GE Chairman Urges Pursuit of Cheap, Green Energy

Stephen DeAngelis

June 24, 2008

For years people have been looking for technological breakthroughs that would make clean alternative energy sources competitive with electricity produced by coal and natural gas powered power plants. Jeff Immelt, chairman and CEO of General Electric, has declared that “much of the technology to make energy generation cleaner and more efficient is available now.” [“GE calls for cheaper, cleaner energy,” by Steve Hargreaves, CNNMoney.com, 21 April 2008] The rub, according to Immelt, is that those technologies remain costly. He has encouraged energy sector executives to invest more heavily in research and development so that the costs of implementing existing technologies can be decreased.

“A lot of the technology is already there,” Immelt told a crowd of electric utility executives at an industry meeting sponsored by the Edison Electric Institute, a utility trade group. “This is a business model issue, not a technical issue. Our job is to make them cheaper.”

Immelt, of course, has a vested interest in having others spend money on R&D in the energy industry. General Electric “makes a variety of energy products – from light bulbs and appliances to coal and nuclear power plants – many of them marketed to utilities.” I’m sure GE will be happy to assist any innovator to get an improved technology to market, especially if they can get a piece of the action. In addition to calling for more R&D, Immelt has also been part of the group urging the U.S. government to regulate greenhouse gas emissions. Hargreaves reports:

“[GE] is part of a consortium of manufacturers and utilities urging lawmakers to pass nationwide restrictions on greenhouse gasses. The Bush administration has so far resisted immediate mandatory restrictions, largely on the grounds that waiting for better, cheaper technology would yield better results. [Both] presidential candidates support mandatory restrictions.”

If you’re living in the U.S., you would have to have been living in a cave not to have seen, heard, or read about General Electric’s “ecomagination” advertising campaign. Immelt sees a big future in engaging in “green business” because the sense of urgency and emergence of technologies seems to be coming together at just the right time. Hargreaves notes:

“The climate debate comes as the world is facing a surge in energy demand and a simultaneous desire to cut greenhouse gas emissions. Energy consumption globally is estimated to grow by 50% over the next few decades, while scientists say the world needs to at least halve its greenhouse gas emissions over the same time period if it is to avoid the worst effects of global warming.”

Immelt is concerned that inertia could win out over the daunting but necessary task of upgrading infrastructure in the near term.

“In facing this challenge, Immelt urged utility executives to keep all technologies on the table – from solar and wind to nuclear and cleaner coal – and to not let new technologies languish at the expense of maintaining the status-quo. He said low oil and gas prices historically led to massive underinvestment in the sector, with energy companies spending only about 2% of their revenue on research and development. By way of comparison, healthcare companies have invested about 8% of their sales on R&D, Immelt said. (GE also is a big player in the medical devices industry.) But with high energy prices now soaring, Immelt believes investments in energy will follow suit. ‘There’s plenty of incentive now to drive technology into the industry,’ he said.”

In concluding his remarks, Immelt observed that many of the green technologies that will emerge will likely be invented and proved elsewhere. In a globalized world, there is nothing wrong with that. He also predicted a bright and growing future for the green sector and urged utility companies to get on board.

“Immelt said GE is investing in a wide range of energy technologies. He specifically mentioned solar as one that has great potential. The cost of solar power should fall from 30 cents a kilowatt hour today to under 15 cents ‘in a relatively short time,’ he said. ‘That should open up a sweet spot for solar.’ By comparison, American consumers currently pay about 10 cents an hour on average for electricity, according to the Energy Information Administration. The U.S. utility industry will likely be a recipient of clean technologies developed outside the U.S., Immelt added, whether it be cleaner coal processes fine-tuned in China or renewable technology pioneered in Europe. But he encouraged the industry and U.S. government to take the lead in capping greenhouse gas emissions and developing clean sources of energy. ‘The time to act is now,’ he said. ‘When you lead in clean energy, you create jobs. This is a place the U.S. could lead.'”

In a year when the economy, energy prices, and job creation are dominating the presidential election agenda, Immelt’s message should be well-received by policymakers, workers, businesses, and environmentalists alike. Whether he’s listened to or not, he’s right about one thing — now is the time to act. In a New York Times op-ed piece, Verlyn Klinkenborg is worried that words are being used as a substitute for action [“Some Doubts Upon Entering a New Carboniferous Era,” 24 June 2008]. She writes:

“Has any phrase in the English language ever spread more quickly than ‘carbon footprint’? There are contenders — ‘hanging chad,’ for instance — but they don’t reflect the potential revolution in consciousness that carbon footprint suggests. After all, carbon footprint captures something we’ve never really had a simple phrase for before: the measurable totality of your environmental impact, or, to put it more simply, what your way of life actually costs the planet. … the phrase sounds conscientious. You feel as though you’re reducing global warming by saying it. Which is why advertisers are saying it everywhere. … Companies of every description have taken up the phrase. Wal-Mart announced last fall that it would ask its suppliers to assess and lower their carbon footprints, one way that Wal-Mart is trying to green itself. BP, the much-fined petroleum giant, has a carbon footprint calculator on its Web site, as well as a link to its conservative thinking on climate change. Consumers who wish to buy voluntary carbon offsets to compensate for the size of their personal carbon footprints are beginning to be able to do so close to home. Why not buy local carbon offsets at the farmers’ market along with your locally grown produce? The swiftness of this change in consciousness — and the linguistic change that goes with it — is staggering. And a little worrying. For one, it is vastly easier to find new words than it is to overturn old habits, and all too easy to mistake the ubiquity of the new carbon-speak for substantive change.”

Klinkenborg is calling for a little action to accompany all the talk. She has a point. In this political season in the U.S., politicians are supporting increased production of oil rather than encouraging voters to adopt conservation strategies. She concludes:

“What makes me uneasy is simply knowing how quickly humans adopt new phrases and how readily we confuse them with the reality — or the unreality — of our actions. The two things we seem to do most instinctively are manipulate language and create markets, and those two instincts converge when it comes to carbon footprints. Creating a market in moral carbon — offsets that counter our energy-rich lifestyle — feels a little like Rotisserie baseball, more il
lusion than reality. Don’t get me wrong. I’m not a climate-change skeptic. In fact, I believe that the idea of a carbon footprint is a little too glib, a little too soothing, a little too likely to persuade us that we can get out of this mess by an easy incrementalism. The same with carbon offsets, only more so. There is nothing trivial about grasping the idea that lies behind carbon footprints, trying to understand the scale of our consumption and its widespread environmental costs. Think about it properly, and it leads you to a profound critique of who we are and how we behave. Act on it, and you immediately see how carbonaceous our lives have become.”

We all learn from the time that we are toddlers that deeds follow thoughts. If that proves to be the case with “carbon footprinting,” then perhaps Klinkenborg is a bit premature in worrying that the world is becoming all talk and no action. If, however, politicians continue to stress increased oil production over conservation measures and that message gets them elected, Klinkenborg may just be right.