Air Date: Week of April 15, 2005

Duke Energy's Paul Anderson recently did what no other major power company CEO has done before: he called for a national tax on carbon dioxide emissions to stave off global warming. Host Steve Curwood talks with Professor John Holdren of Harvard University about how the news is hitting Duke's shareholders, and why an emissions tax might be to the company's advantage.

Transcript

CURWOOD: From the courtroom, we turn to the boardroom, where greenhouse gas emissions now figure into the business plans of some of the nation's largest energy companies. Paul Anderson, CEO of Duke Energy, recently sent ripples through the industry with a pledge to reduce carbon dioxide emissions, even if they drove up the price of Duke's electricity. Mr. Anderson even invoked the "t"word, calling for a national tax on carbon dioxide emissions to curb global climate change.

Joining me is John Holdren, Heinz Professor of Environmental Policy at Harvard University and co-chair of the National Commission on Energy Policy. Professor Holdren, some people say Paul Anderson is out of his mind. Investor's Business Daily calls his statements, I quote, "a total capitulation to environmental extremists." Duke generates nearly 30 percent of its energy through coal-fired, C02 emitting power plants. Is the company biting the hand that feeds it with a proposal to tax carbon dioxide emissions?

HOLDREN: I don't think so. I think there are a variety of good reasons that the Duke CEO has called now for a carbon tax. He indicated, first of all, that good business in the world today requires attention, not just to the economic bottom-line but to a company's responsibility for the environment and for the improvement of society. He talks about a triple bottom-line. He says that very clearly the climate change issue is a pressing issue in the United States and in the world today and that we're going to have to do something about it. And, he says if we're going to have to do something about it, it makes sense to do it in a way that affects sources of carbon dioxide emissions across the energy sector. So that you don't just catch the power plants, you catch the automobiles, you catch the home furnaces, you catch the industrial processes. The carbon tax approach, which he is recommending, would do that. So, in a way, you could regard this proposal as a sort of a pre-emptive strike. Let's propose something sensible before somebody else imposes an approach to this problem, which would be much more onerous and much less effective.

CURWOOD: So, why would a tax be better at reducing greenhouse gas emissions than other regulatory approaches such as a cap-and-trade scheme?

HOLDREN: Well, first of all, in the case of a tax, the government specifies the price and the market works out the quantity, in the sense that people figure out what's the optimum level of emissions given how much you have to pay for each ton of carbon you emit into the atmosphere. In the case of the cap-and-trade scheme, you set the quantity and the market works out the price. The tax and the cap-and-trade approaches are identical in their impact on the problem and on the economy. Many people in the United States have preferred the cap-and-trade approach largely because the "t" word, the tax word, has been anathema in the U.S. political system for quite some time. Nobody dares utter the tax word in Washington, D.C. So, the fear is any tax proposal would be dead on arrival in the U.S. Congress.

CURWOOD: How hard of a sell do you think Paul Anderson's idea is going to be to Wall Street and to the shareholders of Duke Energy?

HOLDREN: Well, I think the quote you mentioned at the beginning of the broadcast saying that he had succumbed to environmental extremism is, in fact, an example of extremism of different kind. I don't think that the position that Mr. Anderson has espoused is regarded as extreme any longer in the mainstream of American industry. I talked to lots of folks from the electric utility industry, from the automobile industry, from the oil industry and, in fact, the idea that we have to do something, specific something, mandatory something across the board with respect to carbon dioxide emissions is now very widely understood. In industry, the extremists are really the ones who continue to insist that there's nothing to this problem and that we don't have to do anything about it.

CURWOOD: John Holdren is the Heinz Professor of Environmental Policy at Harvard University and the co-chair of the National Commission on Energy Policy. Thanks for taking this time with me, today, John.

HOLDREN: Thank you very much, Steve.