Jim Rogers' Boardroom Coup and the New Carbon Rules
During the fireworks and record heat of Independence Week, Duke Energy closed its $26 billion merger with rival Progress Energy, creating the nation’s largest electric utility. Progress CEO William D. Johnson was to lead the expanded company—but just hours after the deal closed, the Board hastily installed Duke chairman and CEO James E. Rogers as chief executive of the merged company.
Jim Rogers is no stranger to headlines and he has made a lot of them since he emerged several years ago as the unlikeliest of species: CEO of a coal-generated power company who sought a U.S. climate policy.
I interviewed Rogers in November 2009 for a recently completed documentary film called Shattered Sky. The film looks at our responses to climate change and to the first truly global environmental crisis, the ozone hole. Chemicals called chlorofluorocarbons (CFCs), found in aerosol sprays and refrigerants, built up in the atmosphere by the 1970s and started destroying the atmospheric ozone that protects living things from ultraviolet solar radiation. The treaty that resolved the crisis, the Montreal Protocol, turns 25 next month.
The ozone hole and climate change are unrelated as scientific problems, but have other points in common -- emissions don’t respect borders and no single country can solve either problem alone.
The most consequential difference difference between them is that the Reagan administration led the world to a solution to the ozone crisis. “The protocol marks an important milestone for the future quality of the global environment,” Reagan said upon signing the Protocol. “And for the health and well-being of all peoples of the world."
Rogers is a revered and controversial figure in the world of energy and environmental policy for arguing that climate change marks another important milestone. Duke Energy’s website calls Rogers “a CEO statesman” for accomplishments that straddle business and policy, such as in 2007 when he pushed the Edison Electric Institute, a utility-industry group, to support U.S. climate legislation when he served as its chairman. Anti-coal advocates accuse him of doublespeak: How could anyone operate coal plants and truly want to address climate change?
I opened the interview by asking Rogers why he thought climate change was a problem to begin with. “It is clear to us that climate change is an issue that we must face up to,” he said. “It is also clear that the scientists have done their work, they have spoken, and we're really acting based on the work that they have done.”
Rogers and Duke Energy in 2007 co-founded the U.S. Climate Action Partnership (USCAP), a centrist group of business and environment groups calling for federal policy to reduce greenhouse gas emissions. Rogers explained on camera that market rules shape investment, particularly for highly regulated companies like utilities. By setting environmental and health standards, goverment forces companies to balance affordability, reliability and external impacts.
“Should we build clean coal plants? Should we build nuclear plants? Should we build natural gas? How much should we invest in wind or solar?” he asked. “Those choices will be made in the context of regulation.” He conceded that “clean coal” technology – capturing carbon dioxide and storing it underground – isn’t yet technologically feasible.
In 2009, investing in renewable power generation was a different proposition than it is today. Wind technology has matured even as the industry languishes. Solar silicon prices have seen a historic drop in the last two years. Oil prices are high. “The important thing is for the government to have clear goals, clear regulations so we can make investments,” he said at the time. Today, Duke Energy is “making significant investments” in electricity from wind, solar, biopower and landfill gas.
We finished the interview. When I switched off the key light I expected Rogers to dash off, but he had something to say—something he didn’t want on film. Rogers told me he had a $20 billion capital budget "over the next few years." If the rules of the game were to change, he was ready to invest accordingly.
If the CEO of America's largest electric utility is ready and willing to adapt, then what are we waiting for? When the House passed a climate bill in 2009, it was historic. Since the Senate abandoned it, we've been wandering in the policy desert. What’s more, Obama and Romney don’t seem to feel much citizen pressure to speak out about energy and climate.
In the mid-1980s, we were still prducing tons of CFCs for air conditioners and refrigerators, and the ozone hole was getting bigger. Doctors were predicting millions of cases of skin cancer. Yet, in September 1987, we led the world to an unprecedented international treaty limiting CFC use. As a result, the ozone hole is shrinking and is projected to close this century.
That’s the real lesson from my film. America faced up to a global environmental problem during the Reagan Administration. We didn’t solve it all at once. But we took a sufficiently strong first step. Because of that, the world followed, and then we all worked out the details over a generation.
Sure, climate change is an even messier problem. Just ask Jim Rogers. But as we approach an important presidential election and the 25th anniversary of a critical ozone treaty, isn’t it time we work together for a forward-looking energy policy that addresses climate change?
Steve Dorst, a documentary filmmaker, will premiere his new film Shattered Sky nationally on PBS in September.
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