The free luncher: Exelon

Lawrence Solomon
Financial Post
October 17, 2009

Fourteen principled companies abandoned the U.S. Chamber of Commerce this week in protest over climate change. Let’s investigate their principles.

The New York Times coverage of the event, focusing on Exelon, one of America’s largest energy companies, frames the issues well. “Climate Bill Splits Exelon and U.S. Chamber,” its headline read. It then quoted Exelon’s long-time CEO, John W. Rowe, who explained that Exelon objected to the chamber’s “stridency against carbon legislation.” Environmentalists cheered the corporate defections, which confirmed their view that climate change reforms made good economic as well as good environmental sense.

“The carbon-based free lunch is over,” stated Rowe. “Breakthroughs on climate change and improving our society’s energy efficiency are within reach.”

John Rowe knows a lot about free lunches. He also is no Johnny-come-lately in coming to the table. Long before most environmental groups discovered the global warming issue, Rowe was warning of the dangers of climate change. In early 1992 — before the UN’s Maurice Strong and a U.S. senator named Al Gore launched the global warming issue at the Rio Earth Summit — Rowe was testifying in Congress about the need for carbon taxes to protect the planet.

Needless to say, carbon taxes were also needed to protect the nuclear industry, which he represented. At the time, Rowe was CEO of New England Electric System, part owner in the Yankee Rowe Nuclear plant that had to be prematurely decommissioned because the cost of making it safe was deemed uneconomic. Rowe had come to New England Electric System from a stint as CEO of Central Main Power, famed for a ruinous investment in the cancelled Seabrook nuclear power plant. Now as CEO of Exelon, he oversees the largest fleet of nuclear reactors in the U.S., those at ill-fated Three Mile Island among them. Every single reactor in Exelon’s fleet needed government backing to be built — neither Exelon nor any other company in the private sector has ever been willing to accept the full financial risk of nuclear power.

Exelon plans to build more nuclear plants — but only if taxpayers will overwhelmingly assume the expense. Thanks to subsidies established by the Bush administration in the hopes of kick-starting a nuclear renaissance, the federal government promises to pick up much of the capital costs and much of the operating costs of a future round of nuclear plants. But that isn’t enough to make new nuclear plants competitive. For nuclear to succeed, competing technologies that don’t require subsidies — and especially coal-fired plants, which Exelon lacks — must be brought down by regulation.

This is the forte of Rowe, a lawyer by training. No one has a more stellar record in the realm of regulatory rule-making, no one has more ingeniously struck deals with environmentalists and government regulators alike, no one more keenly appreciates how the law can be used to cripple a competitor, no one has more tirelessly lobbied for climate change legislation, the biggest club ever devised against the fossil fuel industry.

Hence Rowe’s distaste for anything that stands in the way of regulations that eviscerate his competition. The U.S. Chamber of Commerce, representing three million businesses, most of which won’t benefit from higher energy costs, is standing in his way.

What exactly has the Chamber of Commerce done to earn so much vitriol from environmentalists and corporate defectors alike (the former now refer to the latter as “green corporations”)? Its most egregious act was to ask the Environmental Protection Agency to hold public hearings on proposed EPA regulations associated with global warming, to determine the best way to achieve health goals without harming the economy. The EPA had asked for comment on its proposed regulations, but had planned to make its decisions behind closed doors.

Normally environmental organizations champion the transparency of public hearings; in this case they preferred private deliberations, particularly when a chamber official analogized its proposed hearing to the Scopes monkey trial of the 1920s, which decided, over the objection of creationists, that evolution could be taught in the schools.

The Chamber of Commerce’s other major crime, in the view of its critics, is to recognize the existence of a public debate on climate change through its annual selection of 10 Books That Drive the Debate on different public policy issues. Last year, my book, The Deniers, was one of the 10 books featured. To further public understanding, the Chamber of Commerce then arranged a public debate between me and the senior scientist at the Pew Center on Global Climate Change, perhaps America’s leading NGO in the field of climate change catastrophe.

Behaviour like this, in the view of Exelon’s CEO, amounts to “stridency against carbon legislation.” I see no stridency from the chamber’s side, other than in promoting a transparent process and public debate to protect its members against legislation that hasn’t been fully aired and tested.

In contrast, I do see stridency in Exelon which, for private gain, is trying to cow the Chamber of Commerce for doing its job in protecting three million members from needless cost.

With the defection of Exelon and the rest of the “principled 14,” the membership of the Chamber of Commerce will be down to 2,999,986. But it will have retained its principles. As for Exelon, it, too, is doing its job of enriching its shareholders. That enrichment, largely at public expense, is the only principle that I can detect at Exelon.

Read the previous article in the Climate Profiteers series.

Other Climate Profiteers articles: 

Climate insurance

Hot climate premiums

DuPont’s new game

Fill up with subsidies

Profitin’ in the wind

Carbon baron Gore

Read the sources for this column.

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This entry was posted in Climate Change, Energy Probe News, The Deniers. Bookmark the permalink.

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