Why a Company That Gets 1/3 of Its Power from Fossil Fuels Supports Carbon Cap-and-Trade

For a utility guy whose companies serve fossil fuel-intensive places like Texas and Louisiana, J. Wayne Leonard spends a lot of time telling folks in his neck of the woods that they ought to worry about global warming and the harm that it may do to the country.

Maybe he's learned to stop noticing the frowns and scowls hurled his way.

Leonard is CEO of Entergy, which is a family of utilities that obtain about one-third of their power from fossil fuels, one-third from nuclear, and one-third from purchased sources, plus a smattering of hydro and wind.

Leonard is a big booster of the American Clean Energy and Security Act (ACES), the cap-and-trade hot potato that the House passed and tossed over to the Senate last month.

Leonard supports an 80 percent emissions reduction by 2050. The sooner we start, the better, he believes.

And about those "cap-and-tax" slogans that the bill's critics are repeating ad nauseum? Leonard said putting a price on carbon emission is not a tax. It's pulling your weight and paying your way. "You're being charged a fee for the damage you're doing to the environment," he told a Texas newspaper recently.

That sort of talk is quite unlike what's coming out of the mouths of fear mongering congressmen who represent districts in Entergy's service territories. Sticking to their talking points, they dutifully decry ACES as a "tax." It will kill jobs and cause America to lose the race for economic supremacy to China. Or something like that.

Why do so-called conservatives who champion the superiority of market capitalism always seem so afraid that we're going to lose out to the commies?

But I digress. The question of the moment is why a utility CEO whose companies burn a substantial amount of coal and gas sees the climate issue so differently from carping congressmen.

It goes to the fundamental difference between businessmen and politicians. Businessmen must be practical. They must find real solutions to real problems that face their companies, deal with the world as it is, and plan accordingly. They don't have the luxury to go off on ideological excursions, unlike politicians rhapsodizing their slogans for the C-SPAN cameras.

Leonard's thoughts about reducing carbon emissions may not be popular with enviros. He is not convinced that spending billions on transmission to move renewably generated power from the Southwest and the Great Plains is a worthwhile investment. Nukes, he told shareholders at the company's annual meeting this year, are too expensive to fully displace coal.

Leonard says the only practical way to drive down global carbon emissions is to pass what he calls the "China test" – crack the carbon sequestration nut so that using coal will be climate-safe, here and elsewhere.

While one could take issue with the specifics of Leonard's climate prescription, one of his themes rings out loud and clear. The energy market must see a durable price signal on carbon emissions in order to invest in low-carbon technologies.

The politicians who say "all of the above" technologies are the answer to reducing emissions but resist putting a price on carbon either don't see or don't want to talk about the fatal contradiction in their argument.

As a businessman trying to help solve a problem, J. Wayne Leonard has no time for such pandering jabberwocky.

He does have time, however, to ponder the consequences of doing nothing. As he told a Texas newpaper earlier this month: "This is a personal issue of morality. We'd be the first generation to ask if we're more important than any other generation. We are not."