Exelon’s John Rowe: The Pragmatic Businessman, Favors Cap-and-Trade Over EPA

Rowe:Yes to Cap-and-Trade

Just a couple of weeks after pulling his company out of the U.S. Chamber of Commerce, John Rowe, CEO of Chicago-based power company Exelon made an impassioned and politically savvy plea for cap-and-trade, saying it was the most effective and business friendly tool to fight global warming, and arguing that renewable portfolio standards are expensive for energy consumers.

The alternative to cap-and-trade, he warned, would be regulation of CO2 by an omnipotent Environmental Protection Agency (EPA).

Speaking at the in Pennsylvania, Rowe reiterated his belief that human activity has contributed to global warming, saying that the facts were “unambiguous.”

Given this reality, he urged:

The critical first step to dealing with greenhouse gas emissions, particularly CO2, is to place a price on carbon. Nothing else will encourage low-carbon investments and discourage high-carbon investments.

Take that, Chamber of Commerce!

But Rowe also criticized the current rush towards wind and solar development at the expense of cheaper solutions. Top on his list is energy efficiency (better windows, more insulation, more efficient power distribution with smart grid) as well as the “nuclear uprates” — increasing the power output of existing reactors by refueling them and replacing power plant components to handle the increased heat output of the reactor. This makes sense coming from the CEO of one of the country’s largest nuclear power generators.

He said:

We must have a system that forces us to do the cheapest things first, like energy efficiency and nuclear uprates, and the other items in merit order.

Energy efficiency is the bore of the cleantech crowd. It’s the least technologically exciting, but it is also the easiest to accomplish and most cost-effective of the green solutions. Acres of concentrating solar power collectors in the Mojave Desert are a British pop band headlining in a Brooklyn club. Retrofitting industrial complexes with efficient motors and HVAC systems is the local open-mic night at a Chicago neighborhood tavern.

The jury is still out on the ability of the new technologies such as wind, solar, and geothermal to replace CO2-heavy baseload generation.

So, Don’t expect Exelon to follow utilities like Pacific Gas and Electric, investing in the construction of massive solar or wind farms. Rowe says these technologies only make sense in an environment where CO2 is priced, and then only when the price for a ton of CO2 hovers between $50 and $90, based on Exelon’s own analysis.

Rowe is a politically savvy businessman and long-time believer in global warming who doesn’t want the government telling him what to do, especially not the EPA. Given the choice between a legislated cap-and-trade solution and a more heavy-handed EPA regulation regime, he’s going with cap-and-trade. He’s also looking out for his shareholders as he advocates for cheap and proven — insulation over insolation — strategies to cut carbon emissions.

Photo: Courtesy Business Week

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  • Robert Famham

    Entergy’s, Vermont Yankee nuclear power plant, in Southern Vermont, is due to have its license expire in March of 2012. The owners are pushing to have the license extended for another 20 years. No where near enough funds have been set aside for the moth-balling of the plant. Entergy suggests that by keeping the plant open will allow them to save enough money to safely close the plant.

    Many “experts” suggest that Vermont could save enough energy, through energy efficiency, plus produce enough energy through sustainable methods, where we wouldn’t need to have the nuclear plant any more. Perhaps they’re right. I’m not 100% sure if that’s true but, it seems to me that a group of 6th graders (or, if need be, a group of highly educated economists) could calculate whether or not the need for extending the license of Vermont Yankee is necessary.