Chairman, President and CEO, PSEG
Remark 2008 NJ Clean Energy Conference – Jersey City, NJ -October 17, 2008
Solutions for an ailing economy and a warming planet are desperately needed. Increasingly, the solutions converge around energy.
We have been witnessing two meltdowns, the first hitting our pocketbooks: the unprecedented meltdown of trillions of dollars of market capitalization around the world in recent months.
Also, with potentially far-reaching consequences, but noticed by relatively few, is the unprecedented meltdown of Arctic ice reported this summer. It happened over an area larger than the state of Alaska into which about 100 New Jerseys could fit. This is only one of countless findings of climate change needing close attention.
Many of our financial institutions are undergoing a makeover.
Energy needs a thorough makeover.
The 20th century energy paradigm is not sustainable in a carbon-constrained world.
This is evident when we look at a number of key challenges…
First is the issue of climate change with the power to define the future: Science is telling us carbon dioxide is a pollutant and we must reduce greenhouse gases drastically, but our current energy framework does not reflect that our world is carbon constrained.
We are operating under antiquated early 20th century rules, not in sync with 21st century realities. Not surprisingly, these rules are clueless about the melting polar ice cap, or what should be done to protect life as we know it from environmental catastrophe.
Another key challenge is energy independence. We need an energy revolution to ensure the safety of our nation, end one of the greatest transfers of wealth in human history and kick the gasoline habit. We are not close. In fact, over the last 30 years we have gone backwards.
Last, but not least, is the challenge on all our minds these days – the economy. A clean energy transformation can be the equivalent of the New Deal, which got people off breadlines to build bridges, stadiums and schools, and the Apollo project, which put a man on the moon.
Energy is the public works project of our time, to create jobs, clean our environment, and improve the competitiveness of our businesses.
While we represent many different organizations, I believe we can all get behind a new energy framework for the 21st century.
There is something in this for everyone:
Energy that is safe, reliable, economic and clean;
Jobs and better health for people;
New opportunities for businesses to grow;
Lower bills from energy savings.
Turning to the ingredients of the clean energy makeover:
Energy efficiency is first. It is the cheapest and most cost-effective way to make progress – with things from caulking and insulation to more efficient lighting like compact fluorescent bulbs.
Renewables such as solar, wind, biomass and geothermal energy are another key priority.
Renewables mean energy that is not only carbon free, but pollution free (No NOX, SOX, or Mercury).
Renewables are expanding rapidly from a small base and can be expected to have a larger impact over the intermediate term and beyond. They must.
Much longer term, because of issues of cost and complexity, is new nuclear. However, nuclear has clean-air advantages that cannot and should not be overlooked. Nuclear power produces no greenhouse gas emissions. It does produce a lot of clean energy. Nuclear is the source of 20 percent of the electricity our nation uses each year and about half of the electricity in NJ.
Also long term is new clean fossil fuel generation with carbon storage – a technology in an early stage of development.
Over time, to reduce greenhouse gases to sustainable levels (in the range of 80 percent) will require two fundamental changes in direction. One is to decarbonize the electric system. The second is to electrify transportation as we continue to clean up energy. Both will take time, but we need to get started now.
We have a long way to go, but the clean energy future can happen. Some states will be leaders. They will gain first-mover advantage. This is an important area for New Jersey to be a leader for the sake of our economy and environment.
To be a clean energy leader means moving ahead now and scaling up quickly.
We are talking about multi-billion dollar investments in the next 5 years.
Our state’s energy efficiency goals will require an investment of $2 billion over the next 5 years, which could mean more than 2,000 jobs.
[This could save 7,000 GWs of electricity and 382 million therms of gas – and lower bills.]
Approximately $4 billion over 5 years will be needed to deploy 650 MWs of PV solar with the potential for 900 jobs and the certainty of no carbon.
Also, offshore wind has great potential to become our state’s most plentiful renewable energy resource. This would require additional multi-billion dollar investments translating into clean energy and jobs.
In addition, investment in traditional utility infrastructure, which is essential for reliability, could pump billions more into New Jersey’s economy and create thousands of jobs.
[Additional infrastructure expenditures of $250 million to $800 million per year could create between 1,500 to 4,800 jobs.]
Bottom line: The clean energy transformation will not happen without a major mobilization of resources, society-wide.
Energy utilities like PSEG are in a unique position to help with investments providing universal access to energy efficiency and renewables, as provided for electricity and gas.
We have thousands of skilled workers, trusted relationships with millions of customers and a long history of putting our capital to work to achieve societal benefits.
We have not been sitting still.
We have a proposal before the NJBPU for a $46 million program of energy-efficiency improvements in our cities. We hope and expect a decision on it will be reached soon.
We have a $100 million solar program to expedite solar installations with financing that makes solar more affordable. It enables participating customers to repay their loans with credits from the energy produced by their solar panels – ideally, requiring no cash for repayment.
Our solar program has attracted strong interest, toward an initial goal of 30 megawatts of solar.
Also, we are excited to have won a bid to develop NJ’s first large offshore wind farm, to be located 16 to 20 miles out in the ocean and barely visible from the South Jersey coast.
We are ready and eager to do much more. And much more will need to be done to reach NJ’s ambitious goals for reducing greenhouse gases.
Turning to key next steps for our collective efforts:
Workforce development is an essential part of the foundation for a clean energy future in NJ and across the nation. We need to expand the pool of skilled workers able to do green energy jobs and traditional energy jobs.
We have innovative programs with NJ colleges, providing an important pipeline of new, diverse talent for us.
We are looking to build on these efforts, by introducing students to the study of green energy and establishing programs at the high-school level.
We have plans for a Green Energy Academy with the Essex County Technical and Vocational School System.
We are working closely with cities such as Newark and Trenton to create a model for green economic development that can be used across our state.
Second is encouraging innovation.
Putting a price on carbon is the single most important step needed to encourage more investment in energy efficiency, wind, solar and nuclear rather than oil and gas.
This requires action by our federal government. We will continue to push aggressively for a nationwide cap-and-trade system to reduce greenhouse gas emissions across the board.
But we are not waiting for our federal government to act. We have been strong supporters of regional efforts such as RGGI, which can provide a signpost for the federal action we ultimately need.
We are investing in promising new clean technologies. One is compressed-air storage. This technology stores wind energy for release during peak hours, when it is needed most by customers. It can be a game changer as our nation looks to harness more wind power.
Finally but not least, new rules are needed – a new regulatory compact to establish a more predictable environment for energy investments in our state, especially in this time of financial uncertainty.
The process should provide more timely and predictable recovery of investments to encourage real dollars going into initiatives and technologies that will benefit the environment, save energy and help avoid future blackouts.
This process is known as rate stabilization. It is already used in at least six states.
It can provide a simpler, more transparent and less burdensome alternative to lengthy and complex multi-year proceedings that often result in dramatic, sudden changes in rates.
It is designed to fully protect consumers while enabling utilities to raise and invest capital with greater business certainty.
We are eager to explore with our stakeholders how this process could benefit all of us.
Conclusion:
We need a new framework or paradigm to channel sufficient investment into energy efficiency and clean energy to fight climate change, create good jobs and get our economy growing again.
Talk will not do it. Action, dollars and strong partnerships will.
I hope in future years people will look back at our time and say, wow, look what they accomplished by working together – how they turned things around, restored confidence and laid the foundations for a new flourishing, sustainable and green economy.
Once again, NJ can be the place that creates a better future. Let’s do it. Thank you
