DUKE CEO WARNS
AGAINST 'ALL GAS, ALL THE TIME' FOR ELECTRIC GENERATION
Warning against the use of "all gas, all the time"
for electricity generation, Duke Energy
Corp. Chairman, President and CEO Jim Rogers said a balance of natural gas,
coal, nuclear power, renewables and energy efficiency will be crucial to
maintaining the affordability and reliability of the U.S. electric grid.
"Our greatest challenge as an industry is to avoid all
gas, all the time, because it's very cheap today," Rogers said at an April
11 Energy for Tomorrow conference sponsored by The New York Times.
"I think this is the first time in my career that our gas units are
dispatching after nuclear and before all our coal plants. … That's based on
price, because gas prices are so low."
Rogers noted that "tremendous inventories" of coal
are building up in the PJM
Interconnection LLC and Midwest ISO
markets as natural gas is being burned on a regular basis for power generation.
When asked what will happen to all this coal, Rogers responded, "I guess
we'll be exporting it to China, maybe one answer."
The challenge for the United States is to keep nuclear and
coal in the electricity generation mix, Rogers said. He predicted that
"between now and 2030, you'll see electricity generated from gas be equal
to coal in megawatt-hours. You're going to see that transition occur over the
next 20 years."
Because natural gas is so cheap today, selling in the
$2/MMBtu range, regulators, particularly in regulated states, will likely push
for "all gas, all the time," rather than putting an emphasis on new
nuclear plants or wind, solar power and other renewables, Rogers said.
"When gas is that cheap, there's no need for renewables. You just build a
gas unit."
Rogers noted that U.S. electric utility companies are in the
position of having "to remake our entire generation fleet over the next 40
years. We have a blank sheet of paper, and so the question is, 'What do we
build?'" He argued in favor of maintaining a balanced mix of generation
sources. "The 'Holy Grail' for our industry is all of the above. We've got
to have all of them. … It would be a mistake for our country [to build] nothing
but gas over the next two decades, as we have in the last two. Almost 90% of
what we've built in the last two decades has been gas."
Rogers predicted that at some point, the United States is
going to address the carbon dioxide emissions that are widely believed to be
causing global warming. "My preference has always been for cap-and-trade
for a number of reasons, including the equity of such a system," he said.
However, even though Congress has not yet passed legislation aimed at cutting
CO2 emissions from power plants and other sources of greenhouse gases, Rogers
said he assumes that ultimately there will be a price on carbon. "We know,
over time, people in this country will recognize this is an issue and address
the issue. Will it get done in the next session of Congress? Not clear. I'm not
sure it gets done in the next presidential term."
Added Rogers: "The unfortunate thing is, the
Republicans have demonized cap-and-trade, and yet they're the ones that
invented that in 1990 and called it one of the greatest regulatory
achievements, to use market forces to achieve environmental goals." That
cap-and-trade program was put in place to address the problem of acid rain.
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THIS WEEK IN WASHINGTON
National Association
of Manufacturers
Fed’s Economic Outlook Is Brighter,
but Manufacturers Remain Cautious. This week, the Federal Reserve Board released
its monthly Beige Book, which summarizes economic activity across its 12
district banks. In addition to providing some insight into the Fed’s
perspective on the current economy, it also offers a comprehensive view of
economic activity around the country for a number of major indicators.
This latest report does an excellent job of highlighting
the current state of manufacturing in the United States. Manufacturers have
told the Fed that they are expanding and optimistic about future production,
but they continue to worry about Europe, rising raw material and energy
costs, and persistent weaknesses in the labor and housing markets. These
anxieties temper their outlook, and some businesses are more cautious about
growth and expansion than others.
This caution can be seen in other indicators, too. The
Institute for Supply Management reported increased activity in March,
particularly for production and employment. But it also reflected the “modest
to moderate” growth noted in the Beige Book. The pace of growth for new
orders and exports slowed down, and there was some evidence that the pace of
growth has slowed from the more robust increases at the end of 2011. Similar
observations can be found in regional sentiment surveys, many of which are
summarized by the Beige Book itself.
The NAM continues to express concerns about rising energy
prices and difficulties its members have in hiring skilled workers—concerns
outlined in A
Manufacturing Renaissance: Four Goals for Economic Growth. While the
longer-term outlook remains positive, some manufacturers have become more
cautious, particularly about the persistent challenges in Europe.
Even with uncertainties in the marketplace, manufacturing
has remained a focus among policymakers and economists because the sector has
had an outsized role in terms of contributions to GDP and employment. Over
the past four months, for instance, manufacturers have added 148,000 net new
jobs, or over 17 percent of all nonfarm payroll jobs since November. Yet, as
noted in the Beige Book, some employers are cautious about bringing on
additional workers until they see more robust growth, with some of them
filling the gap by bringing on temporary workers to contain costs and retain
flexibility.
Looking at consumer spending, the Beige Book provided some
optimism along with caution. Consumers have continued making purchases—even
as consumer confidence has taken a slight hit—yet some districts worry that
prolonged periods of higher gasoline prices might begin to have an impact.
Manufacturing activity will be modest in 2012. Even with a
number of headwinds, manufacturers continue to remain positive about activity
for the rest of this year.
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Share Your Experience with the Ex-Im
Bank! The NAM is working hard on Capitol Hill to encourage Congress to
reauthorize the Export-Import Bank (Ex-Im), and we need your help. Share
your story! Let us know if you have worked with Ex-Im Bank, and what your
experience has been. These real-world examples of how Ex-Im helps
manufacturers compete are critical to making our case to Congress.
This week, the NAM hosted a “From the Shopfloor” briefing
for Senate staff. Led by NAM Vice President for Government Relations Wes
Irvin, the panel featured three small and medium-sized manufacturers who rely
on Ex-Im to support their exports. Panelists included speakers from forestry
firefighting aircraft manufacturer Air Tractor in Olney, Texas; construction
machinery manufacturer Vermeer Corporation in Pella, Iowa; and plastic
products manufacturer Five Peaks Technology in Muskegon, Mich.
Ex-Im is currently operating under an extension that
expires May 31. The Bank is expected to hit its lending cap even
sooner—perhaps later this month. Last year, the Bank supported more than $41
billion in exports from more than 3,600 companies—more than 85 percent of
which were small businesses. Those exports, in turn, supported nearly 290,000
American jobs. Moreover, the Bank has helped reduce the deficit, returning
more than $3.4 billion to the U.S. Treasury over the past few years. It is
vital that Congress swiftly pass a long-term reauthorization of Ex-Im Bank to
level the playing field for U.S. exporters against competitors overseas and
to ensure our nation’s manufacturers can compete. Click here to
contact your members of Congress and urge their support for Ex-Im
reauthorization. Numerous resources, facts and testimonials about the
importance of Ex-Im Bank and its support of small business and jobs are
available at www.nam.org/exim.
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Manufacturers Oppose Forced Disclosure of Trade
Secrets. The Environmental Protection Agency (EPA) recently proposed an
update to the 1983 Premanufacturing Notice (PMN) regulation. This proposal
would infringe on chemical manufacturers’ ability to keep “trade secrets” and
hurt the overall competitiveness of the industry. Confidential Business
Information (CBI) is important for the entire manufacturing community, which
depends on the protection of CBI to safeguard individual production processes
from competitors. The EPA’s recent proposal would force chemical
manufacturers to disclose the exact chemical identities of their products in
health and safety studies rather than being able to substitute the generic
name. This disclosure will impede innovation in at least one sector, and has
repercussions regarding the safety of CBI in other industries. On Tuesday,
April 10, the NAM sent a letter
to Office of Information and Regulatory Affairs Administrator Cass Sunstein
expressing concern over this EPA proposal. The NAM opposes this assault on
manufacturers’ ability to guard their trade secrets, which are necessary to
maintain U.S. industrial competitiveness.
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Quick Manufacturing News
The
prototype is expected to go into commercial production in 2014. Click to continue
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Quick Manufacturing News
ACC's
Cal Dooley says a market-driven approach toward energy will foster more
manufacturing investment in the United States. Click to continue
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APPLICATIONS
FOR JOBLESS AID JUMP ON SLOW MARCH
Today in Manufacturing
Today in Manufacturing
After steadily declining since last fall, applications have
leveled off in recent weeks despite the Federal Reserve saying the economy grew
through April … continue
U.S. wholesale prices were flat after a drop in energy
prices offset rising costs for food and pickup trucks, suggesting that modest
growth isn't spurring inflation … continue
U.S. TRADE DEFICIT FALLS TO $46B
Today in Manufacturing
Today in Manufacturing
The U.S. trade deficit fell in February to the lowest point
in four months because American exports rose to an all-time high while imports
dropped ... continue
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