By Andrew Restuccia - 02/08/11 11:31 AM EST
David Crane, CEO of the New Jersey-based power generator NRG Energy, didn’t plan on getting into the electricity business.
“When I was graduating law school, if you told me that I’d be spending most of my career in the electricity industry, I would have said, ‘Just shoot me now because that is so how I don’t want to spend my life,’ ” Crane told The Hill recently in a wide-ranging interview.
But Crane has a plan — and it’s an unusual one. For Crane, the future of energy in the United States lies in two sources that many in the industry have written off entirely: solar and nuclear power.
It’s an unlikely mix, and Crane will be the first to admit that the company’s efforts don’t always win him favor in the environmental community, which tends to favor the idea of solar but has been largely resistant to nuclear power.
“We’re the big crossover people because, right now, we’re on path to be the biggest solar power company in the country and we’re trying to build a new nuclear plant,” Crane said. “So either environmentalists like us or they hate us.”
Electricity generation must move to zero and low-emissions power, Crane said, and solar and nuclear fit the bill. It’s a message he’s been touting for years during trips to Washington to advocate for climate change legislation.
These days, he’s found an ally in the administration, which largely agrees with his views. President Obama, in his State of the Union address, outlined a broad plan to transition the country’s electricity portfolio to low-emissions sources. The plan, which is being fleshed out by the White House and key lawmakers, would require that 80 percent of the country’s electricity come from sources like wind, solar, nuclear, natural gas and coal with carbon capture technology.
That plan sounds great to Crane, who has been pushing for an electricity mandate for years. But he has his own twist on the proposal. Crane is calling on the administration to implement a renewable electricity standard (RES), which mandates use of renewable energy like wind and solar, from 2015 to 2025. Then, in 2025, the RES will transition to a broad clean energy standard that includes renewables and low-carbon sources like nuclear, natural gas and coal with technology to reduce emissions.
Crane, echoing the concerns of many lawmakers, said it’s important to structure the standards from a regional perspective because different regions have different energy portfolios.
“I think the thing that’s kept the power industry from supporting those standards is that it was always one region of the country or another was disadvantaged,” he said. “If you do it right, I think you give every region a chance to comply.”
But Crane is concerned that the new House Republican majority will oppose such efforts. “Everybody right now is sort of talking dogmatically about basic principles like not liking market mandates,” he said. “But if you want to espouse a free-market philosophy, and you don’t want the government to get involved, the only thing our country would build would be natural gas-fired plants.”
While NRG supports natural gas and operates a number of natural-gas plants, Crane said the fossil fuel does not have low enough emissions to significantly reduce greenhouse gas emissions on its own.
“If you believe the goal that has been articulated by the world’s scientists of reducing carbon emissions by 80 percent by 2050, you don’t have to be a math major to know that cutting the carbon emissions of the electric sector in half doesn’t get you there,” he said. “You pretty much have to go to zero.”
Though NRG operates coal-fired power plants, Crane said they are getting old and that companies need to figure out whether to retrofit them or move on to new energy sources.
“Certainly you can life-extend them, but I don’t think that the plants that our company has now or any of the plants that any company has now are going to be running in 2050,” he said. “And since we’re building assets now that are going to go for 60 years, we have to be deciding as a company, as an industry and as a people: What do we want to build, and what are we solving for?”
At the end of the day, Crane said it’s important for any power generator to have a diverse portfolio. That’s why his company operates wind, solar, natural gas and coal plants, and is also hoping to build nuclear plants. In 2006, NRG filed the first licensing application with the Nuclear Regulatory Commission in decades.
Crane learned much of what he knows about the power sector while running a British power company called International Power from 2000 to 2003. During his tenure at the company, Europe began seriously debating how to reduce greenhouse gas emissions.
But it wasn’t until he returned to the United States and took over as CEO of NRG in 2003 that he began to really think about the implications of climate change for the electricity sector.
“I’m a slow learner — I didn’t initially appreciate that carbon was a completely different type of pollutant,” he said. “I don’t know whether that was just denial or what.”
Crane had a lot to deal with when he took over. “This company, when I took it over, was just coming out of bankruptcy and there were a lot of things to worry about other than just environmental issues,” he said.
But, as the company’s financial situation improved, Crane, on the advice of many in the company, began to see climate change as an issue that could help define NRG in the future.
“Maybe it was just that moment in time that I had time to steady the ship and I had time to focus on it,” he said. “It was really an epiphany. I decided that we have to radically rethink the way we do this going forward.”