Ralph Izzo, PSEG | EarthxCEO S1E5 | EarthX - video Dailymotion

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EarthX Website: https://earthxmedia.com/   Ralph Izzo, Chairman & CEO of PSEG, is a well-known leader within the utility industry & public policy arena. He serves on several board of directors & is often asked to speak regarding energy policy.   About EarthxCEO:  Compelling stories from top business leaders across a variety of different industries. They share the belief that financial success is only one side of the equation and work to achieve a triple bottom line, People, Profit and Planet.   EarthX  Love Our Planet.  The Official Network of Earth Day.    About Us:  At EarthX, we believe our planet is a pretty special place. The people, landscapes, and critters are likely unique to the entire universe, so we consider ourselves lucky to be here. We are committed to protecting the environment by inspiring conservation and sustainability, and our programming along with our range of expert hosts support this mission. We’re glad you’re with us.     EarthX is a media company dedicated to inspiring people to care about the planet. We take an omni channel approach to reach audiences of every age through its robust 24/7 linear channel distributed across cable and FAST outlets, along with dynamic, solution oriented short form content on social and digital platforms. EarthX is home to original series, documentaries and snackable content that offer sustainable solutions to environmental challenges. EarthX is the only network that delivers entertaining and inspiring topics that impact and inspire our lives on climate and sustainability.       EarthX Website: https://earthxmedia.com/    Follow Us:  Instagram: https://www.instagram.com/earthxmedia/  LinkedIn: https://www.linkedin.com/company/earthxmedia  Facebook: https://www.facebook.com/EarthXMedia/  TikTok: https://www.tiktok.com/@earthxmedia  YouTube: https://www.youtube.com/@EarthXMedia      How to watch:   United States:   - Spectrum  - AT&T U-verse (1267)  - DIRECTV (267)  - Philo  - FuboTV  - Plex  - Fire TV    #EarthDay #Environment #Sustainability #EcoFriendly #Conservation #EarthX

Transcript

00:00Hello, everybody, and welcome to EarthX CEO, a weekly series on EarthX TV.

00:08Each week, we speak with business presidents and CEOs about their leadership on sustainability

00:14and climate change issues.

00:16I'm your host, Bob Perciasepe, president of the Center for Climate and Energy Solutions.

00:21And with me today is Ralph Izzo, chairman and CEO of PSEG, which is Public Service Enterprise

00:30Group, which is the main and the largest electricity provider in the state of New Jersey.

00:38Ralph has been in that job since, I think, 2007 and has a history with the company, unique

00:47in my mind, in the industry with a Ph.D. in physics and an MBA as well.

00:54And Ralph is a well-known leader in the electric power industry in the United States and one

01:02person who I've had the pleasure to work with through the years.

01:05So Ralph, welcome and thank you for joining us today.

01:08It's a pleasure to be here with you.

01:11Thank you for the invitation.

01:13So, you know, in this era where everyone is trying to figure out how we decarbonize

01:20the economy, almost everybody will point to the fact that electricity has to be at the

01:25forefront of that.

01:27And you have been talking about this for quite a while and being in a very strong leadership

01:35position with your company, but also in the industry.

01:38So recently, PSEG published a climate report, I think earlier this year in the spring.

01:46Why don't you tell us a little bit about that report, how it came about and what your aspirations

01:52are with it?

01:53Sure, Bob, I'm happy to do that.

01:56As you pointed out, our history, though, as a company with climate change and carbon reductions

02:03really does go back now almost three decades to 1993 and President Clinton's climate challenge.

02:10But we've evolved and matured as the whole conversation around the subject has evolved

02:15and matured.

02:16And I'm about to betray that maturity and sophistication by failing to remember the

02:21initials associated with a new set of standards that are basically a carbon disclosure type

02:27of financial standard that we've embodied in that report, which really speaks to the

02:33risks to our operations if we don't seek to take action, the impacts on our customers,

02:40the impacts on our employees, and the long-term sustainability of our company, which, as you

02:46know, like many utilities, is over a century old.

02:49So it really was a way to structure the dialogue and help educate others as to the amount of

02:59science behind the need to act and the very many ways in which we as a company are taking

03:05action to help our customers and simultaneously help our employees and shareholders deal with

03:12what I believe to be an existential threat, namely climate change.

03:16Yes, I think the initials you were struggling for, TCFD, I struggle with the same thing

03:26because it's the task force on climate and financial disclosure, and they leave off the

03:32force part.

03:34But it's important.

03:35It's important because that's a key reason more and more businesses are looking at climate

03:42change and sustainability together, is that there's this financial risk and long-term

03:47sustainability of the company itself, and it's, I think, important that you guys have

03:52included that and built around that a little bit.

03:57So one of the things that's, I'm not going to say unique, but certainly important to the

04:03plans that PSEG has put together is the role of nuclear power.

04:10And this is an issue that's been debated for quite a while in the country, and we find

04:17ourselves in a situation now where the value of those zero emission sources of electricity

04:24are growing.

04:25So tell me how you all have viewed that and your own views on the role of nuclear power,

04:32not only in New Jersey, but also in the whole country.

04:34Yeah, sure.

04:35I mean, so from a statistical point of view, it's impossible to dispute the importance of

04:40nuclear power to climate change.

04:43Nuclear power produces roughly 20% of our nation's electricity.

04:48It's double that in New Jersey, it's 40%.

04:52But it's responsible for 50% of the carbon-free electricity in our nation, and in New Jersey,

04:58it's almost 90%.

05:00So if you were to eliminate nuclear power, existing nuclear power, you would be taking

05:06quite a huge step backwards in terms of our battle to minimize carbon emissions from the

05:11electric power sector, which is a close second to transportation, as you know, Bob, in terms

05:16of carbon dioxide emissions.

05:19So the existing nuclear fleet is an essential tool in battling climate change.

05:25I would agree that a separate conversation, perhaps with different considerations, might

05:32be warranted when talking about new nuclear or the future of nuclear technology.

05:39I happen to be a believer in that, but I do think that reasonable people might have

05:42a different point of view in terms of building new plants or new nuclear, in the absence

05:46of a concerted strategy on how to manage the high-level radioactive waste in the nation.

05:53But to me, there's no disputing the importance of preserving existing plants, which are under

05:58tremendous economic pressure for two reasons.

06:02One, the absence of a price on carbon allows fossil fuel plants to produce electricity

06:10at a cost advantage that is unfair from the point of view of it denies the long-term consequences,

06:18economic consequences, of emitting carbon.

06:21Now, to compensate for that, what some public policy leaders have done is they've subsidized

06:27renewable energy, and that then introduces new supply into the market, which puts further

06:33pressure on the nuclear power plant.

06:36So nuclear is sort of getting hit with a two-by-four on both sides of its head.

06:41And there it sits, kind of as a great ongoing and critical tool for the problem that you're

06:47trying to mitigate by introducing subsidies for renewables, but yet you're exacerbating

06:52the problem and not really attacking the problem at its core, which is to make fossil fuels

06:57pay for the externalities that are associated with them.

07:00So we're huge believers in terms of the need to preserve existing nuclear plants.

07:06And it's one of the five things that I speak about all the time in terms of what we ought

07:11to be doing to combat climate change, and preserving those existing plants is preeminent

07:16among those five things.

07:18MR.

07:19BROWNSTEIN Well, you've also, Ralph, been a leader, I

07:23think, in the industry in talking about the importance of energy efficiency and how that

07:28plays into this long-term plan.

07:32Simple answer is it helps stretch the resources.

07:36But talk a little bit about what you've been trying to do in New Jersey.

07:39MR.

07:40GARGANO Yes.

07:41So energy efficiency is number one of the five items we list.

07:43I'm just going to quickly list those five items and get back to energy efficiency.

07:47It's energy efficiency, number one.

07:49Preserving existing nuclear plants is number two.

07:53Preserving and renewable energy, typically wind and solar, would be number three.

07:57Electrifying the economy would be number four, starting with transportation.

08:02And to help us choose among those four things would be to set a price on carbon so that

08:06we make the most out of every environmental dollar that we spend.

08:11But just to give you an example, in order to preserve existing nuclear in New Jersey,

08:15we do need a subsidy of about $10 per megawatt hour, which translates into about $17 per

08:22ton of carbon removed, way below the social cost of carbon as articulated by the U.S.

08:28EPA and by the National Academy of Sciences.

08:31So it's a prudent investment.

08:33And because of our location on the planet, that's a lot less expensive than solar and

08:38wind.

08:39However, even though I am boasting about nuclear in that case, I need to point out for energy

08:44efficiency, we were recently granted approval by the State Board of Public Utilities to

08:50invest $1 billion over the next three years in energy efficiency.

08:54And based upon our preliminary analysis, now we haven't implemented the program yet, but

08:59we have implemented similar programs at a smaller scale in the past.

09:04That $1 billion in investment will create over $2 billion in energy savings, so a net

09:10savings of $1 billion, and at the same time remove 8 million tons of carbon from the atmosphere.

09:18So you literally have the ability to reduce carbon while lowering customer bills.

09:24You could think of that as a negative cost of removing carbon from the atmosphere.

09:29A hallmark of PSEG is that we really strive to achieve public policy objectives through

09:34a win-win opportunity, and I call energy efficiency the quadruple win.

09:40First of all, it's great for the environment.

09:41We're going to burn less coal, less natural gas, use less uranium-238, use up less land

09:46to build solar farms and wind farms because we're going to need less energy.

09:51Number two, it's a benefit to the customer.

09:53Their bill will be lower.

09:56Number three, we get to employ – this program, we expect to employ either directly or indirectly

10:01over 4,000 people to effectuate the programs.

10:07And then through a regulatory system that allows us to recover our fixed costs and earn

10:13on the investments we make in energy efficiency, our shareholders actually have a new investment

10:17opportunity and get to make some money on this.

10:20So it's good for the shareholder, good for the employee, good for the customer, and good

10:23for the environment.

10:24So it's not fairy dust.

10:26I mean, that's the essential ingredient of energy efficiency.

10:30It's a smart way to do business.

10:32Yes, that's great that you're embarking on that kind of investment and with those kinds

10:39of payoffs.

10:41We've talked about nuclear a little bit and you've talked about efficiency.

10:46One of the other five points that you made was expanding renewable energy.

10:52And you made an important point just in the last conversation about – related to siting

10:59and land use.

11:00You didn't explicitly say that.

11:02But how do you look at that in a densely populated – mostly densely populated area like northern

11:10New Jersey and even in the southwestern part of the state, how do you go about thinking

11:17about siting?

11:18And are you guys thinking about offshore?

11:20Yes.

11:21So it's a challenge.

11:23So New Jersey was an early adopter of distributed solar, rooftop solar, and quite proud of it.

11:32However, it is expensive to the point where it doesn't make sense to me.

11:38And that's a painful thing to say because I've been a climate change combatant, candidly,

11:45since 1986, even prior to coming to PSCG.

11:49But when solar renewable energy certificates consistently sell for between $200 and $250

11:55per megawatt hour, yielding a carbon mitigation price of $400 to $450 per ton, and tend to

12:04be subsidized in a very regressive fashion, you realize that something different needs

12:09to be done.

12:10And to the state's credit, it's now – while it continues to support some rooftop solar,

12:18it's focusing more of its attention on offshore wind.

12:22That too needs to be subsidized, just given the infancy in which the industry exists in

12:26the United States.

12:28But at least the first contract in New Jersey that has been awarded looks at about a $98

12:34per megawatt hour price, which, if you subtract the cost of electricity and capacity in-state,

12:40looks like more of a $50 per megawatt hour subsidy compared to a $200-plus per megawatt

12:46hour subsidy.

12:48It's still expensive.

12:51That still back-translates into anywhere from $75 to $125 per ton of carbon mitigation.

12:58But one has to hope and expect that, given that it's a first-of-a-kind project, that

13:04subsequent projects will be lower cost as we learn to work around the Jones Act and

13:12various other limitations that offshore wind encounters here in the United States.

13:17Well, the last question revolving around those points is the electrification question.

13:25And particularly, you mentioned transportation, which is now the number one source of emissions

13:31in the United States.

13:35How is PSEG approaching electrification of transportation in your plans and how you're

13:42working with the utility regulators?

13:47We've done some things to help our own employees benefit from electric transportation, either

13:55in terms of encouraging mass transit, which is mostly electrified in New Jersey in terms

13:59of trains, and then having charging stations at our major employment locations.

14:07But we've gone to our regulators and asked if they would not allow us to invest $300

14:13million in electric vehicle charging infrastructure as a way to sort of get this chicken-and-egg

14:22conundrum, if you will, resolved.

14:25New Jersey, by most views, should be a great place for electric vehicle penetration.

14:33We're a highly compact state with short commuting distances.

14:36Regrettably, our air quality is challenged.

14:40We tend to be a high-per-capita income state.

14:43Those factors would tend you to think that we would have a fairly high concentration

14:47of electric vehicle purchases, but we don't.

14:51As best we can tell, this is the whole notion of range phobia, that notwithstanding those

14:56short commuting distances and the ability of customers to purchase electric vehicles,

15:03which are not inexpensive, although getting less expensive, potential customers are just

15:10worried about the lack of charging facilities.

15:14And I think it's pretty safe to say that those states that have enjoyed a high concentration,

15:18a high penetration of electric vehicles, have turned to utilities to get that industry underway

15:24by building up some of the infrastructure early on to build that consumer confidence

15:30in the ability to charge their vehicles.

15:32So that's what we've asked the Board of Public Utilities.

15:34And we've been completely open with the fact that what we need to do to get that up

15:40and running may not be the right solution over the long term.

15:43If the market rushes in after the infrastructure is built and people start buying cars,

15:48and then therefore maybe there are new entrants who want to build more infrastructure,

15:51then we could exit the business and sell those assets and return any benefit that's realized to customers.

15:58But I think to be the initiator is something that would be wise to do.

16:04And we're in close conversations with our regulators.

16:08I think we'll have it resolved probably by the end of the first quarter next year.

16:11But what that resolution is, I'm not quite sure just yet.

16:15Well, I think that that's a smart move.

16:20It's a growth area, if you want to think of it from a business perspective, but but also,

16:25I think help stimulate a transition that that we all know has to happen.

16:30And that's a that's a that's a reasonable approach.

16:35Let's switch from your plans now to to you as a leader.

16:41You know, anybody who's listened to the last 10 minutes of conversation,

16:45I think can can see your passion for moving forward on these issues.

16:49But what when you think of this and your other responsibilities of running a corporation

16:56and all your fiduciary responsibilities, as well as management responsibilities,

17:02how do you mesh that up with with your with your own leadership style

17:08and motivating the company to embark on these on these initiatives,

17:13getting the plan done, going to the Board of Public Utilities, all these things require,

17:19you know, an extensive amount of. Of energy, no pun intended.

17:26And so tell us a little bit about your personal management style and leadership in this area.

17:31Yeah, so for me, Bob, I mean, other than maybe housing, health care and food and clothing,

17:41energy is sort of close to that group in terms of being the lifeblood of the way in which we live

17:47and our economy and our lifestyle. I don't kid myself.

17:50I didn't wake up this morning and I know nobody else woke up this morning saying,

17:54I can't wait to use a kilowatt hour. Maybe they did wake up this morning and say,

17:58I can't wait to watch that television show or I can't wait to get back to this book I was reading last night

18:03or in the hot summer. Oh, boy. Turn that air conditioning on. I can't deal with this anymore.

18:08So so energy is something that we we realize universal access to it is critical.

18:16It's more of a tax on living and a means to an end than it is an end in and of itself.

18:21So for a hundred year company to aspire to be around for another hundred years,

18:26I think our alignment with public policy is essential.

18:31And because because consumers don't have a choice, they can't say we don't want energy.

18:37What they can say is we don't want energy in that form or we don't want to deliver it that way.

18:41So so it's important to me that our company be viewed as the number one corporate citizen in those places where we operate

18:49and that we are completely in sync with with the entire customer base and that we we stay ahead of trends so that we can be

18:59viewed as someone that can help inform the direction of those trends.

19:04And that that's not unique to Ralph.

19:07Is that that was true of my predecessor and his predecessor and in fact, the founder of our company.

19:13So I would say that alignment is essential to the way in which I think about running the company.

19:21You then think about that and marry it with the inherent culture of our employee population.

19:28We cannot move our pipes and wires. It's really tough to move our power plants as few as they are now.

19:34What that tends to mean is you you have an employee population that is deeply rooted in its community.

19:42You have an employee population that understands values and respects the importance of safe, reliable, affordable service,

19:50which tends to be employees that then look towards a secure and longer have a longer term view of their careers here.

19:59All of that then points to you can't operate on the premise of what's good today but might not be good tomorrow.

20:05And and my introduction to energy started with concern over energy security.

20:11And then it quickly evolved because of the good fortune I had to meet some leaders in climate change to my recognition of the importance of energy to the environment and climate change.

20:23So so that issue, combined with the longevity and the sustainability of the company,

20:29has just made it very easy for us to champion issues like the Clean Air Act amendments and what it meant for mercury and fine particulates and a variety of other,

20:39quote unquote, traditional pollutants and then segue over to what what for many decades people thought was harmless.

20:45Right. It's what makes the bubbles in our soda carbon dioxide. But what we've come now to realize is a significant pollutant.

20:54Yes, that's almost universally true of too much of good things sometimes can cause problems.

21:01That's obviously we need carbon dioxide. Plants won't grow without it.

21:06But we all but if we have too much, then it creates these other other issues.

21:11And I appreciate those those thoughts there on the company and your personal views of these of these matters.

21:20Let's shift to another quick part of the discussion here.

21:25You've mentioned several times and you just did alignment with public policy.

21:30There's sort of a two edged sword there. You have these goals that you've put into your plan.

21:37And I think if I remember near the end of the plan, it says, you know,

21:40we will need some public policy to help achieve the final 100 percent net zero by 2050.

21:49And you've mentioned aligning with public policy.

21:51So there's this is this growing symbiotic relationship, I think, between the aspirations of companies,

22:00particularly power companies and the alignment with public policy.

22:04And you mentioned a price on carbon. How do you how do you what are some of the public policy priorities you feel that the country really needs to come to grips with over the next decade?

22:18Let's say you nailed number one, it's a price on carbon and there are multiple ways to do that.

22:25Candidly, we're we're quite fortunate as a company.

22:28We have in New Jersey, Governor Phil Murphy, who is a true believer in climate change and the science and the need to battle it.

22:38And that makes for a very easy conversation with him and a great way to be able to get

22:45agreement on energy efficiency and preservation of our nuclear plants and things of that nature.

22:50Unfortunately, in New Jersey, we've we've inherited this system, so to speak, where there is no national price on carbon.

22:58So in New Jersey, carbon mitigation is viewed as something that could be four hundred dollars per ton.

23:04The solar subsidies we talked about, one hundred dollars per ton, the offshore wind subsidies,

23:0917 dollars per ton, the nuclear subsidies or negative one hundred twenty five dollars per ton.

23:13The benefits of energy efficiency that that doesn't make economic sense.

23:17Right. I mean, that that just instead of turning into rational decision making over how to battle climate change,

23:23becomes a contest of who's got the best lobbying skills to garner whatever subsidy they need to preserve their technology.

23:34And you see this at the national level to the absence of federal leadership has resulted in states taking it upon themselves.

23:43So a solar renewable energy credit sells for two hundred plus dollars in New Jersey because we require that that credit be produced in the state.

23:51I don't know what the number is in Arizona, but I got to believe it's probably the low double digits,

23:54if not the high single digits for solar renewable energy certificate.

23:59And if we if we just treated the United States as a single resource, yes,

24:06we'd have to build more transmission to get power from location A to location B.

24:10But you'd have a far more efficient use of resources.

24:15And even though I view climate change as an existential threat,

24:18I realize that for many of our customers, getting a third meal on the table is their challenge today.

24:24Paying their rent is their challenge today.

24:26And all of that's been obviously compounded and exacerbated by by the pandemic and COVID-19.

24:33And how do you tell those folks that six hundred million dollars a year in subsidies that are being paid to rooftop solar is a good investment in New Jersey?

24:42That's just not not a conversation I'd want to have with someone who's struggling to make ends meet.

24:48So so if we did have a nationwide price on carbon and I'll just pick a number, fifty dollars per ton,

24:53I think that produces about two hundred fifty billion dollars a year.

24:59I would certainly defer to elected officials on how that money should be spent.

25:03I would put some of it into research and development to further bring down the price of renewable energy,

25:08inclusive of putting money into carbon capture and storage,

25:12because I do think that natural gas is a fairly clean fuel that we should be able to rely on for many decades to come.

25:19But you could dividend some of that money back to lower incomes.

25:22You could reduce tax rates.

25:23You could reduce the national debt. You can invest in infrastructure.

25:27I mean, in general, I think it's a good idea to to to place a price on bad things, to tax bad things and to not tax good things.

25:34And I think wealth creation is a good thing. I think that emitting carbon is a bad thing.

25:39Now, that would suggest a simple carbon tax,

25:42but you could have a cap and trade system to provide an implicit carbon tax,

25:49so to speak, or back into a price on carbon by virtue of the rigor with which one allowed allowances to be issued.

25:58My my guess is that we're going to end up with something that looks more implicit rather than the explicit price through a tax or a cap and trade system,

26:06something that might arise through a clean energy standard. And at this point, we just need to do something.

26:11So I would be supportive of that, but I think that that's not as not as efficient a market as one that gives you a visible,

26:19transparent price, which would come either from cap and trade or taxation.

26:24I do. I do think there's some alternative ways, as you pointed out, and we have to figure out how it gets through the political meat grinder.

26:32Absolutely. But those are all good points.

26:36So maybe you brought up the pandemic.

26:39You know, obviously it hangs over all of us on these days.

26:44But what's like most people think it's likely to happen,

26:49that Congress will eventually realize they have to do another stimulus of some kind or another, given the economic impact.

26:55And while there's been an impasse leading up to the election, whatever the outcome of the election,

27:01it seems like they will probably turn their heads back to that.

27:06Do you have any thoughts on where where a economic stimulus, other than helping people right away and directly,

27:13as you pointed out, food on the table, rent, things of this nature, which probably need some shoring up.

27:19But if we were able to start moving some of the stimulus to infrastructure,

27:25where would you see some beneficial expenditures of federal dollars?

27:30This is short of a federal price on carbon, but just maybe something might happen sooner rather than later.

27:36There are three areas that I would think would be particularly fruitful to them.

27:42We've done here in New Jersey. Number one is just massive investment in energy efficiency.

27:47The beauty of that, by the way, Bob, as you know, is that oftentimes some of the jobs in energy efficiency are jobs that people can easily be trained for.

27:55So a lot of these dislocated workers could be readily trained to do household energy audit, simple lighting installation,

28:02simple thermostat installations, weatherproofing and things of that nature.

28:07So a major investment in energy efficiency, I think, would benefit jobs, lower bills and the environment.

28:14Second area is that this might be a little bit more limited,

28:18but we are in discussions with leadership in New Jersey about increasing the amount of investment that we have in replacing our old gas pipe system,

28:29which tends to be old and leaky with just newer, less leaky technology.

28:35I'm talking about removing cast iron, bare steel pipes and replacing with plastic,

28:39because we do believe natural gas is going to be around for a while as a heating source and a cooking source.

28:45Won't be forever, and hopefully we'll have some carbon capture storage technology to help mitigate the results of that.

28:52But replacing aged piping infrastructure, I think, would be a great way to reduce fugitive emissions of methane,

29:00which, as you know, over 100 years has about a 25 to 30 fold bigger impact than carbon dioxide.

29:06And the third and final area, which would be an interstate investment, would be creating greater incentives for utilities to invest in transmission.

29:15So we could take the resource rich regions, which tend not to be the population intense regions,

29:22and move that renewable energy to those locations where people live and could use that supply of energy.

29:30We had started making some progress in that regard years ago, but I think it's been diminished in its emphasis of late.

29:37And that's unfortunate, because I do believe that renewable energy has an important role to play in a carbon free future,

29:46but only when it's developed in those places where it makes the most sense.

29:51Well, I think that those are all wise investments that the country can make,

29:55that will have the co-benefits of helping economic activity, which we're going to need over the next year.

30:03So we'll see how that unfolds. Believe it or not, our half hour has come to an end.

30:13And I really want to thank you, Ralph, for spending the time with us.

30:18And I want to also thank you for the leadership you've provided to the industry and also to the state of New Jersey.

30:26So thanks for joining us today. Thank you, Bob.

30:29And thank you for all your years of service at EPA and all the wonderful things you've done,

30:33both as a public servant and subsequent to that now as a leader of an essential NGO in this topic.

30:40Well, thanks. Well, that's it for this show.

30:44Thank you all for tuning in.

Ralph Izzo, PSEG | EarthxCEO S1E5 | EarthX

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