Mark Vachon

How’s GE’s ecomagination  going?

I put that question today to Mark Vachon, who is vice president for ecomagination at GE. He replied by talking about natural gas.

“The large macro trend of gas is massive,” he said. “Our oil and gas business will be a huge beneficiary.”

An abundance of shale gas in the U.S., and methane gas reserves in Australia present a wealth of opportunities for GE, which plays all along the supply chain for natural gas.

“We’re a massive player in gas exploration,” Mark said. “We have a water business that can deal with issues in the fracking process.” And, of course, GE sells lots of gas-burning turbines, including a new combined cycle power plant, currently available in Europe, that enables gas to be burned more efficiently and in concert with renewable energy. (See my June blogpost, GE’s big bet on natural gas)

But can you put “ecomagination and shale gas in the same sentence? Yes,” Mark said. GE will focus on making shale gas cleaner, “with technologies like zero-leak valves” and water filtration products like a mobile evaporator that is basically a truck (see below) “designed to enable on-site frac water recycling, reducing the volume of wastewater and fresh water that needs to be hauled to and from the project site.”

Like it or not, natural gas is the big story today in the energy business. This is good for GE. It’s probably good for the U.S., given our domestic supply. Whether it’s good thing for the climate is very much an open question. If cleaner-burning gas plants replaces dirty coal plants, they will bring meaningful but incremental progress towards a climate solution. If cheap, abundant natural gas stalls the development of low-carbon renewable energy, or discourages investment in new clean-energy businesses, that’s a problem. Chances are, it’ll do both.

I met Mark near the U.S. Capitol, where he was headed for meetings on energy security with House leader John Boehner, among others. He has overseen GE’s ecomagination portfolio for Jeff Immelt since last October. Ecomagination products include efficient aircraft engines and locomotives, appliances, and LED and CFL light bulbs as well as GE’s gas, nuclear, renewable energy and smart-grid businesses; they’ll generate $20 billion to $22 billion in revenues this year, Mark estimates. The 52-year-old exec, who has been with GE for 28 years, was previously President & CEO of GE Healthcare’s $9 billion Americas Region. He still lives in Milwaukee, where the healthcare business is based, but because one of his jobs is to make ecomagination more global, he has traveled this year to Abu Dhabi, Dubai, Israel, Europe, Australia and China, and he’s soon headed to Brazil.

So if the gas business is booming, where are the challenges in the ecomagination portfolio?

Nuclear’s an obvious one. The son of a nuclear engineer, Mark believes in the technology but says, post-Fukushima, that “it’s very clear, at least for the moment, that we’re in a hiatus.” But, he added, “the nuclear industry is very good at learning from its mistakes.”

Wind, too, faces short-term issues, he said: “It’s clearly challenged over the next couple of years.” Without clean-energy mandates or tax subsidies, wind struggles to compete with cheap natural gas. And there’s uncertainty about those subsidies, particularly in the U.S. where Congress is looking to manage budget deficits.

This past spring, GE made a major commitment to solar PV, drawing on technology developed at the National Renewable Energy Lab. Mark said the company will site a manufacturing plant in the U.S. to make the panels.

Does GE remain committed to ecomagination despite the gloomy policy environment in the U.S.? After all, Immelt put his reputation on the line by becoming a vocal advocate for climate regulations through the U.S. Climate Action Partnership. That didn’t end well.

“Business has to step up and act,” Mark said, nothing that GE plans to buy 25,000 electric cars for its own fleet.

“We are not going to wait for policy,” he added. Good thing.

In the slow-moving, capital-intensive, heavily-regulated electric utility industry, the times they aren’t a-changin.’

Natural gas is the cheap fossil fuel of choice. Coal will be burned for as long as there is coal. The federal government will never–never–have a comprehensive energy policy.

Climate crisis? What climate crisis?

Those were the themes that emerged today as four of the power industry’s most powerful CEOs–Mike Morris of American Electric Power, Lew Hay of NextEra, Tom Fanning of the Southern Company and Tom Farrell of Dominion –spoke at the EnergyBiz Leadership Forum in Washington.

While the theme of the conference is “winning strategies for the next five years,” the CEOs mostly agreed that the next five or even 10 years are going to look a lot like the last five or 10 years.

“Five years out, it (the industry) will look exactly as it does today,” declared Morris, perhaps the grumpiest of the grumpy old men on the panel.

Ten years from now, he went on, the industry will still look very familiar, with one significant change: Old and inefficient coal plants will have been replaced by combined-cycle plants that burn natural gas.

Only Hay–whose NextEra is a leading clean energy company–argued that the declining costs of wind and solar energy, the appeal of electric cars and improving renewable-energy  technology could expand the share of low-carbon energy in the electric grid.

With AEP’s Morris to his right and the Southern Co.’s Fanning to his left–both are big-time coal burners–Hay quipped: “I feel like I’m the cream in the middle of an Oreo cookie, sitting between my coal brethren.”

But even he acknowledged that the availability of cheap shale gas, the after-effects of the recession which slowed demand for electricity, and the absence of a comprehensive federal energy policy had dimmed the outlook for renewable power.

Lew Hay

“Without a doubt,” Hay said, “the renewable business is not as robust as it was three years ago.” NextEra still plans to build 700MW to 1000MW of wind and solar generating capacity a year, more than most if not all other big utilities–but under more favorable conditions, it would be building even more.

None of the other CEOs expressed any enthusiasm for solar or wind power. (If the word “climate” was spoken, I missed it.) With that exception, the four power guys agreed much more than they disagreed.

All say we need a fully diversified energy mix–coal, gas, nuclear, wind, solar and efficiency measures.

All say more government investment should be steered towards so-called clean coal.

All support a ramp-up of nuclear power.

All lament the absence of a consistent, long-term federal energy policy.

Hay said: “We’re never going to have a comprehensive energy policy.”

Morris agreed: “Hoping for the U.S. to craft an energy policy is folly. It’s never going to happen.”

For good measure, he added:  “You have global issue that will never come to resolution, and that is carbon and CO2 emissions.”

If they’re right about that–and so far, they are—it’s hard to argue with the utility industry’s inclination to resist change. They’ve sunk vast amounts of capital into their current generation fleet.  Their regulators want them to supply low-cost reliable power above all else. So, it’s a safe bet, do their customers.

Without a price on carbon dioxide emissions–and with natural gas prices as low as they are today–that makes it difficult, if not impossible, for renewable energy generation to compete on a cost basis with fossil fuels. Of course, there are so many subsidies for both renewable energy and fossil fuels that straightforward cost comparison are difficult to make.

Still, all the market signals are pointing in the direction of natural gas. Cheap gas trumps eveything is the way one industry insider put it recently.

There will be a rush to gas,” Fanning said, for better or worse.

Afterward, I asked Lew Hay if this more-of-the-same approach to the future would get U.S. carbon emissions down to where they need to be in the next five of 10 years.

That depends, he replied, on where you think they need to be.

“If we shut down the least efficient coal plants and replace them with natural gas, there will be a pretty dramatic reduction in carbon emissions,” he said.

It’s not the carbon tax that he once advocated. (See my 2009 blogpost, FPL’s change of heart.) Nor is it the cap-and-trade scheme that leading environmentalists and some in the utility industry, including Hay, once united around.

But it’s all we’ve got for now.

Washington may be stuck in neutral–or worse–when it comes to climate policy, but NRG Energy and its chief executive, David Crane, are aggressively pushing clean energy.

NRG Energy is investing in nuclear power, solar energy (photovoltaic and utility-scale solar thermal) and electric cars. It’s powering the Empire State Building. It’s even helping to finance off-the-grid solar power in Haiti.

“Washington is not filled with people who are going to lead,” Crane says. So it’s up to business to show the way.

I interviewed David Crane at the State of Green Business 2011 forum in Chicago. He’s always a pleasure to talk to because he’s brimming with ideas and tells it like it is. Based in Princeton, N.J., NRG is a $9 billion a year independent power producer that operates coal, nuclear, natural gas, wind and solar plants.

Here are some highlights from our conversation:

On nuclear power: “Nuclear is the ultimate green solution, if what we are solving for is climate change,” Crane said. NRG wants to build a new 2,700 MW nuclear faciity in Bay City, Texas, next to an existing plant. It would supply enough energy to power 2 million Texas homes. The project requires federal loan guarantees and progress through the regulatory system has been slow.

Despite strong support for nuclear from President Obama, Energy Secy Chu and Republicans in Congress, the U.S. is likely to build no more than two new nuclear power plants in this decade, “which is not exactly a nuclear renaissance,” Crane said.

On the temptation created by low natural gas prices: “The greatest question of the day is how to deal with natural gas,” Crane says. “Right now, left to its own devices, the only thing the power industry would build on an economic basis is natural gas plants  It wouldn’t build wind. It wouldn’t build solar. It wouldn’t build nuclear. It wouldn’t build coal.”

Natural gas plants are, at best, a short-term solution. Natural gas is “obviously from an environmental perspective much cleaner than coal, but it’s an imperative that we get carbon emissions down by 80% by the year 2050,” he said. Natural gas won’t do that, he said.  “The power generation system, I think, basically needs to go to zero. You can’t just cut it in half. And natural gas cuts it in half.”

Why solar has a brighter future than wind: Although NRG has an offshore wind subsidiary called Bluewater Wind, Crane is more enthusiastic about solar. The wind industry has been slow to bring down costs, and it has done so mostly by building bigger and bigger turbines.

Said Crane: “We are not that bullish on wind, compared to solar. We’re fanatically bullish on solar.”

“What we love about solar,” he explained, “is that the sun is more reliable than the wind. The sun tends to be coincident with peak demand for our product, electricity.”

NRG’s biggest single investments for now, he indicated, are solar thermal projects like the 392 MW Ivanpah facility being built by Brightsource Energy in the Mojave Desert  that will be the world’s largest when completed. “This is where most of NRG’s money is going right now,” he said. The company has also formed a venture investment fund with GE and Conoco Phillips which will look at solar technology.

Crane is also excited by the potential of rooftop solar panels because they compete not with coal or natural gas plants but with the retail price of electricity, since they deliver power directly to customers. Solar panels are a form of self-expression for green consumers, he suggested.

“ People who are living a sustainable lifestyle want other people to know that they are living a sustainable lifestyle,” he said. “A solar panel is a billboard.”

Why electric cars as disruptive technology: Working closely with Nissan and other partners, NRG is building an electric car charging system around Houston. [See Climate Leaders: Chevy, NRG Energy and the Eagles.] For $80 a month, customers of an NRG subsidiary called eVgo can get a home charging system and as much electricity as their car can consume. Charging stations will be located at Walgreen’s, Best Buy and HEB supermarkets.

Crane, who owns a Tesla and is buying a Nissan Leaf, says the target market for the cars are the 60 million Americans who own two or more cars. They’ll recognize that the cost of owning an electric car, over time, is less than the cost of driving a conventional one.

On NRG in Haiti: In cooperation with the Clinton Global Initiative, NRG donated $1 million to deliver solar power to schools, health clinics and other public buildings in Haiti, where only 12% of the population is connected to the grid.  It’s also helping power a fish farm.

“With a fairly small solar array, we can increase their production from 200,000 pounds of fish a year to 1 million pounds of fish,” Crane told me. “Haiti itself consumes 17 million pounds of fish a year and, surprising for an island, they only produce five million of their own. This tiny solar array can make a big difference. That’s the type of thing that gets me up in the morning.”

We wrapped up by talking about how to change the public conversation around climate and energy. Three years ago, Crane joined business execs like GE’s Jeff Immelt and Duke’s Jim Rogers and top environmental leaders to call for regulation of CO2 emissions. The leading presidential candidates–Obama, Hillary Clinton, McCain–all supported cap-and-trade.

Since then, he said: “We haven’t gone forward. We haven’t stood still. We’ve basically drowned.”

It’s now up to business to show Americans that clean energy is not a high-cost proposition, but a smart way forward.

“What we need to spend the next several years doing is changing this image of green away from being something that’s expensive, it’s constrained, it’s sincere but it’s unhappy, it’s doom.”

Instead, green needs to come across as better and smarter than conventional energy. “Electric vehicles are fun, happy, optimistic, forward looking,” he said. Solar PV is a clean and appealing technology. Like mobile phones, both could spread faster than the pundits expect.

“The game changers are electric vehicles and solar panels,” Crane said. Let’s hope so.

Fred Krupp is like a Timex watch.

He takes a licking but keeps on ticking.

Those of you old enough to remember the commercials when Timex tortured its seemingly indestructible watches, using high divers, water skiers, dishwashers, jackhammers, and the propeller of an outboard motor, know what I mean.

Except that the instruments of torture that Fred has endured as he has labored, literally for decades, to get climate change legislation through Congress include coal-state Senators, Republican obstructionists, Washington trade associations, a largely indifferent press corps  and left-wing green groups that accuse the Environmental Defense Fund, which he leads, of selling out to big business.

If nothing else, you’ve got to admire his persistence.

It can’t be easy to calmly discuss the need for cap-and-trade legislation and the challenge of getting 60 votes in the Senate while oil is fouling the Gulf of Mexico, global temperatures are rising and atmospheric concentrations of carbon dioxide are reaching dangerous levels.

Yet that’s Fred–calm, rational, pragmatic and seemingly undeterred by the fact that there appears to be only an outside chance that climate-change legislation will be passed this year, that next year looks a whole lot worse and that the congressional clock is ticking down.

Today, EDF invited reporters to the Washington offices of the Glover Park Group to hear Fred and Steve Cochran, the group’s chief lobbyist, make a last-ditch plea for a scaled-back bill, one with an emissions cap that initially covers only the utility industry.

They conceded for the first time publicly that EDF won’t get the economy-wide cap that it really wants and also, for the first time, gently criticized  President Obama and urged him to back up his climate-change rhetoric with action.

First, the EDF crew admitted that for now we’re not going to get a cap on carbon emissions that covers most polluters, even though that’s what the science of climate change says is needed and that’s what the green groups and the business-backed U.S. Climate Action Partnership, have been seeking for the past three years.

“A comprehensive, economy-wide cap and trade system is not going to be passed by the Senate,” Fred said. A cap that covers the coal-spewing utility  industry would impact  about 40% of the U.S.’s carbon output.

Second, he said, the only way we’re going to get even an admittedly insufficient bill will be if President Obama and the White House staff support one and put their shoulders behind it. This, regrettably, the administration has yet to do.

“We need the president to lead,” Fred said. “For all the good things he’s done, which we acknowledge, he’s got to roll up his sleeves and put together a bill.”

If the president and his staff get deeply involved–as they eventually did with the stimulus package, health-care legislation and financial industry regulation–a climate bill is “absolutely doable,” Fred said.

Neither of those things can have been easy to say–the first is admitting a sort of defeat, the second is admitting disappointment in a key ally.

Indeed, even while calling upon Obama to act, Fred and Steve went out of their way to praise him.

“This is the first time in history we’ve ever had a president who cared so deeply about climate change, and he has done an awful lot, more than any president has done before,” Fred said. They cited strong EPA mileage standards for cars, money for clean tech in the stimulus package and last month’s Oval Office speech on energy and climate.

“But the truth is we need him to do one more thing,” Fred continued. “We need him and his staff to directly engage in the politics and policy to actually produce a bill.”

“If he doesn’t do that, without his leadership, then everything he has done so far will lead to nothing.”

While EDF has proven willing to compromise, the group won’t support legislation without a carbon cap. After reading this thought-provoking argument from my friend Jesse Jenkins of the Breakthrough Institute, I asked whether EDF could accept a package of bipartisan measures that include renewable portfolio standards, energy efficiency rules, a broad electric-car initiative, money to stimulate clean energy research and “cash for dirty-coal-plant clunkers” program, absent a cap.

No, they replied, because if the U.S. doesn’t limit its CO2 emissions, it will be impossible to persuade other big countries like China to follow. Besides, an EDF analysis [PDF, for download] of the energy-only Bingaman-Murkowski bill that came out of a Senate committee and included some of those measures showed that it would actually permit emissions to increase over the next decade or so.

“What we absolutely will insist on is an enforceable, declining limit on carbon pollution coming from these big smokestacks,” Fred said.

For all the setbacks of the past couple of years, and even this week–several reporters mentioned that the White House now seems to be shifting its focus to immigration–Fred won’t allow himself to believe that the long crusade to stop global warming will fail.

Repeating a mantra of all the green groups, he said climate-change legislation is inevitable.

“There are a lot of reasons in this world to be cynical,” he said.  “But are you so cynical as to believe that human beings are going to pollute the planet to the point where we can’t survive anymore?”

Well, no, but it’s getting harder all the time to see how we–not just the Congress, but China, India, Russia and the rest of the world–are going to act quickly and firmly enough to do what needs to be done to curb global warming.

Fred and those Timex watches may be indestructible but human life on this earth, alas, is not.

Several years ago, Lew Hay, the dynamic chairman and CEO of FPL Group, which is the nation’s leading provider of renewable energy ($16 billion in 2008 revenues), gave an impassioned speech at a Goldman Sachs climate change conference in New York, arguing for a tax on emissions of carbon dioxide to deal with the threat of global warming. A carbon tax, he said, would be simple and fair and speed the transition to a clean-energy economy. By contrast, he said, a cap-and-trade system inevitably would be overly complicated, negotiated in Washington back rooms, subject to political horse-trading and shaped not by the public good but by special interests.

Anyone who’s paid even cursory attention to the Congressional debate over climate change knows that Hay was absolutely right.

So why, I  asked him when we spoke by phone today, is he now a supporter of cap-and-trade? FPL is a member of the U.S. Climate Action Partnership, the influential coalition of FORTUNE 500 companies and environmental groups that has put cap-and-trade on the congressional front-burner.

I did strongly support a carbon tax a number of years ago, for several reasons. [Hay said] It’s simple. There’s nothing hard about putting a price per ton on carbon dioxide. You don’t need a big trading mechanism to make that happen. I thought it was fair. You didn’t have the special interest influence, where who has the most lobbying dollars or the best lobbyists gets the most allowances. Everyone would be treated equally. And it was transparent.

Even today, a big part of the debate (about cap-and-trade) is about what it is going to cost our society. What’s the effect going to be on the economy? We’re living in a world of dueling models. Some folks are saying it going to be incredibly expensive and will destroy our economy and at the other end of the spectrum people are saying it’s hardly going to cost anything so let’s get on with it.

He’s right about that, too. Supporters and opponents of cap-and-trade trade wild overstatements. Just today, Sen. Kerry said his climate bill will create “millions of new jobs and major improvements in every sector of the energy economy.” (Like coal mining?) Sen. Inhofe said the bill would bring about  “the largest tax increase in — in history!”

By contrast, as Hay told me: “With a carbon fee, you know exactly what it’s going to cost….Frankly, every economist you talk to supports a carbon tax.”

So, again, what’s changed? “The problem with a carbon tax,” Hay said, “and I knew it at the time, was that it wasn’t going to be politically acceptable.” Even the  idea of a  revenue-neutral fee on carbon, with monies rebated to customers on a per-capita basis, never got off the ground in Washington.

Put simply, Hay, like most CEOs, is a pragmatist. He made his case for a carbon tax. (As of today, the arguments are still there, on the FPL website, along with a thoughtful position paper critical of cap-and-trade. When I mentioned that to Hay, he said it probably should be taken down.) The arguments for a carbon tax didn’t carry the day. And so he’s turned to the next best option, an imperfect cap-and-trade approach that’s better than inaction.

“Let me clear—we fully support a cap-and-trade program,” Hay told me. “The frameworks that Congress is working on are pretty good.”

He didn’t sound wildly enthusiastic, perhaps because he remains concerned about the feeding frenzy going on over free allowances–those are essentially permits allowing companies to pollute–as well as uncertainties surrounding provisions in the legislation regulating carbon offsets and protecting against price shocks from rising carbon costs. Politics, as they say, is the art of the possible, and unhappily  it doesn’t seem possible these days to have a mature political debate about any of the big issues we face–climate change, health care, entitlement costs, the deficit, whatever. That’s not Hay’s doing.

To his credit, FPL has done a lot of work on the ground to deal with the climate-change issue. Just this week, President Obama visited FPL’s DeSoto Next Generation Solar Energy Center in Arcadia, Florida, which at 25MW is the biggest solar photovoltaic power plant in the U.S. Obama was there to announce $3.4 billion in recovery-act grants to promote the smart grid; FPL and partners got $200 million for a program called Energy Smart Florida. FPL’s regulated utility is also developing a 75 MW solar thermal hybrid plant that integrates solar power with natural gas, with both sharing a steam turbine and generator. “It really is the first of its kind,” Hay explained. “When the sun shines, we’re making our steam from the sun. When it isn’t shining, we make steam using natural gas.” Meanwhile, through its independent power generation subsidiary, Next Era, FPL has built more wind-power plants that any other company in the U.S. (I wrote a blogpost last month about Next Era.) Hay told me that he’s bullish about both wind and solar, saying that the costs of wind power have come down by a factor of four in recent years and the costs of solar power, both PV and thermal, have fallen almost in half.

By the way, if you’re wondering whether Hay is worried by all the political maneuvering in Washington because he’s not at the bargaining table, that’s  not so. Earlier this month, he was one of four CEOs invited to a private lunch at the White House with the president; the others were Jeff Bezos of Amazon, Irene Rosenfeld of Kraft and Antonio Perez of Kodak. The lunch was off-the-record, so Hay couldn’t say anything about it other than to observe that Obama was extremely well-informed about a variety of business issues discussed, climate change among them.

I’m pleased to say that Lew Hay has agreed to speak in April at FORTUNE’s Brainstorm Green conference about business and the environment. That’s Lew (with his back turned) and the president in Arcadia with Greg Bove, construction manager of the solar plant. (Photo credit: AP) I’m trying to get my conversation with Lew posted to The Energy Collective website as a podcast. I will add a link here when that happens.

So now America’s biggest business lobby and late-night comic David Letterman have something in common: They have really, really embarrassed themselves.

Of course, there are significant differences between Letterman’s womanizing and the U.S. Chamber of Commerce’s backward-looking opposition to climate-change legislation, which is causing the chamber to lose members, prestige and, worst of all, clout.

For one thing, the chamber’s blunder was entirely unnecessary.

For another, the chamber has yet to apologize.

CBS's Letterman

But the bottom line is that the chamber is embarrassed, or should be. It has lost a number of high profile members – utility companies Exelon, PG&E and PNM Resources and, most recently, Apple, whose image as a forward-looking company left the chamber looking stuck in the past. (One clever headline put it, Apple, citing climate, tells U.S. Chamber iQuit) A Nike executive resigned from the chamber board. Today’s New York Times and Washington Post featured full-page ads from big companies and environmentalists calling upon the U.S. Senate to “pass clean energy legislation with a cap on greenhouse gas emissions this year.” The ads were signed by, among others, Dow, Exelon, United Technologies, Duke Energy, GE, Weyerhauser, Constellation Energy, Interface, PSEG, Deutsche Bank, Entergy, Johnson Controls and NRG. That was a direct slap at the chamber, too.

The Chamber's Donahue

Chamber CEO Tom Donahue can’t say he wasn’t warned.

Consider the fact that more than two and half years ago–on January 22, 2007, to be precise—the CEOS of some of the chamber’s most important, high-profile members—GE’s Jeff Immelt, DuPont’s Chad Holliday, Duke Energy’s Jim Rogers, among them—stood besides some of America’s most important environmentalists, including Fred Krupp of the Environmental Defense Fund and Jonathan Lash of the World Resources Institute, to declare that anthropogenic global warming is a problem and

to call on the federal government to enact legislation requiring significant reductions of greenhouse gas emissions.

True, there weren’t a lot of policy details when the U.S. Climate Action Partnership was launched but the message was clear: Big Business, or at least a significant number of big businesses, wanted mandatory U.S. government regulation to curb global warming. Since then, U.S. CAP, as it’s known, has attracted new members, including AES, Chrysler, ConocoPhillips, Deere & Company, Dow Chemical, Exelon, Ford, General Motors, Johnson & Johnson, NRG Energy, PepsiCo, Rio Tinto, Shell, and Siemens. Not a list you’d want to ignore.

But the chamber, for reasons that remain unclear, continued to oppose—and not just oppose, propagandize against—any climate legislation with a real chance of passage.

In other words, the association did what no smart association should do: It ignored some of its most powerful members. Starting last year, the problem became glaringly evident. Environmentalists (led by Pete Altman of NRDC) and reporters were putting the spotlight on the gap between the chamber’s position and the position of some of its most visible members. I wrote a column called Climate Change Schizophrenia that ran on Slate’s The Big Money back in April and asked, Why do corporations support regulating greenhouse gases but fund a lobby that opposes it? Sources tell me that a delegation from companies that belong to U.S. CAP went to see Tom Donahue, the chamber’s CEO, to talk about climate policy, and they got the brushoff.

To be sure, the chamber, which calls itself “the voice of business” and spent about $62 million lobbying Congress last year, also has lots of members from the oil, coal and energy-intensive industries who oppose federal regulation of greenhouse gases. Its 122-member board includes executives from Consol Energy, Massey Energy, Peabody Energy, and the Southern Co.

The smart thing for the chamber to do would be to stay neutral—to admit that business is divided on the issue and to leave lobbying up to individual companies. Instead, some chamber officials offered up reasonable arguments against the bills pending in Congress and others went off the deep end. In a remark that was ill-advised at best and downright dumb at worst, William Kovacs, the chamber’s senior vice president for environment, technology and regulatory affairs, called for a public trial about climate science that he said would be “the Scopes monkey trial of the 21st century.”

That wasn’t an isolated remark. In comments filed with the EPA when the agency said it would regulate carbon emissions, the chamber argued that maybe global warming wasn’t so bad after all. As Kate Sheppard reported for Mother Jones, the chamber submitted a document called “Detailed Review of EPA’s Health and Welfare Scientific Evidence,” that says:

Humans have become less susceptible to the effects of heat due to a combination of adaptations, particularly air conditioning. The availability of air conditioning is expected to continue to increase.

And:

Overall, there is strong evidence that populations can acclimatize to warmer climates via a range of behavioral, physiological, and technological adaptations.

And finally:

[T]he scientific evidence is clear that cold is a more potent hazard than heat.

This is a little nutty, and it’s hard to know why the chamber would venture so far outside of the mainstream. Maybe ideological blinders? It’s long been more friendly to Republicans and opposed to government regulation. Maybe conflicts of interest. In a provocative blogpost, Pete Altman argued that Donahue, who sits on the board of the Union Pacific Railroad, has a personal interest in the issue–he’s been paid more than $1.1 million by the railroad, and given another $3.8 milion in stock–because the railroad is a major shipper of coal.

In the end, it doesn’t matter much. What matters is that the chamber can’t any longer pretend to be the voice of  business on the climate change issue–the biggest business controversy of the decade. Now that’s embarassing.

I’ve been a fan of Slate since the Microsoft/Michael Kinsley days and more recently I’ve been enjoying The Big Money, Slate’s business and economics site, featuring the amazingly prolific Dan Gross. So I’m pleased today to make my first contribution to Slate and The Big Money. It’s a story about climate change politics.

The story asks: Why do corporations support regulating greenhouse gases also fund the most important lobby that opposes it?

You may be surprised to hear that dozens of big companies (GE, Ford, Nike, Alcoa, PepsiCo, DuPont, Xerox, Nike, many others) that advocate for climate change legislation in Congress also help finance the U.S. Chamber of Commerce, a tough and important opponent. Why? Well, the companies support the chamber because it acts on behalf of business on many other issues. But the chamber’s position on climate change is a bit of a mystery. Read the story to learn more. And check out the cool cartoon below

Climate change is “perhaps the most comprehensive challenge that mankind has ever faced,” declared David Crane, the CEO of NRG Energy, as a group of 26 big companies and five big environmental groups came together on Capitol Hill this morning to offer Congress a blueprint to tackle global warming.

It’s hard to argue with his assessment. The question is, is the blueprint being put forward by Big Business (GE, DuPont, Alcoa, Dow, Duke Energy, Xerox, Shell, Conoco Phillips, the three automakers, etc.) and Big Green (EDF, NRDC, the Pew Center, World Resources Institute and Nature Conservancy) up to the challenge?

The 24-page document from the U.S. Climate Action Partnership, also known as USCAP, emerged from nearly two years of negotiations. You can read it here. “We don’t view this as a perfect document,” said GE’s Jeff Immelt. “We view this as a catalyst for change.” Congress now gets to tackle the issue. Henry Waxman, who heads the House committee dealing with greenhouse gas regulation, said today he wants to get a bill out of committee by May.

USCAP is proposing a cap-and-trade scheme (as opposed to a carbon tax), which adds multiple layers of complexity to the inevitably complex issue of climate change. Far be it from me to judge whether this blueprint will do the job. But here are a few of my first impressions:

A scientific problem, a political solution: The Intergovernmental Panel on Climate Change has estimated that to have a 50% chance of preventing the worst effects of global warming (and keep warming below 2 degrees C), developed nations as a whole must cut emissions by 25-40% from 1990 by 2020 levels and 80-95% reductions by 2050. The emissions reductions targets recommended by USCAP, while not precisely comparable, fall short of that. Nevertheless, Fred Krupp of EDF said, “This gives us the certainty we need that the atmosphere will be protected.” I don’t know if he’s right, but it’s fitting that the blueprint was introduced in the Cannon House Office Building—it was clearly the product of  compromise.

The dilemma of rising energy costs: A key goal of the cap-and-trade program put forth by USCAP is to put a price on carbon emission, to provide economic incentives for companies and individuals (i.e., all of us) to cut back on use of polluting fossil fuels and make cleaner fuels more afforable by comparison. That makes perfect sense. But (and this is a big but) companies are understandably worried about the impact that higher energy prices will have on the economy, and politicians are fearful of being blamed for higher gas and electricity rates. So they want to raise energy prices—just not by too much! This is one reason why U.S. Cap calls for a massive giveaway of the permits to pollute, to avoid putting too big an immediate burden on companies or their consumers. One CEO says the hope is to create a “bearable slope” of rising energy prices. Do you thing Washington can get that right?

A victory for clean coal: I defy any layman to read the coal section of the blueprint and explain what it means. I doubt many congressmen will be able to understand it. (Here’s a sample sentence: “Require all new coal and other solid fueled facilities emitting more than 10,000 tons of CO2 per year that are initially permitted after January 1, 2015, to emit no more than 1,100 lbs of CO2 for MWh; and require all new coal and other solid fueled facilities above this size threshold that are initially permitted after January 1, 202, to emit no more than 800 lbs of CO2 per MWH–provided that USCAP’s CCS direct cash payment funding recommendations are adopted and provided further….etc etc) Trying to translate all that into English, Jim Rogers, the CEO of coal-burning Duke Energy, said that USCAP has concluded that clean coal technology is crucial to solving the problem of global warming. Not only does the U.S. have abundant supplies of coal, he noted, but so does China, whose economy is growing fast and energy hungry. So USCAP calls for massive subsidies for clean-coal plants and rapid adoption of rules to permit the capture and storage of CO2 in underground caverns. “We cannot take coal off the table,” Rogers says. “We must find ways to remove CO2 from coal use.” Good luck.

No news on nukes: Exelon, GE, NRG Energy, Siemens and other big companies in USCAP  believe that nuclear energy should be a key part of the low-carbon energy mix of the future. The enviros won’t go there. So there is a barely a word about nuclear power in the blueprint. This will be a big issue for Obama and the Congress to resolve.

Offsets, global and domestic: These are allowed in substantial numbers, to help hold down energy prices. “Offsets are an important part of the blueprint,” said Bob Lane, CEO of John Deere. The idea here is that companies that find it too expensive or technologically difficult to cut their own emissions can pay others to cut theirs. Farmers could be paid to trap methane gas given off by cows and pigs. Poor people in the developing world could be paid to preserve forests. This is controversial, but probably a good idea, provided the offsets are determined to be real, additional, measurable, enforceable and permanent–no easy feat.

The bottom line: USCAP and Congress are trying to do something that’s really, really, really hard—engineer a dramatic transformation of the U.S. company in ways that aren’t needlessly disruptive. The goal, all agree, is to move from an economy that relies on low-cost, high-carbon fossil fuels (oil and coal) to one that runs on high-cost, low-carbon fuels (wind, solar power, geothermal, and, yes, clean coal).

The politicians and CEOs want to move slowly. The science tells us to move fast. Therein lies the problem.

Jeff Immelt of GE and Jonathan Lash of WRI introduce USCAP two years ago.

“This economic crisis doesn’t represent a cycle. It represents a reset,” Jeff Immelt, the CEO of General Electric, said today. “It’s an emotional, social, economic reset.”

And the biggest impact of this “reset” will be greater government involvement in the economy, and in the affairs of business, for better or worse.

“People who understand that will prosper,” Immelt said. “Those who don’t will be left behind.”

Immelt spoke to the annual conference of Business for Social Responsibility, an association of about 250 companies that are looking for more sustainable ways to do business. About 1,200 people from companies, NGOs, consulting firms, PR shops and government agencies are here for the group’s powwow in New York.

The GE chief executive didn’t put it exactly this way, but he made clear that the meltdown on Wall Street and the election of Barack Obama will bring an end to a couple of decades of nearly blind faith in free markets and deregulation. (Heck, even Alan Greenspan has admitted that.) Going forward, stronger government intervention will be a fact of life, here in the U.S. and around the world.

The question, of course, is how deep and how wide the government involvement will be. You can be sure that the Obama administration will regulate the financial industry. But will Washington bail out the automakers? Freeze foreclosures? Tax fossil fuels? Make it easier for workers to join unions? All of the above?

Adjusting to this new reality will take some doing, Immelt said. “I’m a free market guy and fundamentally a Republican,” he told BSR. (That put him in a distinct minority in this crowd, which is packed with Obama fans. A BSR survey released today found that nine in 10 of the conference participants believe Obama will have a positive impact on advancing the agenda of corporate responsibility.) But while he may be a free market guy, Immelt’s no ideologue. He acknowledged that the government has always been deeply involved in the economy; research funded by the defense department helped spur the technology revolution of the 1990s, for example. What’s more, he said, prosperity depends on what he called four “pillars” of education, energy, health care and a financial services sector that promotes innovation. Education is a government obligation, of course, and the other three sectors he cited–energy, health care and financial services–have always been heavily regulated.

Interestingly, Immelt suggested that President-elect Barack Obama make clean energy a top priority when he takes office. Energy’s a big problem, he said, but unlike, say, health care, it is a problem that can be solved relatively easily, and with substantial benefits for the economy and the environment. Not incidentally, GE, a big player in wind energy and nuclear power, and a wanna-be provider of “clean coal” plants, stands to gain from an aggressive government push for clean energy.

“Clean energy is a combination of technology and public policy,” Immelt said. “I think this is imminently solvable. It creates jobs. There’s not a lot of downside.” GE, he said, is devoting about half of its $6 billion a year in R&D investment to clean energy and clean water technologies.

Immelt also sounded a positive note about his work with the U.S. Climate Action Partnership, an alliance of GE, DuPont, Alcoa and other big companies with environmental NGOs like Environmental Defense Fund and the World Resources Institute. The GE executive is the big cahuna behind U.S. CAP, which favors mandatory regulation of greenhouse gases, a role that has taken him a long way from his days as a young GE plastics exec who had developed a “healthy dislike for environmental NGOs.” Now he’s pals with the likes of Fred Krupp of EDF and Jonathan Lash of WRI.

Having said that, Immelt made clear that neither his position on climate change, nor his belief in GE’s much-hyped EcoMagination initiative, spring from any personal love for the outdoors. “I’ve never camped,” he said. “I don’t fish.”

But the science of climate change is “pretty much irrefutable,” he said. What’s more, GE’s business of selling products that help solve environmental problems is growing, from about $5 billion when EcoMagination was launched to about $17 billion today.

Besides, big companies don’t like uncertainty and there’s an enormous amount of uncertainty right now about what a President Obama and Congress will do to regulate greenhouse gases. Even worse, Immelt noted, you could argue that the U.S. already has de facto, unspoken regulation because of the growing opposition to coal-fired power plants.

“The last 49 coal plants haven’t gotten permits,” Immelt said. “Guess what. When that happens, you do have an energy policy. You just don’t know it.”

Better to have a full-scale democratic debate about what our energy policy should be. You can be sure that when that debate unfolds next year, GE’s voice will be heard.