US power player backs EU-style carbon trading

In an interview with EURACTIV, John Krenicki, president and CEO of GE Energy, says that his company is already investing in clean technologies: “We’re investing in it, assuming that it will happen.”

John Krenicki
, Jr, is president & CEO of GE Energy

Why are you in Brussels today?

We met with the staff of Commissioners Verheugen and Dimas plus two permanent representations.

And the topics you discussed?

Next-generation technologies that are both efficient and cleaner. So we talked about renewables, we are in the wind business, we’ve been in Germany for several years now. We talked about clean coal a lot – coal gasification – and where that technology is going to go, not only in Europe but around the world.

Do you feel that the regulatory environment today is favourable to the uptake of these technologies? I mean, we know that they come at a higher price…

I think the regulatory environment is just one aspect of it, the other is direct government support, the funding of the technology. One of the things that we would strongly advocate is that Europe builds some of the demonstration projects, and there is discussion about building ten to twelve of the clean-coal projects. As with any of these technologies, wind being a good example, there would not be a wind business if it wasn’t for the government.

With clean coal, are you talking about carbon sequestration and storage, or other technologies?

Carbon sequestration and storage would be on top of coal gasification. So clearly, if you have coal gasification, doing sequestration and storage is an option. And it is an option that can be used immediately or ten years from now. This capability exists, that’s one of the advantages of the technology.

So what are the applications that you see for gasification technologies?

I think that there are really two; one is to gasify coal to produce feed- stocks for the chemical industry. The largest market in the world for that application is China, so we have a tremendous business in China providing feed stocks for chemicals and fertilisers. The second application, which is probably of more interest in Europe, is gasification to create a synthetic gas that would be a replacement for natural gas. So, to use the local coal reserves to make synthetic gas that you can burn in a very similar fashion to natural gas. This would be for electrical power generation.

Going back to regulatory environments for clean energy technologies, would you consider today that the environment is better in the US or Europe?

I would say that it is changing in both, not only in the US and Europe but also in Asia. What we’re seeing is two overriding drivers and this is a global phenomenon. One is energy security, so countries and people do not want to be dependent on any one fuel, because in the global world there is a lot of volatility, energy security is front and centre. And the second is cleaner and greener. So, higher efficiencies, more renewables and interest in nuclear power is coming back in many parts of the world.

And if you were to give examples that stand out in terms of regulatory differences between the EU and the US?

The US is clearer in its support, through the energy policy act of 2005, for nuclear energy and clean-coal, so they’ve made provisions to fund that last year. In Europe, the policy on carbon is clearer than it is in the US. That is an ongoing debate in the US in the political arena. Those two facts are crystal clear.

On carbon, you are aware that Europe has an emissions trading scheme in place (EU-ETS). Would you want something similar for the US? 

Our view is that something similar will happen, it may not be the same but our sense is that there will be some value associated with carbon in the future.

After 2012?

We’re going to have mid-term elections in the US shortly and then another election in two years, so we’ll leave that to the politicians.

Do you personally support an EU-ETS-like scheme for the US or not?

Yes, we think the drive to be more efficient and to be greener is something that we’re going to work with our customers to make sure that technology is available. So, we’re investing in it, assuming that it will happen.

Do you think that there will be ripple effects of EU-ETS in the US?

I would say a couple of things. GE is very much a European company, we have over 95,000 employees in Europe. So we’re operating factories here, we are serving customers. The second thing is that we are a technology provider, an equipment supplier, so we’re not necessarily operators of the plants themselves. So, we have to follow our customers’ needs, we have to stay contemporary. Clearly, the changes here in Europe are having an impact on the US and the rest of the world, there’s no doubt about it.

Many businesses in Europe complain about the emissions trading system because they say that it undermines their competitiveness globally. Do you think this is a valid argument?

I think that the devil’s in the detail on any of these schemes. But, if you look at the changes that have occurred in other aspects of the environment, such as water for example, I think that most of the changes have been for the good. Over the long-haul, we’ll work through the negatives and make them better.

But it does come at a price for Europe and therefore for the companies that you operate here in Europe as well. So, do you agree with calls from business organisations such as UNICE, which says “We don’t want an EU trading scheme, we want a global scheme.”?

We operate in the environment based on the rules. And I think that we have to be competitive in all of these geographies. But we think the drive to be more efficient makes us more competitive. So, again, we don’t see it as hampering our competitiveness.

We’re following our customers, we are living in an environment where they operate. In terms of the ETS, we operate very few installations in Europe that fall under the ETS, so we are not best-qualified to comment.

On a global basis, we agreed voluntarily to reduce our greenhouse gases without government mandate. So, GE has taken that commitment on, because we believe it’s the right thing to do.

On ETS though, what we would like to see happening is technologies such as carbon sequestration and storage being recognised under ETS, because this would actually help the development of these technologies and the putting into market of these technologies. This is important to improve the system, to make it more alive with new technologies.

If I had a wish-list of what I’d like to see happening around the world on a governmental basis, it would be a kind of ten-year commitment, similar to the space programme, to invest in new technologies that are cleaner and more efficient to drive energy security. But I think that needs to be a long-term commitment, not year by year.

Do you think that’s feasible? In what framework would you see that happening, under the UNFCCC for example?

I think its going to have to happen on a country by country basis: EU, US, China. But this commitment to energy security, I think, is fundamental to the well-being of billions of people.

Back to clean energy technologies, your main focus is on clean coal?

No, we are leading players in renewables – we are one of the two largest wind manufacturers in the world, we are one of the three largest nuclear manufacturers in the world. On clean coal, absolutely, very high interest, but we’re not limited to one technology.

Which do you see as the most promising in terms of new business opportunities in Europe or elsewhere?

They’re all promising but they’ll come in different time horizons. Renewables is more of a “now” scenario. Clean coal is probably more medium term and nuclear, just looking at the time to construct a plant, is ten years plus. 

As CO2 has value, nuclear is the largest or most significant option to generate zero CO2 electricity.

People have criticised nuclear, saying it is only feasible because of the massive support by government whereas renewables do not receive that level of support.

I think renewables receive a lot of government support.

But do you think they’re comparable?

I just think they’re different so both require support and a balanced approach. But the nuclear capacity is significant and one of the issues with renewables is that they require redundant capacity for when the wind is not blowing. So it is very difficult to singularly pick a strategy. I think this concept of balancing and diversity is critical to a competitive economy. The other thing with nuclear is that once installed, it is the lowest cost to run and emits no CO2, so it’s a real viable option.

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