Fast Company

Should Environmentalists Ever Count On Their "Enemies" To Make Change?

Some people fighting for climate change legislation have apparently taken the position that beggars can’t be choosers.

The need to choose good partners to make change might seem obvious. But in the current political and economic climate, some environmentalists apparently have taken the position that beggars can’t be choosers.

I just finished reading The Climate War by Eric Pooley, a book about the failed political battle to get Congress to take legislative action on global warming. In the book, Pooley describes the extraordinary efforts by former Vice President Al Gore, the Environmental Defense Fund’s Fred Krupp and Duke Energy CEO Jim Rogers (pictured below) to get comprehensive national climate legislation passed.

Pooley portrays Jim Rogers as a man divided by his passion for climate mitigation on the one hand and his fiduciary responsibility to shareholders and ratepayers on the other. This may be an apt description of many CEOs I have met that have publicly pushed for comprehensive climate legislation. But in the case of Jim Rogers, a more appropriate conclusion might be that he is only involved in climate legislation efforts to make sure that new laws enrich his shareholders.

The relationship between Krupp and Rogers dates back to 1990, when the two men worked together on amendments to the Clean Air Act of 1990 that legislated a cap and trade approach to reducing sulfur and nitrogen emissions from coal plants. Both called their victory good for the environment and the economy.

As head of the Environmental Defense Fund, Krupp wanted to test his theories on cap and trade. Rogers was the new CEO of Public Service of Indiana (PSI), a failing electric utility that, it is important to note, was turned around in part by the free allocations of valuable emission credits that it received under the bill. These credits allowed PSI to continue polluting without legal or financial consequences.

Since Jim Rogers completed his ascent to CEO of Duke Energy in 2006, he hasn't changed much of the culture there. Duke Energy has not presented shareholders with a model for a "Utility 2.0" that they can embrace in a low carbon world. In fact, Duke Energy is not number one in any environmental category.

A few years ago, when Ohio and North Carolina passed renewable portfolio standards (RPS)--laws that required utilities to use certain amounts of renewable energy, Duke Energy fought them every step of the way. When asked about the technical capacity of the grid to integrate renewables in North Carolina, the utility told the North Carolina Utilities Commission it could expect a paltry 3% overall penetration. Only under heavy pressure did Duke concede that its technical analysis was flawed, and that the utility could in fact meet the entire RPS requirement without much difficulty.

Despite Rogers’ dismal track record, in 2010 Fred Krupp teamed up with him again to try and replicate their earlier success in legislation around carbon dioxide emissions, but the effort failed to garner sufficient votes in the U.S. Senate. While Rogers was pushing for a national climate bill, he decided to build two new coal plants (one in Indiana and another in North Carolina) even as he admitted that coal can have a significant negative health impact.

In my view, Rogers’ support for national climate legislation in 2010 was nothing more than a hat trick. Whatever else it might have done, the legislation he supported would certainly have provided regulatory  cover to build 20 new coal plants. At the same time, the legislation did not contain measures to help support solar power and energy efficiency. It would not have created a level playing field for next generation renewable technologies in the states in which Duke Energy operates.

Today, Jim Rogers continues to charm people like Fred Krupp into thinking that he is a messenger for change. I do not fault Rogers for his strategy, but I do fault Krupp and others for not holding Rogers to a high enough standard before giving him a seal of approval.

The actions of Rogers and others like him are not new; history repeats itself.  The largest suppliers of wood in the 1800s did not become prominent coal companies and the largest coal companies didn’t become the largest oil companies. And I highly doubt that most utilities and oil and gas companies will lead the way in our transition to a carbon-free economy. So let’s stop filling Rogers’ mantle with environmental champion awards and look for partners that can truly help cut down on energy waste and accelerate low carbon solutions. 

[Photo: Duke Energy]

Jigar Shah is CEO of the Carbon War Room, a nonprofit that harnesses the power of entrepreneurs to implement market-driven solutions to climate change and create a post-carbon economy. 

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5 Comments

  • Christopher Porto

    In my opinion, the tactics of EDF in partnering with corporations to achieve progress on environmental issues is exactly what we need to transition to a low-carbon economy. The dark green approach that has a distain for corporations and markets is bound to not get any real traction in the end. I would have thought that Jigar as a spokesman for the Carbon War Room would see the necessity in partnering with energy companies like Duke Energy that are going to be the ones making huge capital investments in the new energy economy. It is the power of these established entities that we need to embrace in order to accelerate our movement towards a bright green future. Of course, without legislation that puts a price on carbon its hard to make the business case to move in this direction...

    Reading the Climate War was a true gift on my journey to playing a leading role in the politics and business of tackling climate change. More specifically, it filled in many contextual gaps in my understanding of the history of market-based solutions like cap and trade that I wholeheartedly agree are the most appropriate way to confront the climate crisis. My blog site http://carboncapitalist.com is a testament to this belief that the power and innovation of markets is what will catalyze the needed economic transformation. Thank you so much Eric Pooley for your contribution to the climate dialogue! 

    I would encourage Jigar to continue to refine his approach when it comes to working with major emitters that show willingness to change. We need both them AND entrepreneurs to stimulate this monumental shift to a clean energy economy. If you are looking to point fingers, please spend your time villianizing those corporations that are funding the climate skeptic campaigns (i.e. ExxonMobile) and that drag their feet when legislative approaches to dealing with the carbon issue are presented!

  • Eric Pooley

     Jigar Shah's blog post about The Climate War made me sad. Not because he missed the point of my book or had unkind things to say about people I admire the man is entitled to his opinion. The piece saddened me because it gave voice to an incredibly damaging green stereotype: the notion that we enviros are ideological purists more interested in being right than being successful, and that we can't work with anyone who doesn't meet our high standards.

    I'd thought Shah knew better. After all, he runs an NGO that works with industry to reduce greenhouse gas emissionsand he and I have even discussed the need to reach out to corporations if we're going to turn the carbon tide. (I call it the Willie Sutton rule: If you want to cut pollution, you have to talk to polluters.) That's certainly the approach of Environmental Defense Fund, which Shah disparages in his post. EDF has always embraced the power of unlikely partnerships, including the one with Duke Energy that so annoys Shah.

    Shah criticizes EDF and its president, Fred Krupp, for working with Duke CEO Jim Rogers in the fight to pass climate legislation, and "for not holding Rogers to a high enough standard before giving him a seal of approval." Shah writes that Krupp was "charmed" by Rogers and blind to Duke's environmental record. To make that demonstrably inaccurate argument, Shah ignores all of the times EDF has gone into battle against Duke. Here are just a few:

    EDF sued Duke Energy to force it to install pollution scrubbers on old power plants when it refurbished them. EDF took the case all the way to the Supreme Court and won in a 9-0 ruling handed down in 2007. The case, Environmental Defense, et al. v. Duke Energy Corp, is a landmark of environmental law. Shah doesn't mention it.

    When Duke proposed to build two massive new coal units in North Carolina, EDF and its partners challenged the need for the plants before the North Carolina Utilities Commission pointing to cleaner and more cost-effective alternatives. We secured a landmark decision in which the Commission denied Duke's request for one of the two units.

    EDF and its allies sued Duke again over its plan to build the Cliffside Unit 6 power plant, the remaining coal unit, without first determining whether the plant would meet Clean Air Act standards. EDF won again, and the 4th Circuit Court of Appeals recently upheld this victory.

    When Duke sued to block federal clean air standards requiring far-reaching pollution reductions from eastern coal plants, EDF stepped in. And we successfully reversed the court decision halting the implementation of these vital clean air protections while EPA took corrective action.

    Shah writes that Duke fought a proposed renewable portfolio standard in North Carolina and backed off "under heavy pressure." He doesn't mention that much of that pressure came from EDF, which was a leader in passing the renewable standard.

    EDF, in other words, is more than willing to stand up to pollutersbut it will also sit down with them if there's a chance to make progress on key goals. That's why, in the middle of these courtroom battles, Krupp and Rogers began working together to pass comprehensive climate legislation. Duke joined EDF in a coalition called the United States Climate Action Partnership, or USCAP. In The Climate War, I describe their uneasy alliancesquaring off during tough negotiations over the contours of the bill, collaborating on ad campaigns and opinion pieces, jawboning senators and congressmen in a multi-year effort to cap carbon. Along the way, Duke even resigned from the American Coalition for Clean Coal Electricity and the National Association of Manufacturers because those two groups were devoted to killing climate legislation.

    Shah doesn't acknowledge that Rogers' support was crucial to passing climate legislation in the House, and he never mentions the real opponents of the bill or the myriad social and political forces that were allied against us. He claims that Rogers was "only involved in climate legislation efforts to make sure that new laws enrich his shareholders."

    That's a simplistic view of a complicated figure and a misreading of how cap and trade works. (Shah points to free allowances as the source of Rogers's interest in cap-and-trade for sulfur dioxide in the 1990s; as my book explains, it was not allowances but CWIP--the ability to pass on the cost of S02 scrubbers to ratepayers BEFORE the scrubbers were installed--that made money for his shareholders.) And if Shah is waiting for power bosses like Rogers to support legislation out of the goodness of their hearts, he's going to be waiting a long time. Altruism is not going to get this done. The whole point of climate legislation is to give polluters a reason to clean up to create incentives for doing the right thing instead of the wrong thing. Fred Krupp never held any illusions that Rogers or other the members of USCAP were trying for sainthood. These companies fought for climate legislation because they saw it as vital to their long-term economic well-being. That's the point.

    Of course Duke's environmental record is mixed. My book lays out those facts in great detail. For Shah, that's reason enough to shun Rogers. The title of his piece asks whether enviros should work with their "enemies"- and since Duke is not always on our side, he believes that makes it an enemy. That approach "you're either with us or you're against us" has failed us too often. It's time we retired it for good. Environmentalists should not be an elite fraternity that refuses to consort with those who are less enlightened.

    The people at EDF understand that. They deal with the world as it is, not as they wish it to be. That's why, when I decided to leave journalism and join the environmental movement, EDF is where I chose to hang my hat. I've been here less than a month, and in that time we've launched tough actions against American Electric Power, which is trying to delay new air pollution standards, and United and Continental airlines, which have been greenwashing while opposing common sense rules to reduce pollution. We're calling out corporations who delay progress while cooperating with those willing to clean up. We're interested in working with anyone who wants to march down the path to a clean energy future. But we never have, and never will, demand that they march in lockstep.

  • Kevin Leahy

    Addendum to my previous comment & apologies – I thought my affiliation would appear with the comment.  I work for Duke Energy as Managing Director, Environmental and Energy Policy. 
     
    Kevin S. Leahy
    Managing Director -- Environmental and Energy Policy
    Duke Energy

  • Kevin Leahy

    There is an emerging theme from the Über – Greens that claims adherence to “principle” is everything and compromise equals betrayal.  This seems to be the basis of Jigar’s post on Duke Energy and Environmental Defense Fund.
    The Über-Greens, represented by Jigar in this case, imply (or sometimes openly claim) the failure to pass climate legislation was due to the fact that environmentalists worked with major industries and companies like Duke Energy –that these working relationships somehow made the legislation impure and corrupt.
    According to this logic, if the legislation had in fact simply been more “green,” with a heavy dose of punishment for heavy industry, that it would have gained the support of “real” environmentalists and easily sailed through Congress.  To deal with industry is apparently a sign of desperation.
    This line of attack has the added benefit of resonating with a broader constituency insofar as many of the themes are also taken-up by Über-Conservative opponents of climate – mainly, that those businesses that supported passage of climate legislation were doing so only because they were “rent seekers.”  According to this storyline, these businesses were cynically trying to rig the system to their benefit and make money regardless of the fact that (in their view) this would destroy the economy.  Über-Greens and Über-Conservatives both want change -- greens want stricter environmental regulations and conservatives want to dismantle regulations – but they can at least agree that many of the companies that wanted climate legislation are BAD.
    As evidence, Mr. Shah claims Public Service Indiana (PSI), a “failing electric utility” Jim Roger’s was leading that is now part of Duke Energy… “was turned around in part by the free allocations of valuable emission credits” received as part of the emissions trading system created by passage of the 1990 Clean Air Act (CAA) Amendments.  Mr. Shah claims this allowed PSI to continue polluting without legal or financial consequences.  The company therefore only wanted to pass climate because they would be given bundles of money.
    This only demonstrates how woefully ill informed Mr. Shah is – The market created by the 1990 CAA Amendments was a radical reform that required utilities to turn in, from a limited supply of emissions allowances, one allowance for each ton of pollutant released.  The regulation gave utilities a large number of allowances to help offset the cost of compliance – this buffered the cost impact for PSI ratepayers as the entire value of allowances went to them, not shareholders.  PSI installed a scrubber to reduce SO2 on one of its largest units, purchased additional allowances needed to comply with the law and switched to lower sulfur coal for most of its remaining units.  The utility, being regulated and guaranteed a return on capital invested, could have generated more profits under the old style command and control system which might have required scrubbers on ALL units, but this would have costs customers a lot more money.  Economists will explain that the allocation did not impact the amount of investment made as business responds to opportunity costs, not actual costs. 
    The CAA emissions trading program is considered one of the great success stories of environmental regulation – it lowered pollution at a cost far less than under the old regime – by giving companies the freedom to find the lowest cost reductions.  It also did so in a manner that worked to buffer cost impacts for consumers through the free allocation of allowances.  The program, proposed and advanced by Republicans, was bitterly fought by most Greens, who claimed it was equivalent to selling the right to pollute.  Green ideological opposition to the approach dropped over time, but as demonstrated in the climate debate, remains alive and well among the Über-Greens.
    Mr. Shah complains that Duke has no plans for “Utility 2.0” – which is presumably a “green” utility, or likely in Mr. Shah’s perspective, a utility that only relies on distributed renewable energy regardless of costs to consumers (ignoring our state regulations calling for least cost power production).  For Über-Greens, this is a reasonable perspective.  For them, Duke’s advocacy for legislation that would have reduced U.S. emissions by 80% by 2050 was not good enough.  Nor was it good enough that Duke announced its plans to reduce its emissions by 50% by 2030 once legislation was passed.  Nor were its announcements to build the largest solar facility in the Eastern part of the country (purchased in fact from Mr. Shah’s former company SunEdison) or that that it now owns 986 MW of wind energy in nine wind farms.  Nor were its efforts to build advanced coal plants, enabling the shutdown of older, high emitting coal plants, not to mention new nuclear units announced and under development.  Investments in smart grid technology for 700,000 Ohio households and businesses, enabling the connection of dispersed solar generation and hyper-efficiency also weren’t good enough.  No sir – no “utility 2.0” here.
    Über-Greens frequently fail to consider the fact that regulated utilities, like most of Duke’s operations, have to work with State Utility Commissions to gain approval to implement these new plans.  Commissions have a mandate to ensure reliable and affordable service – investments must be low cost, prudent and useful.  That means utilities can’t simply decide to replace all their existing plants with new technologies – they have to make the case that this is least cost and reliable. 
    The company supported climate legislation because it would have created the economic signals that would have made these technologies competitive with conventional technology, which would then allow them to be deployed.  The company also supported legislative components that provided cost help to both households and trade exposed industries.
    Advocates like Mr. Shah were understandably disappointed that Duke Energy did not support renewable energy to the extent they wanted.  However, Mr. Shah is wrong to say we opposed Renewable Portfolio Standards in Ohio and North Carolina – and we did not claim the grid could only support 3%. 
    Jigar’s main beef with the climate legislation perhaps appears toward the end of his post – the lack of special programs for solar energy.  It may be a cliché, but solar energy has a bright future – costs are coming down and it is becoming increasingly competitive.  A price on CO2 emissions created by emission trading would have improved solar’s relative competitiveness.  However, it remains among the most expensive energy technologies and so its role might not be as large as the Über-Greens want.
    We operate in a democracy.  We have many problems to resolve that require serious, open engagement.  Compromise is what comes from the give and take and recognition of the legitimate views of opponents.  Adherence to “principles” seems to be code for “my way is the only way.”  Anchoring a position on “principle” allows someone to claim purity and a strong moral anchor while casting those who might compromise as unprincipled and corrupt.
    Climate legislation didn’t fail because it wasn’t “pure” or had been corrupted by business.  It failed because members of Congress feared it was too strict and that voters would punish them for supporting it.  Über-Greens should perhaps spend less time disparaging those of us who sought a solution through engagement and compromise.  Rather, they might instead work to build strong support for a meaningful climate policy among the people who matter, the electorate.