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Duke It Out on Climate Change

April 8, 2005

You could hear the china rattling in Washington, DC on Thursday when Paul Anderson, CEO of Duke Energy, announced his support for a carbon tax at a breakfast meeting of Charlotte civic leaders.

Anderson’s statement sent one more message to the political establishment that the time for facing facts about global warming has arrived. Denial is no longer an option.

Anderson joined a growing number of high-profile business executives who, way ahead of the politicians, are trying to find constructive ways of addressing the issue. Others include John Browne of BP, John Rowe of Exelon, American Electric Power’s Dale Heydlauff, and James Rogers of Cinergy.

Anderson made several common-sense arguments for a carbon tax. They could apply just as well to other policies for incorporating the costs of carbon dioxide emissions into energy markets, such as the McCain-Lieberman cap-and-trade bill.

• Since global warming will affect everyone in America, a national policy is necessary.
• An economically sensible national policy should ensure that all business sectors that contribute to the climate problem internalize the costs of carbon dioxide emissions, which in turn will steer markets towards energy choices that are less carbon-intensive.
• Getting ahead of the curve by helping to shape policy protects a company’s interests more effectively than passively hoping the issue goes away.
• A national policy provides businesses with greater regulatory certainty than 50 state policies.

On the latter point, one should not fault states, including California and New York, that have adopted policies to address global warming. Since the federal government so far has refused to lead, states have felt compelled to step into the breach. That’s because a changing climate will have enormous consequences for the states – rising sea levels, more frequent heat waves, droughts, forest fires, the spread of mosquitoes and other vectors carrying hot-weather diseases, disappearing snowpack in the Sierra Nevada, disappearing sugar maples in the Northeast.

Anderson acknowledged that advocating a carbon tax will raise a lot of eyebrows. Duke is a national player in the energy game and burns a lot of fossil fuels. Duke owns and operates eight coal-fired power plants in the Carolinas, and natural gas-fired power plants in the Northeast, Midwest, and West. Duke also owns a Canadian gas utility, operates gas gathering pipelines and processing plants, and markets natural gas liquids.

A personal digression – One of Duke’s older power plants is the 1,002-megawatt Morro Bay plant on California’s central coast. When I was a child, my family frequently took road trips to Morro Bay, and the sight of the power plant’s “three smokestacks” on the horizon was a sign that our destination was near.

But back on point – Anderson said he doesn’t expect to see adoption of a carbon tax until the next presidential administration. It’s important, however, to begin the public conversation and shape the terms of the debate.

Anderson is aware that his statement will not make him popular in some energy circles. As he wryly noted, he can forget about attending ExxonMobil’s Christmas party.

There are other parties Anderson can attend. In the meantime, he can be satisfied in knowing that he has given America a far more valuable gift than any holiday gewgaw – another push in the political momentum for our nation to deal seriously and responsibly with global warming.