Setting precedent, Exelon plans a huge cut in emissions

Matthew Wald of the NY Times has a story about Exelon, a large utility and operator of nuclear reactors. Given the urgency of reducing carbon emissions, nuclear power must be an option on the table.


Exelon, the electric company based in Chicago, will promise on Tuesday to cut greenhouse gas emissions by 2020 by an amount larger than its total emissions in 2008, in a bid to shape the debate on carbon dioxide rules and to get a jump on compliance.

Many academic researchers and nonprofit groups have made proposals for cutting emissions, but Exelon’s will be an unusual public presentation devised by a company that hopes to make money in the process. The plan relies heavily on conservation and having existing nuclear plants produce more power, but it includes smaller contributions from wind and sun energy.

The reductions in greenhouse gas emissions will come by making Exelon’s operations more efficient, cutting the energy use of its electricity customers and building low-carbon generators that would displace older, less-efficient plants, many operated by rivals, the company said.

One reason for the pledge is to seek credit for actions that cut emissions of other companies, said Exelon’s chairman and chief executive, John W. Rowe.

For example, Exelon plans to help the factories that it serves do the same work with less electricity so that some generating stations, owned by Exelon or others, will burn less fuel. Exelon also wants to build generating stations that use natural gas more efficiently to replace coal plants in the Midwest and East — probably owned by other companies — that emit far more carbon dioxide.

“Dealing with greenhouse gases, while essential, is very costly,” Mr. Rowe said. “If you have an adequate way of accounting for offsets and displacements, we think we can offset our carbon footprint at a reasonable price.”

Some components of the plan, like trying to bolster the output of its nuclear plants, are moves that Exelon would have taken anyway, Mr. Rowe acknowledged. One major step is made financially feasible by changes in the fuel markets: the price of natural gas is now so high that efficient generating stations can be built profitably to replace older plants.

The plan’s biggest components are cutting customers’ use of energy by improving efficiency and increasing the output of existing reactors. Each of those moves would contribute 23 percent to the carbon reductions.

By the company’s calculation, some of those steps save money on a net basis. Some of the improvements would cut costs up to $70 a ton of carbon dioxide saved after expenses. Some of the nuclear changes would earn $60 a ton net of expenses.

Operators of most of the nation’s 103 commercial nuclear reactors have raised output, usually by making small changes to pumps and valves and performing engineering analyses to show that they can safely produce more heat — akin to raising a highway speed limit.

Exelon is counting on this source for about 16 percent of the savings. But it holds open the possibility that it could exceed its goal, and more than half the planned greenhouse gas reductions use this method.

But the plan is remarkable for what it does not emphasize. Despite a national focus on solar and wind power, discussions in Congress about renewed tax credits for investments in windmills and solar systems and debate over a federal requirement for a minimum level of “renewable” energy, Exelon calls for relatively little.

New “renewable” energy, including plants that run on landfill gas or wood or crop waste that can be burned, makes up just 7 percent of the carbon savings. In the region that the company serves in Pennsylvania, where state law requires electricity distributors to buy “renewable energy credits,” it will buy the equivalent of another 6.5 percent.

Sequestering the carbon dioxide from coal-burning power plants is not a technology that Exelon thinks will be available by 2020.

In contrast, the plan calls for improving the efficiency of its fossil-powered plants. It also calls for cutting the release of sulfur hexafluoride, a gas that is used to insulate circuit breakers but which is 24,000 times more potent for global warming than carbon dioxide, molecule for molecule.

“This is a mix of things that any sensible person would do, and of things that you only can economically do if the cost of climate are incorporated into the marketplace,” said Mr. Rowe, referring to carbon taxes or limits that require emissions trading.

Exelon’s carbon footprint is relatively small, because it has many nuclear reactors, he said.