DR: There hasn’t been any public pressure to change the electricity system. Most people don’t even know how electricity is made. It comes out of the wall like magic.
TC: You are so right. In Ontario, they did a massive peer-reviewed study to identify the health and environmental effects of making power with coal, and what they thought would be saved if they replaced the coal with gas or nuclear. They talked about being able to save $3 billion a year in health and environmental costs.
When you divide that number by the kilowatt hours made from coal plants, it turns out that the health and environmental cost of coal-fired power is 12.3 cents per kilowatt hour. They are selling electricity to consumers at between 6 and 8 cents per kilowatt hour.
How much public pressure would there be to get rid of coal plants if every kilowatt hour coming from a coal plant cost 18 or 19 cents?
Energy is the most subsidized commodity on the planet. One of the longer term things we could do is put the full costs onto energy, and do it in some kind of revenue-neutral way.
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DR: You mean a carbon tax?
TC: Without getting into the specifics, in some way identify the health costs. I’m not a great fan of a carbon tax, relative to a cap and trade, because the number gets set politically and it’s hard to change. Then the government has all the money and has to figure out what to do with it.
The lower the price is, the more we will overuse a commodity and underinvest in saving it. So somehow or other the number needs to get to the number you pay for electricity. At the end of the day I would rather depend on your economic instincts — you being 300 million people — than on your goodwill.
DR: The roadblocks seem more political than technological.
TC: I agree with you that it’s political. A lot of it is a perception that if we change, it’s going to hurt the economy.
I don’t spend much time thinking about the venality of politicians. You’ve got vested interests and the vested interests are going to give money to certain people, and certain people are going to take the party line, no matter what. It’s better to dig deeper, and get into the underlying perceptual issues causing people to think that way.
The way we’re going to get out of this is that California is going to reduce its greenhouse gases more than Kyoto requires. More importantly, the Terminator signed another bill that said if you’re going to supply power to California from outside the state, you have to meet the standards. He killed 15 coal plants when he signed that bill.
The naysayers will say California’s going to go bankrupt, and California’s economy is going to boom. Your job, if I could be so bold, is to be on top of those things and highlight the successes.
DR: There’s a tectonic shift going on underneath the federal level that a lot of people miss.
TC: On Sunday, I flew to North Carolina to testify before the North Carolina Legislative Commission on Global Warming.
DR: Who woulda thunk it?
TC: Not only that, but on the panel was a guy considered the most powerful politician in the North Carolina Senate, and he was sitting there with rapt attention.
I was an invited speaker at the Clinton Global Initiative six weeks ago. I got introduced to Carl Pope, executive director of the Sierra Club. I said, "Carl, my commitment is to form a not-for-profit effort to promote the deployment of clean technology, called the Alliance for Clean Technology. I would ask you to do your due diligence and see if this isn’t something the Sierra Club might like to get behind." He said, "I don’t need to do any due diligence. My members have been asking me for some response to global warming." So Sierra Club has decided that they’re going to get behind this. We’ve got a set of proposals that would eliminate some of the barriers for clean technology.
I think the original thing with the enviros was the assumption that all business is evil, and it’s an absolute fight to the death. I’ve always had the impression that whether you were a businessman or an environmentalist, you probably had children, and the fact of the matter is, we’re the first generation in history that’s leaving the world worse for our children than we found it.
DR: There’s some meeting in the middle. There’s a new generation of businesspeople who have this at heart.
TC: You know what else they’re finding out? They’re making money doing it.
About six years ago, in Foreign Affairs, there was a long article by Lord Browne, the chairman of British Petroleum. It was all about climate change. Well-articulated — he’s a pretty special guy. He mentions the fact that BP decided it would have its own internal carbon system, and use that system to find the least expensive ways to get rid of carbon. They would set a goal of getting back to their 1990 levels.
He then — and it was so damn subtle you wonder if he’s trying not to give it all away — he said, "In fact, we’ve given ourselves 10 years and it took 3 years, and it cost less than we thought. In fact, we created $600 million of shareholder value." I’ve got the paragraph almost memorized. BP, who cut their carbon to 1990 levels, made over half a billion dollars doing it.
What we don’t have is examples of people that decided to cut their carbon and found out it cost them half a billion dollars. For some reason we believe it will, but we don’t have an example.
