The ever-quotable David Crane, CEO of the nation's largest independent power producer NRG Energy, is back.
In an op-ed published in Fortune, Crane says he is "pleased — or at least relieved" to see the Obama administration address "the single greatest challenge of our time" — climate change.
But while the EPA's draft rule to regulate CO2 emissions from existing power plants is "certainly significant," Crane indicates the proposal "achieves less and provokes more uncertainty than initially meets the eye."
Crane's two major gripes with the proposed regulation are that: 1) EPA set 2005 as the baseline year from which to measure emissions reductions; and 2) the "enormous weight" the EPA places on using natural gas-fired generation as a compliance method and substitute for coal-fired generation.
EPA sets 'artificially high baseline'
"Why 2005? It was a year when there were particularly high levels of greenhouse gas emissions, since the U.S. economy was humming and natural gas prices soared so coal plants ran flat out," Crane says. "In other words, 2005 sets an artificially high baseline for many states."
Since 2005, CO2 emissions from the U.S. electric power sector are down 10%, meaning the planned reductions will only amount to about 22% of CO2 emissions by 2030 using 2013 as the baseline year.
"[T]his fuzzy math [...] significantly overstates the expected carbon reduction from where we are now," Crane concludes. The rule "could have disproportionately negative impacts on states like Texas that have had the audacity actually to grow their economies since 2005," Crane observed with a hint of sarcasm.
But Crane's main quibble with the EPA rule is that it "will simply displace one fossil fuel with another."
'Extreme dependence on natural gas is an enormous mistake'
The EPA has touted coal-to-natural gas power plant conversions as a compliance method for meeting the emissions targets, but Crane argues that taking "the electricity system in certain parts of the U.S. from its current fuel diversity to extreme dependence on natural gas is an enormous mistake economically, strategically, and environmentally."
Maintaining fuel diversity is "essential" to reliability, Crane says. "Instead of killing coal and doing too little to replace our nuclear fleet, the Obama administration should be incenting the flow of more resources to plants that capture carbon; coming up with more effective ways to at least preserve the negligible carbon footprint of the 20% of our electricity production that currently is generated by zero-carbon nuclear plants and, of course, more solar on every building and over every parking lot."
New natural gas plants are being built — but gas is beating coal power "for economic rather than environmental reasons," Crane says. "The main result [of the proposed EPA regulations] will be the retirement of aging coal plants a few years earlier than planned and their replacement with natural gas plants."
This may be a win for the EPA, but it's a loss for the war on climate change. "What we really need to win this war," Crane prescribes, "is a singular focus on building the clean energy economy of the 21st century."
Crane seeks consumer-led, business-enabled movement
Crane cites "an inexhaustible supply of clean energy generated domestically and distributed locally, clean transportation, intelligent conversion of waste to energy in our growing cities, and fresh water production from zero marginal cost excess renewable energy" as the key drivers for a clean energy economy.
"We need to bring down the old regulatory structures," Crane says, so that consumers have "the right to pursue their own energy destinies rather than being force-fed energy from government-granted energy monopolies that sell the past rather than embrace the clean energy technologies of the future."
This line of thinking — which pits NRG Energy against electric utilities in the fight for high-value relationships with energy consumers — is typical David Crane. Utility monopolies are getting in the way of change, Crane recently argued, and companies like NRG Energy are here to provide consumers with the clean choices they want.
"You and I and the 300 million other American energy consumers" can make their own decisions to reduce emissions and fight climate change, Crane believes. "Whether we elect to buy only renewable energy from our local electricity provider, choose to drive an electric car powered by clean energy, decide to install solar panels on the roofs of our homes and businesses or over the sea of parking lots dotting our urban and suburban landscapes, we are advancing in the right direction."
Crane calls for a "consumer-led movement," enabled by companies like NRG Energy, to "create an environmental and economic outcome result unprecedented in scale and unrivaled in the audacity of its ambition."
"Our success in creating that movement," Crane argues, "will determine the future of the planet."
