we have that other cities don’t, and vice versa. If you take away affordable energy it really undercuts the development and growth of our community.

If you do it on a prospective basis, however, you take today’s carbon footprint and reward or punish companies on a going-forward basis, depending on the choices they make. I think that’s a lot more fair and won’t upset the economic balance.

Saggau, Great River Energy: The devil is in the details. GHG regulation must be fair to utilities, reasonably flexible, and phased in over a reasonable period of time. It must include full credit for voluntary reductions that are taking place now.

One of the big fears for us is that by being progressive and responsible on this issue, we could end up being penalized for being early adopters if it takes too long to implement mandatory standards.

The way it worked for SO 2 was each company started from a baseline amount of carbon, and had to improve upon it. As we develop technologies and invest in infrastructure to reduce our carbon footprint, it could have the effect of lowering our baseline when national cap-and-trade policies are enacted.

There’s a bit of a feeling that no good deed will go unpunished. Yet we feel it’s important to go forward and do it in any event.

Holliday, National Grid: It’s a massive challenge, make no bones about it. The things we need to do require some pretty major adaptations in the way we run our operations. There are risks associated with that. And ultimately the biggest risks are actually the consequences of climate change itself, and how it will affect our operations and our markets.

In a word, though, the immediate risks are political. The biggest risk today is getting people to have the courage to tackle this issue.

Addressing these issues and changing the way you provide an essential service to society will take some brave people who want to make big changes. Climate-change adaptation is not free, but most people want their bills to go down. That is a dilemma we have to grapple with.

Crane, NRG: The main secondary effect we are concerned about is a carbon regime that becomes too punitive, too quickly. If that happens there will be a flight from coal plants into gas-fired generation, causing sharp upward pressure on natural gas prices.

There’s a large fleet of marginal coal plants that already are struggling with adding back-end controls for SOx and NOx. If you hit those up front, they will be pushed out of the market before the market is able to replace them.

Global warming signals a true paradigm shift. If we put our minds to it, the industry and regulators working together can significantly change the way we produce energy by 2015 to 2020.

Rogers, Duke: Our challenge is to make this transition and minimize the cost impact on our customers. That’s why getting the allowance system right and having a long enough transition period is critical.

We are asking the question, can we significantly

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