Ed. Note: In mid-2019, MasterResource published a post on a notable political capitalist in the history of the energy industry, the late James E. Rogers, longtime CEO of Duke Energy. With that company’s rolling blackouts (“load shedding”) over Christmas weekend for a half-million customers “for the first time in the utility’s history“, it is worth remembering the damage done to free markets and electric reliability by the political track chosen by one executive. (The post is reproduced below with minor edits.)
At 41 [in 1988], [James Rogers] was named CEO of PSI Energy Inc., a small, financially troubled Indiana utility. Breaking ranks with others in the electric-power industry, he supported legislation putting caps on sulfur-dioxide emissions. “Some of my guys thought I was drinking the environmental Kool-Aid,” he said later. “But I said, ‘Let’s shape this, let’s make some money.’”
– James Hagerty, “Jim Rogers, Head of a Coal-Burning Utility, Crusaded Against Global Warming.” Wall Street Journal, December 20, 2018.
“I made money on sulfur [dioxide], and I’ll make money on carbon [dioxide].”
– James Rogers. Quoted in Eric Pooley, “The Smooth-Talking King of Coal–and Climate Change.” Bloomberg Businessweek, June 3, 2010.
James Eugene “Jim” Rogers Jr. (1947–2018) was a notable political capitalist (rent seeker) of the late 20th/early 21st century electricity market. He did his work after leaving Enron Corp in 1988 to head a Midwest electric utility, Public Service of Indiana, later Cinergy (1994–2006), then Duke Energy (2006–13).
At all stops as CEO, he broke from the electric industry to not debate but accept the anti-fossil-fuel narrative of mainstream, DC-based environmental groups. In this framework, he felt he could make more money for shareholders and thus himself by cutting deals with environmentalists and regulators. The [longer term] best interest of ratepayers and the free market as an ideal were not in this equation.
Cap-and-Trade: Credits for Coal Reductions
“Enron as a market maker for emissions was more interested in cap-and-trade policy than in a carbon tax,” I noted in Enron Ascending (pp. 331–32).
Enron-ex Jim Rogers, who was eager to convert his electricity units from coal to gas to receive CO2 credits to sell, was even more partial to cap and trade. Rogers, like [Ken] Lay, was waging civil war with his fellow electric utility executives, using Lay’s political-capitalism model.
Still, the risk that Rogers took was that cap-and-trade would not become law (it failed in 2010) or that if the law, carbon credits would be depreciated by regulatory change (they were not a property right).
As such, Rogers brought Enron’s political model re natural gas (versus coal and oil) to the electricity industry. The upshot was that Ken Lay and James Rogers, not only BP’s John Browne, advanced the global warming agenda in the 1980s and 1990s that resulted in Obama’s aggressive climate policy and, today, the Green New Deal. [1]
Before he got to the CO2 issue, Rogers was active on the sulfur dioxide (acid rain) front: As I noted in Enron Ascending (p. 323):
Instead of SO2 trading, coal interests sought a national fee on all electricity sales (including gas-generated sales) to fund scrubbers. Enron-ex Jim Rogers, now head of the coal-heavy Public Service Company of Indiana (PSI), argued for a “cost sharing mechanism” to help underwrite five scrubbers (each costing in excess of $200 million) that his coal plants needed to comply with what he called the “Bush bill.” Without such help, PSI’s rates would rise around 20 percent for the anticipated two-thirds-plus reduction in SO2 emissions.
Quotations
James Rogers was politically correct. The mainstream press adored the folksy Rogers who was bucking his peers on the climate issue–and the need, in time, for forced energy transformation. Yes, Rogers was making a deal with the devil, but he could claim to be playing defense. But he hurt the entire fossil fuel industry by playing the political game to start a civil war in the power industry. The Baptists needed this Bootlegger.
Some quotations establishing the factual base of Political Rogers follow:
“I was the first CEO in the electric utility industry to speak about the changes needed in the face of climate change.”
“While I was CEO, Duke Energy was recognized as a leader in sustainability. In 2010 and 2011, the company was named to the elite Dow Jones Sustainability World Index; it has been a part of the Dow Jones Sustainability Index for North America for the past nine years.”
“I’ve long advocated investing in energy efficiency and renewables such as solar and wind; modernizing the electric infrastructure; and pursuing advanced technologies and nuclear energy to grow the economy and transition to a low-carbon future.”
“While at Duke Energy, I invested four billion dollars in wind and solar assets. I served as vice chairman of the World Business Council for Sustainable Development, and was a founding member of the U.S. Climate Action Partnership, a collaboration of leading businesses and environmental groups that came together to call on the federal government to enact legislation to reduce greenhouse gas emissions.”
“I was chairman of the Edison Electric Institute (EEI) when it changed its position to support federal climate legislation in 2009.”
“… [I] was the founding chairman of the Institute for Electric Efficiency, former co-chair of the Alliance to Save Energy and past co-chair of the National Action Plan for Energy Efficiency.”
His affiliations included:
New York Times on Rogers
James E. Rogers, who as chief executive of Duke Energy emerged as one of the industry’s most passionate supporters of sustainable energy, died on Dec. 17 in Louisville, Ky. He was 71.
But Mr. Rogers proved to be an anomaly among utility chiefs, who were often quick to dismiss green activists. He not only held extensive meetings and talks with the company’s environmental critics; he also went several steps further, actively lobbying Washington for stricter regulation of greenhouse gases.
During his tenure, Duke Energy began to reduce its own carbon emissions and made significant investments in renewable energy projects.
In 1988 he was offered the job of turning around an Indiana electrical utility, PSI Energy, which was teetering on the verge of bankruptcy after environmentalists forced it to halt the construction of a nuclear plant, resulting in a $2.7 billion write-off. Rather than dismiss the environmentalists, Mr. Rogers met with them to find a way to get the company on firmer ground. In 1994, PSI merged with Cincinnati Gas & Electric, creating the Cinergy Corporation, with Mr. Rogers as chairman and chief executive.
Throughout the 1990s, as concerns about climate change entered the public debate, Mr. Rogers began meeting with climate experts. In 2001, he shocked a room of fellow energy executives when he declared that the industry should work to pass a federal carbon cap, a law that would strictly limit the amount of carbon dioxide produced in the United States and impose enormous costs on any company that releases more carbon than its assigned limit.
“They were stunned,” Ralph Cavanagh, an energy program director at the Natural Resources Defense Council who was present at the meeting, said in a 2008 New York Times Magazine piece about Mr. Rogers titled “A Green Coal Baron?” “That was the first time I had heard a major energy executive say anything like this. But because he was chairman of their energy committee, he wasn’t just a flaky maverick.”
– Julie Creswell, “James Rogers, 71, Dies; Utility Chief and Clean Energy Advocate.” New York Times, December 21, 2018.
Washington Post on Rogers
Jim Rogers, the former chief executive of Duke Energy who became one of the first prominent energy industry officials to recognize the threat of climate change and argue that it should be addressed through federal policy, died Dec. 17 at a hospital in Louisville, where he was visiting family. He was 71.
Mr. Rogers, a lawyer by training and a policy person at heart ….
Seeing tougher restrictions on coal as inevitable, Mr. Rogers broke taboos in the utility industry and became a supporter of a cap-and-trade approach that President Barack Obama favored to reduce carbon emissions. During negotiations over the cap-and-trade bill that ultimately passed the House but failed in the Senate, Mr. Rogers frequently told audiences and reporters that “if we are not at the table, we will be on the menu, and I intend to be at the table.”
Jason Bordoff, founding director of Columbia University’s global energy policy center and former National Security Council senior director for energy and climate under Obama, said that Mr. Rogers “saw the potential for clean electricity sources like renewables earlier than many of his peers.”
Bordoff also said that Mr. Rogers was “a key member of the U.S. Climate Action Partnership that developed a template for the climate legislation passed by the House of Representatives.”
Since Mr. Rogers became its chief executive, Duke Energy has invested more than $4 billion on wind and solar power projects.
But Mr. Rogers also came under criticism from environmental groups because he favored a gradual transition away from coal. They also contended that he had not moved fast enough to shut down coal plants or to clean up the coal ash waste that had built up over decades. That corporate legacy surfaced recently after the rains from Hurricane Florence led to a Duke coal ash facility overflowing its banks and into the Cape Fear River.
Climate change hung over his career at Duke. “I believe in global warming,” he told comedian Stephen Colbert in a 2009 interview. But Mr. Rogers still said that he favored a search for ways to extract carbon dioxide from the exhaust of coal plants, a costly technology that is still being researched. He told Colbert he hoped to “decarbonize” the fleet of coal plants, not junk it.
Mr. Rogers said he read extensively about climate change, including Al Gore’s book “An Inconvenient Truth.” “It’s not like I woke up one morning and felt God spoke to me,” he said in an interview in 2007. “It took years of reading and thinking about it.”
Though a supporter of nuclear power, Mr. Rogers also said it was too expensive to “bet the farm” on it. He compared the site of an abandoned nuclear plant with the set of a “Mad Max” movie.
Mr. Rogers was at times openly critical of congressional Republicans for defeating the cap-and-trade plan that was modeled on a similar plan President George H.W. Bush used to slash sulfur dioxide emissions. Mr. Rogers, who as chief executive of PSI Energy had supported Bush’s plan, was convinced later that the same approach would cut carbon dioxide emissions.
In the 2011 Post interview, Mr. Rogers said that “the only approach to address the carbon issue [is one] that allows us to successfully reduce emissions in a way that is fair and allows us to transition to a [less carbon-intensive] world. Unfortunately, the people who invented it have demonized it — the Republicans. When they created it, they called it the greatest use of market forces to solve the problems of the world.”
By that time, especially with the surge of cheap shale gas, Duke sped up the retirement of coal plants.
Today, one of the final new coal plants to go online in the United States is named for Mr. Rogers. Because it is relatively new, Duke doesn’t expect to close it until 2048.
– Steven Mufson, “Jim Rogers, Duke Energy Executive who Promoted Clean Energy, Dies at 71.” Washington Post, December 21, 2018.
Jim Rogers liked to be known as an environmentalist leading a crusade against global warming. He also was the CEO of the electric-power utility Duke Energy Corp. , one of the nation’s largest coal burners. The apparent contradiction got him an interview on Stephen Colbert’s talk show in 2009.
The comedian said he was confused by Mr. Rogers’s PR. “I’d love to call myself a vegetarian because I’m having broccoli with my veal,” Mr. Colbert said. “Is that the same deal?”
Though Mr. Rogers laughed along with the jokes, he was earnest in his role as one of the most outspoken energy industry leaders on finding ways to reduce emissions of carbon dioxide—notably by transitioning to more use of nuclear, solar and wind power. Some environmentalists said he didn’t do enough to live up to his talk.
In 2013, as he prepared to retire from Duke, Mr. Rogers told the Charlotte Observer that he sometimes found himself in an “unenviable place where people who don’t want any environmental legislation don’t like you, and where people who don’t think you’ve done enough, the environmentalists, don’t like you. But compromise is the way forward.”
Over the next five years, he pursued his environmental causes and wrote a book, “Lighting the World,” suggesting ways to bring reliable electric power to the poorest parts of the world, without burning more coal.
Tougher restrictions on coal were inevitable, Mr. Rogers believed, so he aimed to help steer the transition—and make money out of it. “If we are not at the table, we will be on the menu,” he said.
The espresso-fueled CEO spoke of “building a bridge to a low-carbon world” and was optimistic that technological advances would make that possible. He mastered the art of talking about energy policy without being boring. “He was a walking sound bite,” said Roberta Bowman, a former Duke Energy executive.
At 41, he was named CEO of PSI Energy Inc., a small, financially troubled Indiana utility. Breaking ranks with others in the electric-power industry, he supported legislation putting caps on sulfur-dioxide emissions. “Some of my guys thought I was drinking the environmental Kool-Aid,” he said later. “But I said, ‘Let’s shape this, let’s make some money.’”
Through a series of mergers, he became CEO of Duke Energy in 2006. In 2012, Duke acquired Progress Energy Inc. for $26 billion. The plan was for Bill Johnson, the head of Progress Energy, to become CEO of Duke. Hours after the merger was completed, though, Duke’s board ousted Mr. Johnson and named Mr. Rogers CEO of the combined company. Regulators launched an investigation of the boardroom coup. Several months later, Mr. Rogers agreed to retire by the end of 2013 as part of a settlement with regulators.
His schedule remained packed. While still living in Charlotte, N.C., he taught energy courses at Duke University and served as vice chair of the Nature Conservancy, a global environmental group. Mr. Rogers also campaigned to bring electricity to sub-Saharan Africa, India and other impoverished regions. He helped found the Global BrightLight Foundation to distribute solar lanterns and cellphone chargers in poor countries.
A young man in a Kenyan village had told him of having to walk three hours to reach a charging station for his cellphone. That spurred Mr. Rogers’s desire to help, he wrote, adding: “I can barely stand it when I check into a hotel and there’s not an outlet conveniently placed next to my bed.”
– James Hagerty, “Jim Rogers, Head of a Coal-Burning Utility, Crusaded Against Global Warming.” Wall Street Journal, December 20, 2018.
Appendix A: Criticism from Environmentalists
“But Mr. Rogers also came under criticism from environmental groups because he favored a gradual transition away from coal. They also contended that he had not moved fast enough to shut down coal plants or to clean up the coal ash waste that had built up over decades. That corporate legacy surfaced recently after the rains from Hurricane Florence led to a Duke coal ash facility overflowing its banks and into the Cape Fear River.”(Washington Post)
Rogers stands out in the coal (and broader energy) industry as a CEO who openly acknowledges the threat of climate change. Despite this, his company “is building two new coal plants.” Rogers also talks much about the need to develop carbon capture and sequestration (CCS) technology, although Duke Energy is not spending any money on such expensive prospects, and generates only 1.5% of its electricity from wind projects. At the same time, Rogers served on the board of the staunchly anti-environmentalist U.S. Chamber of Commerce. Rogers left the US Chamber’s Board in April 2010, although apparently because of terms limits. (Polluter Watch)
Rogers pulled Duke out of the National Association of Manufacturers and the American Coalition for Clean Coal Electricity. Duke claims the motivation for these withdrawals came from the lack of support for climate legislation among these groups. While this appears to be intentional public support for climate legislation, it is important to note that the House climate bill included massive provisions for the coal industry, including emissions exemptions on the two new coal plants Duke is currently reconstructing (Cliffside and Edwardsport). (Polluter Watch)
Duke Energy also faced accusations of double-speak by Greenpeace in December 2011, after the non-profit (and managing organization of this site) highlighted Duke’s conflicting behavior regarding the EPA’s Mercury and Air Toxics Standards or “Mercury Rule”. Although Rogers had already indicated that Duke’s fleet was prepared to comply with the regulation, Duke was apparently a member of the Electric Reliability Coordinating Council (ERCC), a utility industry group that had actively worked “to delay and weaken much-needed federal mercury protections.” (Polluter Watch)
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Tribute to Rogers from the Aspen Institute
On behalf of the entire Aspen Institute and the Energy and Environment Program, we are saddened to hear about the passing of Jim Rogers, former Duke Energy CEO.
As a leader at both Duke Energy and Cinergy, Jim led the way in the areas of renewable energy and sustainability and had been part of the Aspen family for decades, bringing a wealth of knowledge and experience to the Aspen Energy program.
We are grateful to Jim for supporting our program through the years and allowing the Aspen Energy program to expand its leadership in policy by endowing the James E. Rogers Energy Fellowship.
Even after his retirement from Duke Energy, he continued his work by publishing the book “Lighting the World” about energy development in the developing world….
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Postnote: Regarding “Lighting the World: Transforming our Energy Future by Bringing Electricity to Everyone” (Rogers: 2015), the problem is that energy in the developing world is constrained and challenged by climate alarmism where inferior energies are promoted in place of mass, superior ones. MasterResource posts on this moral issue, include: