Cover Story: ... what is Southern Co. going to do about it?
Not too much too soon.</
For half a century, the energy giant has powered four Southeastern states largely by burning coal. Meanwhile, challenge after environmental challenge has been tossed at Southern’s coal plants. First, there was acid rain. Then, smog in metro Atlanta. Then, toxins, soot and, finally, mercury.
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Sometimes, sticking with coal has required Southern to spend tens of millions of dollars on pollution controls, process improvements and capacity upgrades. Overall, the company says it’s spent $6 billion on reducing pollutants.</
Other times, Southern tapped into its deep political connections — born from some of corporate America’s heaviest campaign contributions and lobbying expenditures — to convince Congress or the U.S. Environmental Protection Agency or the White House to ease up on the regulations.</
Through it all, the company has chosen to stay with its favored fossil. And why not? Coal’s cheap and plentiful. The infrastructure for burning it is already there. And other options are either expensive or technically challenging — or both.</
Seventy-one percent of Southern Co.’s power generation now comes from coal. Georgia Power and three corporate siblings in the Southern family operate 21 coal-fired plants that generate 200 billion kilowatt hours a year. As corporate assets, the plants are valued in the billions of dollars.</
Over the next decade, however, Southern’s marriage to coal might face its biggest challenge. Carbon dioxide — coal’s top byproduct and the main greenhouse gas contributed by humans — is still completely unregulated. If it heats the globe to the extent scientists say it will, electric utilities are likely finally to face pressure to shift away from fossil fuels.</
Southern insists that’s a “long-term” (read: not urgent) problem, well under control within the company’s current strategy.</
“It’s not a burden, it’s our business,” Georgia Power spokeswoman Lolita Jackson says of coal. “We do what we have to do to reduce emissions and will continue to do so.”</
But many environmentalists and some energy experts say Southern’s underplaying the dramatic impact global warming may have on its operations.</
“Having that high a reliance on coal can put them at a competitive disadvantage very quickly if some kind of regulation is passed, which I think is likely to happen,” says Jim Grode, staff attorney at the Southern Environmental Law Center. “I don’t think they’re doing enough to reduce the need for all that coal-fired capacity.”</
While the company takes credit for voluntarily “avoiding or reducing” carbon dioxide emissions by more than 100 million tons since 1994, its total carbon dioxide emissions have risen steeply over the same period — from about 110 million tons to more than 148 million tons.</
“You have to keep in mind that [power] generation has gone up,” company spokeswoman Lynn Wallace points out. “In the Southeast, demand is higher than any other region in the country. As demand goes up, emissions go up. But we are addressing it.”</
Driven by shareholder pressure, Southern began in 2004 to issue annual reports on climate change’s potential impact on the company’s bottom line. The 2005 report stated that the company “has had a comprehensive program of engagement in activities related to the climate change issue and CO2 emissions for more than a decade.”</
But the report hardly makes it seem as if the company considers global warming a priority: “About 20 people — engineers, chemists, economists and policy experts” of Southern’s 25,000 employees are “involved” in a “comprehensive program of engagement activities” on climate change and carbon dioxide, the report says.
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There is one alternative to fossil fuel in which Southern has sunk a significant investment: nuclear power. The company already has three nuclear plants — Farley, Hatch and Vogtle — that generate 22.5 percent of the power in Georgia and Alabama. And last year, Georgia Power laid some of the regulatory groundwork for new units at Vogtle, near Waynesboro.</
While the country is warming up to nuclear power after 30 years of awkward silence, atom-smashing still has its own baggage, from waste disposal to finances to terrorism. Environmentalists aren’t about to let it succeed coal without a fight.
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Meanwhile, Southern has begun to tinker with other alternatives as well. In concert with an Orlando utility, the company’s building a coal-gasification plant, which is supposed to burn more cleanly. It’s planning to generate electricity at a south DeKalb County landfill by burning methane, which otherwise would waft into the upper atmosphere as a greenhouse gas. In some coal-fired plants, it’s using switchgrass, wood chips and other “biomass” as supplements to lighten the load of carbon. It threw in on a major Georgia Tech study of wind power off the Georgia coast.</
And three subsidiaries — Georgia Power, Alabama Power and Mississippi Power — have “green energy” programs for customers who want to spend extra to fund renewable energy initiatives.</
But compared to the energy sector as a whole, the company’s commitment to alternative techniques has been modest. Leonard Haynes, Southern’s executive vice president in charge of such alternatives, says that when it comes to renewable energy, the company is putting its main effort into biomass while “focusing on finding niche opportunities for wind and solar.”</
“The best thing to understand,” Haynes says, “is that the opportunities for renewables in the Southeast ... are not as great as in other areas of the country.”</
The unhurried approach to alternative energy shouldn’t be surprising. It reflects Southern’s skepticism on the urgency of global warming.</
The company has found itself within a shrinking circle in corporate America that refuses to acknowledge what most scientists now agree is true: Fossil fuels are contributing to global warming.</
“Enough is known about the science and environmental impacts of climate change for us to take actions to address its consequences,” says a report from American Electric Power, based in Columbus, Ohio. AEP, the nation’s largest power company and the top emitter of greenhouse gas pollution, argues that a tax on carbon (something Southern vehemently opposes) would create “significant but manageable costs — provided that the program was efficiently designed.”</
Charlotte-based Duke Energy, the eighth-largest electricity provider and a big greenhouse emitter, has been one of the clearest advocates of carbon regulation. Chairman Paul Anderson told Newsweek in July: “It’s in the best interests of Duke to get out ahead of the problem as opposed to waiting.
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“It’s the same as when a lot of people in the industry were opposed to doing something about sulfur dioxide,” Anderson said. “When the Great Lakes were dying, people drug their feet. But when we all got on the bandwagon and decided to do something, we eliminated the [sulfur dioxide] in the atmosphere without an economic backlash. It’s amazing how easy it is to resolve these problems.”</
Duke stated in its shareholder report that it wants federal regulation of greenhouse gases to avoid “a patchwork of inconsistent state or local regulations to complicate and increase the cost of compliance.”</
“We’re hoping that by taking a leadership role, others will follow,” says Duke spokeswoman Elizabeth Bennett.</
Southern’s Wallace says she doesn’t know why Duke advocates such legislation. “I can only tell you where we stand. I wouldn’t even want to speculate on why Duke is doing what they’re doing.”</
And where does Southern Co. stand on, say, a carbon tax?</
Let’s not be hasty, company officials answer.</
“Southern Co. is going to work to meet or exceed any federal regulation that comes our way,” Wallace says. “But because we believe climate change is a long-term, global problem, we feel the best solution is a voluntary, technology-based approach. The nation should put its energy and resources into developing new technologies, not subjecting businesses and industries and, ultimately, American consumers to mandatory taxes.”</
Such genteel intractibility has served Southern’s interests on other environmental issues.</
Less than a month after the Bush administration took office, Southern and other utilities appealed to the White House to get the EPA to drop a lawsuit against the utilities. The EPA had alleged that Southern and nine other power companies were getting around a rule that required them to install pollution controls on old power plants as they aged. The utilities were pumping enormous amounts of money into overhauls of the old plants and claiming they were renovations, the EPA alleged.
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Some defendants went ahead and settled with the government. Southern fought the legal battle until 2003, when the administration decided to drop the lawsuit.</
Southern’s ace in the hole has long been its political influence. Former Republican National Committee Chairman (and current Mississippi governor) Haley Barbour served as one of the company’s lobbyists on the coal-plant lawsuit. The company has been the No. 2 federal campaign donor in the energy sector since 1990, according to the nonpartisan Center for Responsive Politics.</
And Southern’s employees and political action committees have been getting even more generous in recent years; contributions to federal candidates increased 264 percent between the 1994 and 2004 election cycles. Lobbying expenses leapt 343 percent from 2000 to 2005, according to data compiled by the center.</
Not surprisingly, many of Southern’s top political beneficiaries hold positions on key congressional committees where legislation affecting energy generation and emissions originates. Southern also donated more than $192,000 to George W. Bush’s 2004 presidential campaign.</
Certainly, power companies have been dealing with other issues over the last few years. But it’s worth noting that Bush and Southern’s other beneficiaries are among the stiffest foes of mandatory limits on greenhouse gas emissions.</
As temperatures rise, however, and a long-projected litany of maladies begins to spread — bigger hurricanes, hotter heatwaves, longer droughts, disappearing wildlife — greenhouse emissions are becoming more and more difficult to dismiss as a serious issue.</
A push for carbon reductions (in this case, pertaining only to vehicles) could come late this fall, when the Supreme Court takes up a 2003 lawsuit against the EPA. The plaintiffs, which include 12 states, contend both that carbon dioxide is an air pollutant under the Clean Air Act and that the EPA should regulate it as such.</
The case doesn’t directly address carbon dioxide from power plants, which accounts for 40 percent of the emissions. But a Supreme Court precedent that defines carbon dioxide as an air pollutant would send shock waves through the carbon-consuming community.</
“It’s one of the most important environmental cases ever before the Supreme Court,” says Emily Figdor of the U.S. Public Interest Research Group, which is among those suing the EPA. “It could ultimately determine what steps are taken to address global warming.”</
And the more a utility is reliant on coal, many energy experts warn, the more difficult its day of reckoning.</
“There are companies that never budge no matter what,” when their industry must face up to reforms, says Jeremy Rifkin, president of the Foundation on Economic Trends and a prominent advocate for hydrogen-based energy. “What happens is they become anachronisms, and they go out of business.”</
Southern’s been a bit vague in acknowledging that possibility. In its climate change report to shareholders, the company said, “Compliance with possible additional federal or state legislation related to global climate change ... could significantly affect” the company.</
But a portion of the report did hint at the daunting challenge Southern might face if the country seriously tried to cut greenhouse gases:</
“Because there is no technology that can economically be added to an existing fossil-fuel-fired power plant to remove CO2, and because burning fossil fuels is the basis not only of electricity generation — but also of modern transportation and society’s way of life — the climate change issue requires more comprehensive energy and economic approaches. Indeed, addressing climate change could require a fundamental shift in the way in which society makes and uses energy.”
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