What Utilities Can Learn From Big Auto
Change, for major industries that have spent decades doing things in pretty much the same way, is inconvenient. This is at the heart of why big business in the US has been so reluctant to embrace a transition to fuels with lower carbon emissions, even as other nations show clean energy can be an economic lifeline during recession. Thus the largest US auto companies, heavily invested in SUVs, spent years trying to ignore how consumer preferences were changing. With rising gas prices and increased concern over carbon emissions, more and more people no longer wanted to drive the biggest and heaviest cars available.
The result, for auto makers like Ford and GM, was disastrous. By failing to become a more sustainable business, US automakers sacrificed their position in the world economy. They were rescued from near-extinction only by a federal bailout, and have only begun to recover after embracing fuel efficiency rules they spent years fighting. Now US utilities can learn a lesson from the mishaps of the auto industry. Just as automakers had to bow to the times, electricity producers will to have to adapt to new pollution regulations, and increasing interest in renewable energy. The oldest and dirtiest power plants will have to be taken off-line over the next several years, and replaced with cleaner energy. Yet utilities seem set on fighting this transition every step of the way. Utilities are making the same mistake auto manufacturers made by failing to adapt to the inevitable.
A good example is Portland General Electric (PGE), one of the largest electricity providers in the Pacific Northwest. PGE operates the Boardman Coal Plant, which was grandfathered in under the Clean Air Act and so has not been held to the same air quality standards as power plants across the country. Now PGE’s free ride to pollute is over. New Environmental Protection Agency regulations on mercury and other pollutants are likely to affect the Boardman Plant, and the Sierra Club has filed a lawsuit claiming the plant’s grandfathering was illegal in the first place. Oregon’s Department of Environmental Quality has made it clear: PGE must either invest huge amounts of money in new pollution controls, or shut down their coal plant within the next five years.
Given this reality, the logical choice for PGE should be to get ahead of the curve, avoid investing in costly equipment, and transition off Boardman Coal in 2015 or early 2016. Yet PGE seems determined to spend valuable resources avoiding the plant’s inevitable closure as long as possible. Meanwhile PGE’s customers are growing increasingly frustrated with the company’s reliance on coal, even as PGE tries to paint itself “green” with public relations campaigns. It’s reminiscent of events that doomed major automakers: for years, Ford and GM used flashy PR to hide the fact that their cars were among the worst gas-guzzlers on the market. Though they failed to win over consumers, car companies dragged out the transition to lower carbon emissions long enough that they suffered irreparable losses. PGE and other utilities likewise do themselves no favors by pretending the transition off dirty coal plants can be avoided.
Ironically, the US Senate’s inability to pass climate legislation may make things even worse for utilities. Failure to enact new legislation doesn’t mean carbon emissions will go unregulated; rather, it means the main vehicle of regulation will be the existing Clean Air Act. New EPA rules may actually hit power providers harder, because relying on carbon emissions “offsets” will not be allowed. At the same time a long-overdue crackdown on other pollutants, delayed for years under the Bush Administration, is about to take place. Compounds like mercury will be more strictly limited, while toxic coal ash may be regulated at the federal level for the first time in history. New rules that have nothing to do with carbon emissions may lead to 20% of US coal plants being taken offline in the next five years.
The writing is on the wall for US utilities. For almost a decade under George W. Bush, they were allowed to pollute with minimal oversight at great cost to public health and the environment. Now upcoming pollution rules, and public enthusiasm for clean energy, make a transition away from coal plants inevitable. Utilities can bury their heads in the sand if they want, but if they do they will pay the price. It would be far better to take a lesson from the auto industry, and get onboard the transition to clean energy now.
Photo credit: Nick Engelfried
Nick Engelfried is a freelance writer on climate and energy issues, and works with campuses and communities in the Pacific Northwest to reduce the causes of climate change.