PSEG CEO on climate change: ‘We all recognize that action has to begin yesterday’

Ralph Izzo, PSEG Chairman, President & CEO, joins Yahoo Finance to discuss climate change, Hurricane Ida, and utility companies combating future disasters.

Video transcript

- Earlier this month, Hurricane Ida paralyzed parts of New York, New Jersey, Pennsylvania, and Connecticut. The storm killed at least 43 people, and left more than 150,000 homes without power. And it put some of our nation's largest utilities on high alert. Joining me now is president and CEO of New Jersey's PSEG, Ralph Izzo. Ralph, welcome to the program, and thanks for being here. Just tell us how your company and your area fared during Hurricane Ida earlier this month.

RALPH IZZO: Thanks for having me, Alexis. It's a pleasure to be here with you. So it's really a tale of two different stories. On the one hand, the loss of life is unspeakable, as you correctly pointed out. From an infrastructure point of view, though, we fared rather well compared to what would have occurred had we not made the infrastructure improvements that were made post-Sandy.

We actually came through that with a fairly minimal amount of electric power interruptions. So Sandy was a lesson for us, a wake-up call, major investments in infrastructure to keep the grid resilient to the kind of flooding we saw in Ida. And we bore the fruit of that as a result. I mean, we did have over 100,000 customers out, but that's 5% of our customer population, as opposed to Sandy, where we had 90% out.

- You know, you bring up infrastructure, and of course that's a big pillar of the Biden administration. He's at with his multi-trillion-dollar plan. And he also addressed the United Nations this morning on climate change. Here's a bit of what he had to say.

JOE BIDEN: This year has also brought widespread death and devastation from the borderless climate crisis. The extreme weather events that we have seen in every part of the world-- and you all know it and feel it-- represent what the secretary-general has rightly called code red for humanity.

- That was President Biden this morning before the UN. So Ralph, what in that infrastructure package are you honing in on in particular? What would it mean for you, your customers, and your company?

RALPH IZZO: Well, there are several-- first of all, just the fact that the issue is getting attention is tremendously important. We've long been, as a company, believers that climate change is real. We've [INAUDIBLE] avoid pointing out any one particular event as proof that it was occurring, but I know very few people who doubt it now, between the wildfires in California to the freezing cold in Texas to the latest report by the Intergovernmental Panel on Climate Change. I think we all recognize that action has to begin yesterday.

The areas that we're zeroing in on are the technology-neutral production tax credits that will help any carbon-free source of electricity, whether that's wind, solar, or nuclear power. In addition, there's a very encouraging piece of the legislation that's been proposed called the Clean Electricity Performance Program, which seeks to make sure that we have no backsliding in terms of the current resource base that we have that's carbon-free, and that we accelerate the growth in that resource base by 3% or 4% per year to try to achieve the president's targets, which are reflective of what the IPCC said we need to do. So the mere fact that this is getting the kind of attention that it's getting in Washington is phenomenal news. And as I said, we're really focused in on preserving our nuclear fleet, investing in offshore wind, and doing a variety of other things to achieve net zero by 2030.

- I know that is an ambitious goal. I know you've actually shortened your timeline. I think it was somewhere in the middle 2045, 2046 prior. What makes you so confident that you can reach this goal by 2030?

RALPH IZZO: Well, so it's not just a question of confidence, it's a question of need. It's a necessity is the mother of invention. I'm sorry to speak in cliches. But we originally, as you correctly pointed out, said that we would be 80% lower by 2045, and then we said we'd get to net zero by 2050. But various reports and scientific analysis that have come out recently made us realize that that wasn't good enough.

So not only did we shorten the time frame by 20 years, we expanded our scope. We said, we're not going to limit carbon-free just to the operations of our power generation business. We're going to also include our electric distribution and our gas distribution business. We're going to include not only our direct emissions, but our indirect emissions, what are often referred to as scope one and scope two.

So we're going to need some help. We don't have all the answers just yet. But that's what we're striving to achieve, and we're off to a very good start in terms of some of the improvements we've already made. As a matter of fact, by the end of this year, we will have closed all of our coal plants. We will have sold all of our natural gas plants.

We will be pursuing investments, as I said a moment ago, in offshore wind. We will have increased our energy efficiency investments by a factor of 10. And we will be partnering with the state of New Jersey to help reduce its number one source of carbon emissions today, that being vehicle emissions, by helping build the electric vehicle infrastructure base.

- Now before we let you go, I know, Ralph, that you're on the record as being a pretty big proponent of the carbon tax. Treasury Secretary Janet Yellen is, as well. Why do you think carbon tax is the answer?

RALPH IZZO: Well, I just believe that if you want to reduce carbon in the most efficient way possible, you want to have every option at your disposal. So while I understand what needs to be done in the power sector, and in the gas and in the energy sector writ large, I don't have that same visibility to agriculture, industrial processes, and various other ways that we might be able to reduce the carbon. So if the market had a visible, transparent price, I think the market would act most efficiently to achieve those carbon reductions.

I would hate for perfection, however, to become the enemy of the good. And even though I prefer a carbon price, an explicit carbon price, I really have to applaud the members of Congress and the administration for what they're doing today, through these various mechanisms that I mentioned a moment ago, which will effectively create an implicit price on carbon. And the truth of the matter is we're at a state now where we probably need to do some of all the above to get to where we need to be.

- Yeah, I think you're right. Gotta throw the kitchen sink at it. Ralph Izzo, president and CEO of New Jersey's PSEG, thanks so much.