Photograph by Peter Hapak; Illustration by Geoff McFetridge

Jim Rogers is the chief executive of the electric company Duke Energy.

“So we have 500,000 solar units on the roofs of our customers,” he said. “We install them, we maintain them and we dispatch them, just like it was a power plant!” He did some quick math: he could get maybe 1,000 megawatts out of that system, enough to permanently shutter one of the company’s older power plants. He shot me a toothy grin.

Even in this era of green evangelism, Rogers is a genuine anomaly. As the head of Duke Energy, with its dozens of coal-burning electric plants scattered around the Midwest and the Carolinas, he represents one of the country’s biggest sources of greenhouse gases. The company pumps 100 million tons of carbon dioxide into the atmosphere each year, making it the third-largest corporate emitter in the United States.

Yet Rogers, who makes $10 million a year, is also one of the electricity industry’s most vocal environmentalists. For years, he has opened his doors to the kinds of green activists who would give palpitations to most energy C.E.O.’s. In March, he had breakfast with James Lovelock, the originator of the Gaia theory, which regards the earth as a single, living organism, to discuss whether species can adapt to a warmer earth. In April, James Hansen, a climatologist at NASA and one of the first scientists to publicly warn about global warming, wrote an open letter urging Rogers to stop burning coal — so Rogers took him out for a three-hour dinner in Manhattan. “I would dare say that no one in the industry would talk to Lovelock and Hansen,” Rogers told me. Last year, Rogers astonished his board when he presented his plan to “decarbonize” Duke Energy by 2050 — in effect, to retool the utility so that it emits very little carbon dioxide.

Perhaps most controversial, though, Rogers has long advocated stiff regulation of greenhouses gases. For the last few years, he has relentlessly lobbied Washington to create a “carbon cap” law that strictly limits the amount of carbon dioxide produced in the United States, one that would impose enormous costs on any company that releases more carbon than its assigned limit. That law is now on its way to becoming reality: last fall, Senators Joe Lieberman and John Warner introduced a historic “cap-and-trade” bill that would require the country to reduce its co2 emissions by 70 percent before 2050. Earlier this month, the bill failed to advance, but its sponsors will most likely reintroduce it next year once a new president is in office; meanwhile, a half-dozen other rival bills are currently being drawn up that all seek the same thing. One way or another, a carbon cap is coming.

Prominent environmentalists, thrilled, credit Rogers for clearing the way politically; many are his friends. “It’s fair to say that we wouldn’t be where we are in Congress if it weren’t for him,” says Eileen Claussen, head of the Pew Center on Global Climate Change. “He helped put carbon legislation on the map.” This should be a golden moment for Rogers: he has godfathered a bill that could significantly reshape the electricity industry, help balance the world’s climate and establish his legacy as a visionary C.E.O. — a “statesman,” as he puts it. Instead, he is very, very worried, fearful that the real-world version of his dream legislation may end up threatening the company he has spent so many years building.

Though the details are devilish, the basic cap-and-trade concept is simple. The government makes it expensive for companies to emit carbon dioxide, and then market forces work their magic: those companies aggressively seek ways to avoid producing the stuff, to try to get a competitive edge on one another.

This is precisely how the government dealt with acid rain, back in the late ’80s. Acid rain, like global warming to a great extent, was caused by dangerous byproducts from burning coal: the chemicals sulphur dioxide and nitrogen oxide, or “sox and nox,” as they were known colloquially. Environmentalists in the ’80s tried to get Ronald Reagan’s Environmental Protection Agency to crack down on sox and nox, but an antiregulatory mood prevailed. So a group of politicians and forward-thinking environmentalists turned to the marketplace instead.

Through legislation, the government first set a limit, or cap, on how much sox and nox could be discharged by the nation’s coal-burning utilities. These companies then regularly received allowances based on their historic levels of emissions. At the end of a predetermined period, every company had to possess enough in the way of allowances to cover the gases it released or face stiff penalties. Over time, the cap and the number of allowances were slowly reduced.

A system like this creates a carrot and a stick. An electrical utility that reduces its pollution below the cap has leftover allowances to sell to other companies. In theory, a virtuous cycle emerges: a company that invests money to clean up its emissions can more than recoup its outlay by selling unused allowances to its dirtier, laggard competitors. Furthermore, entrepreneurs have an incentive to develop cleanup technologies. And sure enough, following the Clean Air Act amendments in 1990, innovations emerged quickly, ranging from new coal blends to chemical “scrubbers” that removed sox and nox from the smokestacks. Government and industry officials predicted that solving the problem of acid rain could cost $4 billion in new investment — but the marketplace was so efficient that only an estimated $1 billion was needed.

A cap-and-trade program for co2 would try to harness the same dynamics. There are several bills under development — Lieberman-Warner is the most advanced, and the one most likely to pass next year — but they all take roughly the same approach. Greenhouse-gas emissions are capped in key carbon-dioxide-producing industries like gas, oil and electricity. Allowances are issued and companies are free to sell them to one another. Then the cap and number of allowances are ratcheted down over time, sparking, it’s hoped, the same Cambrian-like explosion in the development of cheaper, cleaner technologies.

If Rogers is keen on the idea of cap and trade, it’s because the acid-rain fight was one of his formative experiences as a C.E.O. His first job was a three-year stint as a journalist in Lexington, Ky. — “I was a journalist, so I’m allowed to be a little cynical at times,” he likes to joke — before heading to law school and working as a public advocate in his home state of Kentucky. In 1988, by then 40 years old, he switched sides — the Indiana electrical utility PSI Energy teetered on the verge of bankruptcy, and Rogers was offered the job of turning it around.

Part of what ruined PSI was a $2.7-billion write-off of its nuclear plant when local environmentalists forced PSI to halt its construction after the Three Mile Island accident. Rather than demonize the environmentalists, Rogers instead decided to “put on a flannel shirt” and meet with them in a cafe in Madison, Ind. Phil Sharp, a U.S. representative for Indiana at the time, recalls the activists’ astonishment. “They couldn’t believe it,” he says. “They were always used to taking on the big utility companies. Then he came in and instead of saying, What craziness is this, he said, O.K., let’s talk.” It was partly self-protection, of course; Rogers knew that public opinion could ruin a company. Aware that the environmentalists were also worried about acid rain, Rogers decided it was a problem he should head off.

When cap and trade was proposed as a solution to acid rain, most energy executives whose companies burned coal hated the idea and lobbied fiercely against it. It wasn’t merely that they tended to resist regulation. They also didn’t believe it would work: they didn’t trust that the necessary technology would evolve fast enough. If it didn’t, they worried, very few firms would have extra allowances to sell, and the price of those on the open market would skyrocket. Companies might go broke trying to buy extra allowances to meet their cap.

Rogers was the outlier. He loved the elegance of the market-based approach, and he had a nerd’s optimism that the technology would bloom quickly. “And we were right,” he says. “So that’s what gave me the faith that this approach works. All you have to do is set the market up right.” PSI spent only $250 million to clean up its smokestacks, and allowances were “cheap and plentiful,” Rogers says.

Even as acid rain was being confronted in 1990, climate change was entering the public debate. By this time, Rogers was friends with a number of environmentalists and decided to dive into the science of global warming. He began inviting climate experts from Harvard, NASA and various research firms to brief him. “Pretty soon, I could see that the science was persuasive,” Rogers recalls. Many policy makers behind the acid-rain cleanup suspected that a cap-and-trade program could whip the carbon problem too. Rogers agreed. “What’s unusual about Jim is that he recognized these problems not as a woe-is-me burden but as real growth opportunities, opportunities to change his industry,” says Tim Wirth, president of the United Nations Foundation and a former senator from Colorado who helped write the acid-rain legislation. “That allows him to be cheerful in the face of the opposition.”

And there was plenty of opposition. Back then, merely acknowledging the existence of global warming was a thought crime among coal-burning energy executives. But as early as 2001, Rogers told a meeting of fellow C.E.O.’s in the industry that they should all work to pass a federal carbon cap. “They were stunned,” recalls Ralph Cavanagh, an energy program director at the Natural Resources Defense Council, who was present at the meeting. “That was the first time I had heard a major energy executive say anything like this. But because he was chairman of their energy committee, he wasn’t just a flaky maverick.” Sharp, a longtime friend, chuckles when he remembers how much ire Rogers generated. “They hated him,” he says. “Nobody would invite him for golf.”

[BLOGGER'S NOTE: this article is rather long, but well worth the read -- the rest of the article can be found at the link below in my Reference Materials blog: