PDF Exelon CEO Calls for Government, Industry Partnership in Fostering Low-Carbon Economy

Business Wire, Feb 12, 2008

In major policy address at the Brookings Institution, John Rowe outlines comprehensive vision for addressing climate change

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EXELON CEO CALLS FOR GOVERNMENT, INDUSTRY PARTNERSHIP IN FOSTERING LOW-CARBON ECONOMY

In major policy address at the Brookings Institution, John Rowe outlines comprehensive vision for addressing climate change

In a major energy policy speech delivered at the Brookings Institution today, Exelon Chairman and CEO John Rowe called on industry and government to accelerate the process of building a low-carbon economy that is essential to solving the climate change issue and meeting rising demand for energy.

"Time is not our friend with respect to global climate change," Rowe said. "We must begin a long journey to address climate change and the usual DC approach - doing too much, too late - will not work."

Rowe outlined three essential elements necessary to make a meaningful impact on carbon emissions. They are proper governmental policies and regulations; market-driven innovation and investment; and energy industry leadership.

Rowe further emphasized that the transition to a low-carbon economy requires a continuing commitment to competition that allows the markets to choose the most cost effective demand or supply side solutions.

"The competitive market system is the single most important weapon in the fight against climate change," Rowe said. "Ultimately, if policymakers abandon market principles it will cost consumers three times as much to reduce or displace carbon."

Government Policies and Regulation

In the speech, Rowe called for a comprehensive government policy that includes a cap-and-trade system to incorporate the costs of greenhouse gases into the marketplace. "This is where the rubber meets the road, and without carbon regulation, climate action is just climate talk," said Rowe.

Rowe said that any cap-and-trade system should have an allowance allocation system that will protect against economic windfalls. In the electricity sector, Rowe said, that means allowances should either be auctioned, or go to local distribution companies based on the number of customers they serve.

Rowe also called on the federal government to increase investment in research and development for renewables and carbon sequestration and called for federal loan guarantees and tax incentives for renewables and new nuclear plants. He said government at all levels must also adopt more stringent efficiency standards for buildings, equipment and appliances.

Market Innovation and Investment

Rowe outlined a comprehensive suite of initiatives that must be part of the solution including new natural gas infrastructure, expanded energy efficiency efforts, development of renewable energy and new coal technologies.

Rowe said that nuclear energy must be part of the solution. Nuclear power today supplies the vast majority of low-carbon electric energy. Existing plants are safe and efficient, and the next generation promises to be more passively safe, and more efficient, he said. Rowe said he believed that the U.S. will need at least 25-30 new reactors by 2030 if we are to succeed.

Industry Leadership

Rowe also called on the entire energy industry to do more to lower its own carbon footprint and help customers do the same. He highlighted the industry-leading steps Exelon is taking to reduce emissions and provide education and tools to allow the 5.4 million customers served by Exelon's utility subsidiaries to better manage energy use.

Exelon is one of the lowest CO2 emitters among major U.S. utilities and generators, despite being one of the largest power producers. In 2005, Exelon made a voluntary commitment under the U.S. EPA's Climate Leaders Program to reduce greenhouse gases 8 percent from 2001 levels by the end of 2008. By the end of the 2008 Exelon anticipates significantly surpassing that goal, Rowe said. Exelon's environmental performance is recognized by the Dow Jones Sustainability Index and Carbon Disclosure Project Climate Disclosure Leadership Index.

The Real Inconvenient Truth

Rowe cautioned that the real "inconvenient truth" of climate change is that addressing it won't be cheap. He cited the Energy Information Administration estimates that the utility industry, the source of one-third of current carbon emissions, will have to invest $400 billion in new electric generation by 2030 to address climate change. $400 billion is almost as much as today's market cap for the entire investor owned utility industry, he noted.

Rowe is the longest-serving chief executive in the energy industry and is regarded as one of the country's leading voices on energy and public policy. He first raised the issue of global warming in testimony before Congress in 1992 and currently serves as co-chair of the National Commission on Energy Policy.

Rowe's speech is available on the Exelon Web site - www.exeloncorp.com - as well as the Brookings Web site - www.brookings.edu. Rowe's speech was part of Brookings' Energy Security Intiative.