June 15, 2006

Globalization: The new millennium's "invisible hand"

Jason Makansi, Pearl Street Inc.

Help for AC power? Look to D.C.

In contrast to the hallmarks of the U.S. electricity industry in the 1990s-deregulation and privatization-this decade's leaders are less shy about asking for government action. Taylor said, "Government has to help solve the [nuclear waste] problem." Hanrahan called for "certainty on federal CO₂ rules" to avoid a state-by-state approach, which would be a disaster. Bowers noted that Southern is pursuing a "diversified path" toward future generation, including nuclear and integrated gasification combined cycle (IGCC). The federal government's support of IGCC from an RD&D perspective has been clear for decades. Now there are specific incentives for IGCC and nuclear (as well as many other options) in the recently passed energy bill.

National security, with energy independence playing a key role, clearly has a seat at the table of priority forces shaping the U.S. generation sector today. It sits comfortably with reliability, environmental impact, and cost. If there's one clear difference between today and 10 years ago, it's that worries about global climate change are fostering renewed interest in-and driving the debate between-coal and nuclear power. It may boil down to a simple choice: Manage spent nuclear fuel, or sequestered CO₂, for centuries to come.

Overall, the subtext of the CEO panel appeared to be that globalization is having a huge impact on the domestic scene. Given the labor and cost pressures produced by voracious Asian demand for commodities, the public's realization that something must be done about climate change, and the shift in the national psyche toward security and energy independence, perhaps we're being victimized by globalization. That's ironic, because only a decade ago, U.S. gencos were leading the charge.