The following is the unofficial transcript of a CNBC interview with Lynn Good, Duke Energy CEO, from the CNBC Evolve Global Summit, which took place today, Wednesday, July 13th. Video from the interview will be available at cnbc.com/evolve.
All references must be sourced to the CNBC Evolve Global Summit.
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JIM CRAMER: Hi, Tyler. Thank you so much for having us. This is terrific. Lynn Good, welcome to what I regard as being the most thoughtful part of what we do at CNBC. I want to get right into it, because I want to approach this issue a little bit different from what other people have done. I’ve been looking at what the inflation numbers are, and I’ve obviously looked at what’s going on in Germany. Lynn, you are probably, I would say the most forward executive, not just in the power industry, but almost in every industry, in trying to rid us of air that can kill people. I put it like that because I think when we just say that it’s just noxious or something, we lose sight of the fact that there are people who we can identify who have been killed by what the emissions are. How can you justify, though, the increasing nature of peril of moving to cleaner energy with the cost of it and the possibility that, when we get there, it’s not reliable?
LYNN GOOD: You know, Jim, great question. And I appreciate the opportunity to be here today and to have this conversation with you. As we think about the future and driving to a lower carbon future, we think about it as something that has to be accomplished within the context of affordability and reliability. It just doesn’t work if we don’t accomplish all of those things together. So as we develop plans on how we are going to progress, setting ambitious targets on reducing carbon, we also do that within the constraints of what is going to maintain a reliable system that our customers count on and also keeping an eye on affordability. So I think that combination is something that we can’t lose sight of as we make the important progress on carbon, but not step away from the reliability and affordability that makes our economy competitive.
JIM CRAMER: I had the great fortune of being someone who interviewed Mr. Rogers, Jim Rogers, someone who really was for many people Duke Energy before you. He was committed to coal. Why? Because he wanted the most reliable power, he wanted the cheapest power. And then one day he basically had a revelation, a conversion, if you don’t mind, saying this is just a bad idea. There were protests. But he took it upon himself to say, you know what? We’re backing away. At the same time that he backed away, there are people in the communities that you serve who are deeply involved and need coal to do well. How do you reconcile that with the idea that you have a senator, perhaps the most powerful senator in the country, who really says: Let’s go slow on this coal removal?
LYNN GOOD: Well, I think a couple of things to point to, Jim, is we’ve already made incredible progress in reducing our dependence on coal and lowering carbon emissions. So, for Duke Energy, carbon emissions are down almost 45 percent from 2005, which has been the result of an orderly transition from coal, using natural gas, of course using renewables, wind and solar, increasingly using battery technology. As we talk to our communities and we talk to our states about the need to continue to make progress on carbon, but also continue to introduce diversity into the supply mix, I believe that conversation is going well. I think people understand that, over the next several decades, we must transition away from fossil fuels, we must transition away from coal; we need to introduce renewables, battery technology, energy efficiency. Nuclear needs to be a part of the equation. So our commitment is to continue to have these conversations not only with customers, but with policy makers, with communities that could be impacted, so that that transition is something we all understand, we can plan for, and we can make the adjustments necessary for the economy of the future.
JIM CRAMER: So you mentioned battery technology twice. We’re quite familiar with and my chattel trust owns shares in Honeywell. Darius Adamczyk, the CEO, has come on several times and told us: Do not be surprised if they don’t have some battery technology that will blow us away. Are you working with Darius on this?
LYNN GOOD: We are, in fact. Darius is right down the street from me here in Charlotte. And battery technology is something we’re spending a lot of time on, Jim, because we look at it as an important part of the equation. As we introduce more renewables, having a way to store that power so that it meets the needs of our customers when they have demand for energy is essential. And so we are working with Honeywell. We’re also working with a variety of other technologies; hydrogen, advanced nuclear. These are the types of technologies that we think are going to be essential as we get toward the end of this decade, into the 2030s, to continue our progress on transition to a clean energy future.
JIM CRAMER: So, Lynn, I’ve been a big believer in nuclear, even from the days when David Crane was in Texas trying to do it and failed, failed dramatically in several of its initiatives, but really, the biggest flop I thought he had was nuclear. I know Canada’s got some small models, I know GE is trying to do some things, but having — When the Russian soldiers went to Chernobyl and actually kicked up the soil there, there was a lot of radiation. “Midnight in Chernobyl,” an incredible text, basically tells you that you can’t stop a meltdown without just phenomenal casualties occurring, and it makes me wonder, we keep hearing that nuke could have a renaissance, but every time I think of nuke, I think of the one that I live next door to in Sacramento, I think of Three Mile Island, which I covered as a reporter, and I think of Chernobyl. And I did not cover Fukushima, but I say to myself, we’re kidding ourselves. We keep talking about nuke, but it’s too expensive and it’s too dangerous. What makes you, as a person who really knows this stuff, even confident at all that a new nuclear power plant could be built in this country?
LYNN GOOD: Jim, I think the safety of nuclear is job one, and you’ve mentioned a couple of instances around the world where safety has been a concern. And our commitment at Duke Energy and in the U.S. nuclear industry is to continue to maintain safety as the very highest priority. If I think about Duke Energy, 50 percent of the power that we produce in the Carolinas is from nuclear, and safety is what we do every day, job one, to make sure that those plants are operating in a way that not only we expect, but our customers and communities, etc. So safety to me is job one, and I do believe nuclear can be operated in a safe way. If we think about the role it needs to play in the future and we believe in low carbon, think about a world without nuclear. And I think about the Carolinas, where 50 percent of the power today is from carbon-free nuclear. I do not have a technology that can replace that today. So finding a way to keep those plants running, and running safely, is important to reducing carbon. Then if we can find a way to bring in commercially viable, so cost effective smaller modular reactors that are of course safe, I believe they could be a part of the solution. So we are advocates for increased investment, continuing investment in these nuclear technologies to see if they can reach a point of commercial availability in the 2030’s so that they can be a part of a diverse mix of resources that we need to accomplish our goals around carbon reduction.
JIM CRAMER: Well, do you think to some degree journalists are part of the problem here? I mean, look, right in front of you, I conflated Chernobyl, which was a horrible accident, with Three Mile Island, where nobody died. I mean, our country’s record in nuclear is perfect. When I compare to the data that I’ve seen by people been killed by coal — and I say “killed,” I mean like they died because of things that coal caused — it is ridiculous how safe nuclear is versus what we have suggested with coal and also we know from methane from nuclear power — I mean, from natural gas. So why does nuclear power, other than for someone like me who said, wait, Fukashima and, hey, Chernobyl, we have not been able to tell the story in this country. I am so pro nuke, it’s ridiculous, from the day this show began. But we’ve not been able to tell the story about how — what happens is there’s nukes where they’re run well, and that’s the United States, and there’s nukes where they’re not run well, and that’s overseas; and we have to distinguish the two, and therefore it’s safe in this country.
LYNN GOOD: Well, I do believe, Jim, we should continue to tell the story around nuclear. And I am a believer and believe deeply that the commitment in the U.S., domestically, the safe nuclear operation is unparalleled. But the U.S. is also involved around the world with the nuclear association, World Nuclear Association, to try to increase the focus on nuclear safety around the world, and our commitment to that remains unchanged. But I think any technology — and you referenced it, whether it’s emissions from coal, methane from natural gas, whether it’s implications from mining, for materials that may be necessary for renewables and batteries, there is no solution that’s without some form of environmental impact or some impact that we need to deal with. So our strategies to maintain safe operations, to take care of the environment, to operate with excellence, is something that this industry has deeply engrained, we care deeply about. And it’s our commitment as we continue this transition to clean energy that we take all of those things into consideration and deliver it in a way that our customers expect.
JIM CRAMER: Okay. So there was a time when I believed that you couldn’t go fast enough to all green. Mike Wirth, who spoke earlier, was talking about — from Chevron — that you need to be able to basically go brown to green. I didn’t think there was any necessity in doing that at all. Now I see what’s happened, and Germany had the most forward policy toward it, and Germany only has 27 percent of the days of Saudi. We certainly got more than that. We have more wind. But without a doubt, they went too fast. And I think anybody who thinks they didn’t go too fast has their eyes closed to what’s going on in Ukraine. Do you ever think, in your darkest moments, that, wait a second, maybe we have to go slower; look at what happened to Germany; they moved too quickly?
LYNN GOOD: Jim, I think it gets back to the point that you made at the beginning of our discussion. When you talk about the pace of change, you have to maintain a focus on reliability, you have to maintain a focus on affordability, and you must make progress. I think if we think about the transition with those three constructs, then we have a framework within which we can make decisions. Reliability is incredibly important. We don’t have a renewable technology today that operates — is load following, that operates when customers need the power, or that is available and controllable. For the most part, we take renewable energy when it’s generated. We can store it for a few hours but not over long periods or seasons, and so that’s what makes things like natural gas important as part of this transition. So in my mind, if I keep my eye on maintaining a reliable system, moving as quickly as I can toward carbon-free resources and maintaining a focus on affordability, then I think the pace is about right.
JIM CRAMER: Now, the Australian oil and gas companies pretty much assured the Australian people that they would never export so much that the prices would go up. They didn’t know. They made a mistake. It was wrong. Our natural gas companies are very confident about a 100-year supply. But when I look at the surge of natural gas prices from $4 to $6, I put it directly on the feet of what is going on in Europe and the export and now the head-long run to have more export facilities, LNG in Louisiana and Texas. Are we going too fast there? Are we helping our allies at the expense of your constituents?
LYNN GOOD: You know, there are a lot of dynamics going on, Jim, and it sounds like you’ve had conversations with some of the producers today. I think we’ve had a bounce-back in demand coming out of the pandemic. We’ve had global issues around the world impacting what’s going on. We also have not been increasing production here in the U.S. We have some infrastructure issues, we have labor and logistics that have been a challenge. So you’ve had a confluence of events. And I think the issue becomes, where do we want to take production over a 10- to 20-year period, so that those who are producing natural gas can make the investments that they need to, want to make, and have some certainty about where it’s going. The prices have moderated recently, so we have seen some balancing, but I think it’s an important strategic decision as we go forward. I’m a believer that increasing production and maintaining a pace around clean energy is possible. We can do both. I think that’s a debate worth having.
JIM CRAMER: Do you think the industry is a villain, or shady and not capable of compromise, as I believe our President feels? And I say that, if only because the President felt that the Saudi Arabians were pariahs, were murderers, he was happy to sit down. All the photo opportunities you want over there in Saudi Arabia. But no sit-down with Mike Wirth, no sit-down with Darren Woods, no sit-down with Scott Sheffield, no sit-down with these people in oil and gas, whom you and I both know are reasonable people who are doing their absolute best to try to weed out the carbon where they can do. What is going on in Washington that makes it so that they are the enemy of what you are trying to accomplish in many ways?
LYNN GOOD: Well, I think energy has been a topic, Jim, for some time, and there are conversations on both sides of the equation. Carbon reduction, energy independence, affordability, energy stability. I mean, there are so many different dimensions. I think we need to talk about all of them, and we need to have a long-term view. I think about my business. I’m planning for what I believe is going to be necessary to serve my customers, to electrify our economy in the 2030s and the 2040s. I’m trying to get to net zero by 2050. That means we have to have conversations about a variety of resources, about diversity of supply, because there’s never been a single source of power generation that has powered our country, and I don’t expect there to be over the next several decades. So I would encourage the conversations. I think we can have them.
JIM CRAMER: Good. I’m glad you say that, because not compromising with great Americans who have done their absolute best, like Mike Wirth, 3 billion to 10 billion in just a few years time in order to be able to make it so there’s more renewables, means that that person is a great American and should be sat down with and should not be insulted, which is what I think he was. That’s my own words. Now let’s talk about the state of North Carolina, to be a little more upbeat. We said that that was the most desirable state to work in. You’ve got some terrific people. I mentioned Darius Adamczyk at Honeywell. He moves his company down the block from me in New Jersey to North Carolina. You have so much industry coming down to that area. Is there a big surge in the need for electricity, and what are the constraints that they want? How many of these companies come to you and say: You know what? We’ll come to you, but we do not want any fossil fuels to be part of the mosaic by 2050.
LYNN GOOD: You know, Jim, North Carolina is open for business, and I was so pleased to see the ranking of the state because there’s been a lot of hard work in North Carolina to understand how to drive the economy, how to make sure we’ve got the worse force, how to attract the industries necessary to really power the growth of the state going forward. When we are a part of those discussions, and we frequently are because energy can be a part of the decision process that a company goes through in deciding where to locate, we’re always at the table, coming up with solutions and ways that we can partner to meet their needs. Many of our customers have sustainability goals, whether it’s a net zero goal by 2050 or it’s a 50 percent reduction by 2030, and we’re anxious to have those conversations and to share where we’re going and what else we can do to help the customers meet their sustainability goals.
JIM CRAMER: We’ve spent a lot of time on “Mad Money” with the CEOs of the cyber security companies. To a person — I would like to say, actually, to a man, unfortunately, but to a person, they are all convinced that some of the easier targets after Colonial Pipeline are the people in the energy business, because they’re somewhat unsophisticated — not everybody, I think you have a very good read on this — about what can happen and the need to be able to have a staff that understands, you know what? We can’t just keep paying Ethereum to companies so that they let our pipelines work. Who have you brought in? What kind of strategies do you have to be sure that you’re not targeted?
LYNN GOOD: Jim, I would say to you that the electric industry has been operating under mandatory standards around cyber security for some time because we understand the importance that we represent to our communities as critical infrastructure to serve not only urban communities, but rural communities as well. So those standards have been in place for some time. We’re very active with information sharing, not only with government partners, but with industry partners. And we’ve been making increasing investments, not only to strengthen our system, but to put tools and processes in place around cyber. And then we also drill, which means recovery methods and plans, simulating what could happen if we had a cyber attack, if we had a physical attack, if we had an explosion or an accident of some sort around the system. So this work is ongoing, and I would say to you that the investment has been increasing year-over-year, and we understand the importance of maintaining our focus on doing as much as we can and working closely with these partners to make sure we have the kind of infrastructure that our customers and communities count on.
JIM CRAMER: Okay. So lastly, Lynn, we had some CPI number out today, it was torrid, it was not what anybody wanted. One of the components was — I don’t want to say skyrocketing, because that would be hyperbole, but much higher energy costs to consumers. Obviously, the gasoline, you do not control that. But if there was a way to be able to reduce the price of energy to your constituents, would it not require you to get dirtier? And is that an option, at a time when people are very worried about inflation to say, You know what? We’re going slow here. We’ve got a number of great coal plants. We can extend them, we can make them cleaner, and we can keep power cheaper. Is that a compromise worth making?
LYNN GOOD: You know, Jim, I don’t think that’s an equation that necessarily makes sense, because it’s actually the fuel that has been driving the energy prices, the high natural gas prices. Coal prices are very high as the demand for coal overseas has accelerated, and the price has actually increased to a global market price. I believe what the answer is is to work on domestic production, to work on our transition to clean energy in a way that finds that balance between affordability and reliability, and to work closely with customers in this moment where prices are high, to make sure energy efficiency programs are being put in place, to make sure customers understand usage, to communicate, to provide flexibility on payment arrangements, to find assistance for those that are vulnerable and to work our way through this transition in a way that demonstrates the right long-term decisions so that we get to our ultimate goal of net zero by 2050. I don’t think it’s a choice on what type of energy we provide; it’s looking at the long-term and making long-term choices that achieve the goals of affordability, reliability and clean.
JIM CRAMER: But are some of these more natural, obviously, renewables, inherently unreliable given in some parts of your territory, you don’t get a lot of sun and you don’t get a lot of wind?
LYNN GOOD: Well, renewables come with an operating profile that’s intermittent, Jim, just as you indicate. We have the ability with solar to put battery storage to move the power around a few hours. Wind has a slightly different profile depending on the area of the country that you’re in. Nuclear, of course, runs 95 percent of the time. We have energy efficiency products that our customers can use, and of course we use natural gas where reliability is needed. So it gets back to that equation of a diverse supply, which has always been the case in the electric sector; I believe it will be the case in the future, and that combination is what makes reliability work.
JIM CRAMER: Well, Lynn, you are a great steward of the last part of Jim Rogers’ career when he came around to understanding how important his company could be in a leadership position. You are in a leadership position. I want to thank you so much, Lynn Good. DUK is the symbol. I’ve liked this stock for a great long time. We didn’t talk stocks, but that’s all right. We’re doing something a little bit more high level here. You have done a terrific job. Thank you so much for joining us on Evolve.
LYNN GOOD: Jim, thank you. It’s a pleasure.
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