Entergy Corporation

A burning issueElectricity generation is at the heart of the climate change debate. Wayne Leonard, CEO of Entergy Corporation, tells Martin Ashcroft about the urgent action he believes is required. "For every generation there is a defining issueÔÇöan issue it must resolve if society is to continue and thrive; an issue it cannot ignore.   For our generation, I believe the defining issue is climate change resulting from human activityÔÇöactivity that produces hugely escalating amounts of greenhouse gases.ÔÇØ So says Wayne Leonard, chief executive of Entergy Corporation. He puts the issue of climate change absolutely on a par with that of the depression, World War II and civil rights in previous generations. But he is quick to contradict my description of him as an authority on the subject. ÔÇ£I am a student of it,ÔÇØ he says, ÔÇ£and IÔÇÖm learning more every day. IÔÇÖd love to be an authority on it.ÔÇØAs CEO of a company engaged in electric power production, Leonard is close to the debate on climate change, and in a perfect position to comment on it. Entergy owns and operates power plants with approximately 30,000 megawatts of electric generating capacity, serving 2.7 million utility customers in Arkansas, Louisiana, Mississippi and Texas. It has dozens of electricity generating facilities, mainly oil and gas powered, with a handful of coal fired plants, and a couple of hydroelectric facilities. ItÔÇÖs also the second-largest nuclear power generator in the United States (see our article on Entergy Nuclear in the August issue). The company is acutely aware of its responsibility to the environment, being the only US utility to be named to the Dow Jones Sustainability Index for six consecutive years. The conundrum is, however, that although electricity generation is the single greatest contributor to greenhouse gas emissions in the United States, domestic demand for electricity is expected to rise by 40 percent in the next 20 years.┬á ItÔÇÖs a problem that has to be dealt with, urgently. Leonard underlines the urgency in a reference to Albert Einstein, who recognized the interdependency of life on earth long before we had the knowledge and technology we have now. ÔÇ£Einstein famously said that if the honeybee were to become extinct, mankind would follow within four years. The honeybee is in serious decline right now.ÔÇØOne of the problems in dealing with climate change, however, is that it involves predicting the future, and nature is not conducive to being predicted with certainty. We all know we have a problem, but itÔÇÖs hard to agree on the size of it, the timescale involved, or the efficacy and cost of solutions. Despite huge advances in science, technology and economic models, there is no way to prove beyond doubt what is going to happen in 40 or 50 yearsÔÇÖ time if we do this, that, or the other thing. The absence of certainty creates division in political opinion, which cripples attempts to take action. Leonard sees it as a question of probabilities. ÔÇ£The best statistical analysis from the worldÔÇÖs best thinkers is that if we could stabilize CO2 at about 500 parts per million, thereÔÇÖs an 80 percent chance that weÔÇÖll see two degrees or less in the warming effect, and a 20 percent chance of catastrophic events. If we are on the 80 percent branch, there will still be natural disasters, but on a level you can deal with.ÔÇØTo stabilize at 500 ppm would require an 80 percent reduction in carbon emissions by 2050, he points out, which in turn would require agreement and strong leadership from the major countries represented by the G8. ÔÇ£But the G8 comes back with a 50 percent reduction by 2050, and a ten year delay in getting started,ÔÇØ complains Leonard. ÔÇ£They just reversed the odds. Now we have an 80 percent chance of catastrophic events and only a 20 percent chance that we wonÔÇÖt see them. That, to my mind, is perverse. Now weÔÇÖre likely to see parts per million of 800 to a thousand, and we donÔÇÖt know what that will mean.ÔÇØ One thing we can all be certain of is that we need to take some kind of action, now, if only to get started. The European Union did that when it launched its experimental Emissions Trading Scheme in 2005. Around 12,000 energy-intensive plants in the EU have been able to buy and sell permits that allow them to emit carbon dioxide into the atmosphere. Companies that exceed their individual limit can buy unused permits from firms that have taken steps to cut their emissions. Those who exceed their limit and are unable to obtain spare permits are fined. Industries included in the scheme include power generation, iron and steel, glass and cement. Leonard applauds the European approach. ÔÇ£They went into it on the basis of ÔÇÿletÔÇÖs get started, letÔÇÖs see what happens, and then weÔÇÖll take the lessons learned and implement them into something more permanent that makes senseÔÇÖ,ÔÇØ he says. ÔÇ£They found there were a lot of loopholes and ways round things, a lot of segments that werenÔÇÖt covered, and some people held projects back to get the allowances and then implemented things under the scheme that they would have done anyway, but everybody in the world has learned a lot from the European experiment. It was a very positive thing to do. At least they got started.ÔÇØSo what are the chances of the US doing something similar? ÔÇ£I think the chances are very good that the US will have something like it in place by 2010,ÔÇØ he says. ÔÇ£And I do believe thereÔÇÖs a very strong will that just because it takes us longer to get a bill in place, weÔÇÖre not going to lose time on the implementation. I donÔÇÖt think the people who take the decisions are going to say that because it took us five years to get the bill weÔÇÖll give you five extra years to start complying. The 2012 timeframe is still an appropriate timeframe. Industry is just going to have less time to do it.ÔÇØIn their obsession with certainty, however, authorities dither, and the issue remains unsolved. ÔÇ£The problem with something like this is that it gets caught up in an intellectual debate about what is the right way to do it,ÔÇØ says Leonard. Scientists, statisticians and economists all have their own models, he says, but itÔÇÖs impossible to prove climate change by scientific methods. ÔÇ£So we have to deal with what we know,ÔÇØ he says, pragmatically. ÔÇ£In the electric sector, what is absolutely obvious is that coal is 80 percent of the problem. China is building 50 coal powered plants a year. In the US 80-90 percent of greenhouse gases come out of coal plants. Coal plants are not going to be retired, so we have to come up with a way to fix them. China will have an enormous investment in coal capacity by 2020 and they are not going to throw that away. We have to find an affordable way to retrofit the coal plants ÔÇô ours and theirs.ÔÇ£There are various alternatives, but almost no research has been done on it,ÔÇØ he continues. One option is post-combustion capture, using an absorption agent after the fuel has been burned. ÔÇ£Or you can deal with it before the process, by separating the CO2 before burning the fuel. Or you can deal with it in the actual burning of the fuel itself, by burning the coal in a pure oxygen atmosphere to separate the carbon. Once youÔÇÖve done that, though, you have to find someplace to put it, and a way to get it there.ÔÇØSkeptics in the US argue that it is too expensive, if not impossible, to move large quantities of CO2 into storage, and that it would require pipelines in multiples of what we have now for natural gas, but Leonard does not believe that. ÔÇ£It appears that 66 percent of coal plants that could be retrofitted are sitting almost right on top of a reserve, a coal seam, an oil seam or something of that nature where you could put it,ÔÇØ he says. He is clear on what would be his three point plan. ÔÇ£We have to start to retrofit existing coal plants. Then we have to get the G8 to be realistic and to agree an overall reduction to keep us around that 500 ppm level. Then we have to look at the transportation sector. If we went to electric vehicles you would have a reduction of about 50 percent in CO2 emissions per mile today. If you had a worldwide agreement on how to attack climate change in the electric sector, which would produce the fuel for the vehicles, and you went for a combination of nuclear and retrofit coal technology, or even natural gas, you could eliminate 80 percent or more of the emissions from the transportation sector by switching to electric vehicles.ÔÇ£You could solve this problem in the appropriate time frame,ÔÇØ he says, ÔÇ£but itÔÇÖs going to change peopleÔÇÖs lifestyle a little bit and itÔÇÖs going to cost money. We canÔÇÖt rely on the markets alone to solve the problem when there is no assurance that the world community will put an adequate price on carbon, so governments are going to have to get together and do something jointly to start funding the research.ÔÇØ┬á