U.S. electric utility has 12-year plan to shape debate on carbon emissions

By Matthew L. Wald
Published: July 15, 2008

Exelon, the largest U.S. operator of nuclear power plants, said Tuesday that by 2020 it would cut its greenhouse gas emissions by an amount larger than its total emissions in 2008, in a bid to shape the debate on carbon dioxide rules and to get a jump on compliance.
Numerous academic researchers and nonprofit groups have made proposals for cutting emissions, but the Exelon plan is an unusual public presentation devised by a company that hopes to make money in the process. The plan relies heavily on conservation and having existing nuclear plants produce more electricity, but it includes smaller contributions from wind and sun energy.
The reductions in greenhouse gas emissions would come by making Exelon's operations more efficient, cutting the energy use of its electricity customers and building low-carbon generators that would displace older, less-efficient plants, many operated by rivals, the company, based in Chicago, said.
One reason for the pledge is to seek credit for actions that cut emissions of other companies, the Exelon chairman and chief executive, John Rowe, said. For example, Exelon plans to help the factories that it serves do the same work with less electricity so that some generating stations, owned by Exelon or other companies, will burn less fuel. Exelon also wants to build generating stations that use natural gas more efficiently to replace coal plants in the Midwestern and Eastern United States - probably owned by other companies - that emit far more carbon dioxide.
"Dealing with greenhouse gases, while essential, is very costly," Rowe said. "If you have an adequate way of accounting for offsets and displacements, we think we can offset our carbon footprint at a reasonable price."

Some components of the plan, like trying to bolster the output of its nuclear plants, are moves that Exelon would have taken anyway, Rowe said. One major step is made financially feasible by changes in the fuel markets: The price of natural gas is now so high that efficient generating stations can be built profitably to replace older plants.
But the plan is remarkable for what it does not emphasize. Despite a national focus on solar and wind power, discussions in Congress about renewed tax credits for investments in windmills and solar energy systems, and debate over a government requirement for a minimum level of "renewable" energy, Exelon's plan calls for relatively little renewable energy.
New "renewable" energy, including plants that run on landfill gas or wood or crop waste, makes up just 7 percent of the carbon savings. In the region that the company serves in Pennsylvania, where state law requires electricity distributors to buy "renewable energy credits" from companies that generate with wind and other sources, it will buy the equivalent of an additional 6.5 percent.
Burning coal but capturing and sequestering the carbon dioxide underground are not technologies that Exelon thinks will be cost competitive by 2020.
In contrast, the plan calls for improving the efficiency of its fossil-fuel-powered plants. It also calls for cutting the release of sulfur hexafluoride, a gas used to insulate circuit breakers but which is 24,000 times more potent for global warming than carbon dioxide.
"This is a mix of things that any sensible person would do, and of things that you only can economically do if the cost of climate are incorporated into the marketplace," Rowe said, referring to carbon taxes or limits that require emissions trading. Exelon's carbon footprint is relatively small, because it has many nuclear reactors, he said.Blackstone invests in wind
Blackstone Group, a U.S. private equity firm, said Tuesday that it would invest in a €1 billion project to build and manage a German offshore wind farm capable of powering half a million homes, Reuters reported from Berlin.
The wind farm will be the latest in a growing number aiming to cash in on European renewable energy subsidies, but will have to overcome supply and labor bottlenecks as well as lingering uncertainty over the reliability of offshore turbine technology, analysts said.
Blackstone said it had formed a joint venture, Meerwind, with Windland Energieerzeugungs in Germany for the $1.6 billion, 400 megawatt project, spread over an area of 40 square kilometers, or 25 miles.
"Projects of this scale were made possible thanks to the reformed regulations and incentives system in Germany that were passed in the German parliament in early June," Blackstone said.