Climate Leadership Lessons: “This is Good Business”

To make bold moves and push new ideas, you have to build consensus and set examples. That’s the strategy DTE Energy Chairman and CEO Gerry Anderson used to develop emissions cuts that are paving the way for others in the electricity sector and earned him the Climate Leadership Individual Achievement Award at this year’s Climate Leadership Conference.

On the final day of the conference, Anderson took the stage in Denver. Representatives of several other award winners, Davida Heller of Citi, winner of the Organizational Achievement Award; Stewart Van Horn of Kimberly-Clarke Corporation, recipient of a Goal Setting Certificate; and Sandy Taft of National Grid, which earned an Innovative Partnership Certificate, also described their formulas for success.

The common thread among Climate Leadership Award winners was the growing consensus among cities, states, and businesses – from financial institutions to power companies and state agencies – that planning for and moving toward the low-carbon economy today means economic prosperity for years to come.

The seeds of Anderson’s strategy took root in 2015 and 2016, when he worked to build consensus for the EPA’s Clean Power Plan, the agency’s tool at the time for regulating greenhouse gas emissions in the power sector. The EPA wanted a plan that industry would embrace, and as chair of the environment committee of the Edison Electric Institute, Anderson discussed it with other energy CEOs. He soon found out that in order to argue for reining in emissions, he had to look at his own company.

“It’s hard to make a case to other people if you don’t believe it for yourself,” he said.

Looking into the economics and the engineering of lowering emissions, it became clear that there wasn’t a binary choice between the environment and the economy. That was a change from nine years earlier, when Congress was trying to pass a cap-and-trade measure.

“The options were so much better in 2016 than they were in 2007,” he explained.

DTE’s goal is an 80 percent reduction in greenhouse gas emissions by 2050. Anderson said it will be achieved gradually, with about a 35 percent reduction from 2005 levels by the early 2020s; 45 percent by 2030; 75 percent by 2040, and the full 80 percent by 2050. Each goal is more ambitious than those of the Clean Power Plan.

“What convinced us we can do that is just the simple math and economics of renewables and gas technology,” he explained.

The company will decommission its aging coal fleet, and by 2040, about 40 percent of DTE’s energy will come from renewables and storage, 40 percent from combined-cycle natural gas generation, and 20 percent from nuclear.

“I am really optimistic about the rate of carbon reduction we’re going to see in our sector,” he said. “Many companies who had coal as the backbone of their production, their choice is exactly what ours is, and they’re going to come to the same conclusion. This doesn’t play out over 50 years. It’s playing out over next decade and a half.”

New breakthroughs will only help, Anderson predicts.

“The plan’s going to change. I have no doubt about that,” he said. “But I think the technology is generally going to favor this being easier and not harder.”

Reactions have been overwhelmingly positive, in the news media, with investors, customers, and the rest of the industry.

“Soon after we made our announcement, I had one of my peers in a company that looked a lot like us come to me and say, ‘We saw what you guys did. We’re looking hard at something similar, and we’re probably not far behind you,’” said Anderson. “And it was within six months that they made a similar announcement.”

Anderson believes it’s part of a larger move toward a low-carbon economy: “This is good business. It’s an opportunity to invest in assets that our customers want us to and our investors want us to. It isn’t an imposition anymore. It’s a business opportunity.”