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An Unlikely 1970s-Era Environmentalist

A 1974 American Electric Power advertisement claim rings hollow today.

There was a lot of breaking news during the summer of 1974. Watergate was in full swing, culminating in President Nixon’s resignation on August 8, oil prices were skyrocketing, and Patty Hearst was still held by kidnappers. All these monumental headlines may explain why my parents decided to save a couple issues of the New York Times from that July, and why I came across them at their house a couple weeks ago.

The back page of the July 31, 1974 front section had an amazing advertisement, which I’ve reproduced below.

There are a number of striking things about this ad.

  • American Electric Power’s claim to environmentalism. The ad is for American Electric Power (AEP), who today produce more electricity from coal than any other US company by a long shot (see the figure below, which is based on this report.) Producing electricity from coal has a lot of advantages – low cost being one of the main ones. Benefits to the environment, however, are not one of coal’s selling points.
The Top-5 Coal Generators in the US

More than two-thirds of AEP’s 2015 generation is from coal-fired power plants. That’s a higher share than any of the other top-15 US power producers. All told, AEP is the largest electric utility emitter of CO2, accounting for almost 2% of the US’s total CO2 emissions.

In addition to their CO2 emissions, coal plants produce some gnarly local pollutants, such as sulfur dioxide, nitrogen oxides and particulate matter. In the late 1990s, AEP was one of the targets of a series of federal lawsuits alleging that the defendants hadn’t complied with federal requirements to install control equipment to mitigate these pollutants. Under the so-called New Source Review process, companies were supposed to apply for permits from the EPA whenever they made major modifications to their power plants that increased their emissions. Regulations that grew out of the Clean Air Act required power plants to install pollution control equipment when they were built, so New Source Review was designed to prevent companies from skirting the requirements for new plants by keeping old plants in service with major refurbishments. The lawsuits alleged that companies did not comply with New Source Review. AEP eventually settled its case, agreeing to install what the EPA claimed was $4.6 billion worth of new pollution control equipment.

AEP is also famous amongst Coasian economists for buying out an entire town instead of addressing townspeople’s objections to the pollution from the local coal plant. The people of Cheshire, Ohio had been complaining for years about pollution from AEP’s Gavin plant, so in 2002, the company offered every one of the town’s 450 or so residents 3.5 times the assessed value of their property if they agreed to move and never complain about the pollution. (This article has a great discussion of the issues.) Ronald Coase won the Nobel Prize in economics for, among other things, noting how difficult it is to

Ronald Coase

strike deals between polluters and people affected by the pollution, so some of us discuss this counterexample in environmental economics classes.

Recently, the company has lobbied against Obama-era regulations designed to address climate change. If I were an AEP shareholder, I would probably want them to make those arguments, given their investments in coal-fired power plants, but it does detract from their claims to environmentalism.

I have no idea whether AEP’s ad seemed cynical in 1974. Maybe not, since climate change wasn’t part of the public discussion and the US was worried about supplying its own fossil fuels. But, it sure rings hollow today.

In a sign of the changing times, however, AEP recently announced its intention to purchase a 2,000 MW wind farm in Oklahoma once it’s built. Wind is really going mainstream if the company that the Cheshire article claims used “capitalism in its purest form” is making this large an investment.

  • What they’re calling environmentalism. The caption to the photo claims that, “Once this was famished farmland, then our stripmine. We reclaimed it into lovely woodland and lakes – a tiny part of our investment in environment.” So, AEP is highlighting their strip mining activities, but claiming they’re environmentalists because they’ve patched up the strip mined area with a wooded pond that cherubic children will stand next to, but maybe not swim in? I wonder whether the emphasis on “clean coal” touted in this ad is what makes people skeptical of carbon capture and sequestration.
  • The timeless emphasis on energy independence. The bottom right of the ad has the silly cartoon drawing of what are presumably supposed to be Arab oil sheikhs and the phrase, “America has more coal than the Middle East has oil. Let’s dig it!”

I can just picture the groovy Mad Men Season 7-era creative directors who came up with the “Dig it” phrase. I wonder if they’d be proud to see how it resurfaced during the summer of 2016?

My colleagues in marketing suggest that investments in advertising can pay off over a long time, as people remember the message. So, maybe there are some of us who still – at least in some residual piece of our subconscious – think that AEP is a green company and that digging lots of coal will help the environment. It does make me wonder – which 2017 ads will seem most anachronistic in another 43 years?

 

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Catherine Wolfram View All

Catherine Wolfram is the Cora Jane Flood Professor of Business Administration at the Haas School of Business, Co-Director of the Energy Institute at Haas, and a Faculty Director of The E2e Project. Her research analyzes the impact of environmental regulation on energy markets and the effects of electricity industry privatization and restructuring around the world. She is currently implementing several randomized control trials to evaluate energy efficiency programs.

11 thoughts on “An Unlikely 1970s-Era Environmentalist Leave a comment

  1. Catherine, an ad featuring the rusting, ineffectual turbines of the 1980s-era Tehachapi Pass Windfarm near Palm Springs might already seem a little anachronistic.

    A 2060 photo ad of the projected 460 sq. mile Wind Catcher farm in Oklahoma will be even more embarrassing – by then, its 800 turbines will be ready for their second replacement, with ratepayers unlikely to absorb another $4.6 billion payment for 2 gigawatts of intermittent wind energy.

    Especially considering a nuclear plant like Diablo Canyon would have cost half the price – and would still be churning out three times as much annual electricity, in wind or calm, while occupying 1/1,500 the land area. Ouch!

  2. Thanks for this reminder of corporate lying which is still being bought by too many Americans who think that Capitalism and Democracy are one and the same. AEP could not lie because they are good capitalists! Probably PNM (New Mexico) produced more power from coal on a percentage basis than AEP but stockholders and a false notion of jobs (including mining) over health from the Navajo Nation keeps then in business.

  3. Sierra Club ad promoting taking nuclear offline, and building 2,700 MW gas. Part of their reasoning is that nuclear is not C free (10 g), and that nuclear reactors release radioactivity, which fossil fuels like coal and oil gas somehow don’t. There are a number of other mistakes. One could almost think that climate change is not a major interest of Sierra Club.

    https://content.sierraclub.org/grassrootsnetwork/sites/content.sierraclub.org.activistnetwork/files/teams/documents/Reasons%20to%20Oppose%20Ohio%20Nuclear%20Bailouts.pdf

  4. For those of us who were involved in energy/environment/political issues as far back as the late 1960s/early 1970s (I know, hard to believe…), AEP was then notorious for its ‘green-washing’ (I don’t think any of us called it that then, mostly it was just labeled BS and worse). AEP was trying to ride on the coattails of the calls to achieve energy “independence” and Nixon’s Project Independence, announced in 1973, which, among other things, called for the conversion of oil-fired power plants to coal (not to mention 1000 nukes by the year 2000). At the same time, there was beginning to be stronger resistance to strip mining – especially when the coal companies were simply walking away from the despoiled environment after the mining ceased. This was also a time when NEPA and the EPA were brand new and the enforcement of rules regarding thermal discharges into waterways had just been bolstered by the Calvert Cliffs decision (in 1971, I think) by the Supreme Court — hence AEP’s mention of cooling towers in their fourth and fifth paragraphs of the ad. AEP, like many other utilities, relied heavily on once-through cooling on the backside of the steam turbines using available surface water (mainly rivers in the case of AEP).

    What is truly striking are the three paragraphs following the cooling towers, where AEP touts the building tall stacks as a way of “mitigating” the effects of burning sulfur-containing coal. AEP was a leader (but by no means alone) in resisting the need to remove sulfur oxide emissions – either through scrubbing or through using low sulfur coal. Hence their claim about tall stacks – which even in those days were seen as a major source of air pollution and acid rain in the North East (AEP’s coal-fired plants are mainly located in the Ohio and Tennessee valleys).

    I think for most of us involved in these issues in the 1970’s, global warming was not at the top of the list of concerns (perhaps in hind sight it should have been higher), but the major concerns were precisely that list of “gnarly local [and regional] pollutants” you mention – along with strip mining and mountain top removal and all the environmental ills like acid mine drainage. So was this ad seen as cynical in 1974 – absolutely, and it also rang ‘just as hollow’ then as now. I’d like to believe that there aren’t very many people – conciously or otherwise – who think mining and burning coal is green (cynical politicians excepted).

    My candidate for historically anachronistic (I think environmentally mendacious is a better descriptor) energy ads is from about the same late-60’s early 70’s time period – “electric power too cheap to meter” was a slick, large format publication put out by Westinghouse extolling the virtues of their PWR nuclear power program. Westinghouse’s current financial problems (now Toshiba’s, as they purchased the Westinghouse electric power program) figure prominently in the recent decision by Scana and Santee Cooper to walk away from their partially finished PWR units at Summer in South Carolina.

  5. The other feature of this era was the coal vs. nuclear debate. Perhaps AEP was putting it stake in the ground for coal? Expectations were of ever increasing electricity use, more or less in lockstep with rising prosperity, and the obvious two U.S. fuel choices were coal and nuclear. AEP went the coal route, building (I believe) only one nuclear station, Cook. The Three Mile Island incident occurred 5 years later. While climate change wasn’t a major factor in the public debate, other pollution certainly was. Had AEP gone the other direction and built more nukes their carbon footprint would look a lot smaller today, but who know what other persontraps they might have fallen into.

  6. When this AEP ad was published the US was importing most of its oil at high prices. One response of the federal government was to encourage the substitution of coal for oil and gas in electricity production. Power plants that were built to burn coal, and later were converted to burn oil and/gas, were being converted back to coal usage. AEP was merely doing what was considered to be in the public interest so it is unfair to now condemn AEP for increasing its use of coal.

    On the other hand, AEP’s skirting the New Source Review regulations is unconscionable. The Clean Air Act of 1970 exempted existing coal-fired power plants (and those under construction) from having to comply with best available compliance standards for reducing particulates, SO2 and NOx emissions under the assumption that these plants (many of which were totally uncontrolled) would be retired after 30 years. They weren’t. Instead the utilities kept them in service spewing deadly emissions into the atmosphere in order to keep electric rates low. AEP was one of them, along with Duke, Southern Company and many others. Now these same utilities want to cry foul when the Clean Power Plan was forcing then to do what they should have voluntarily done years ago.

    How times have changed. In 1974 global warming was not yet recognized as a worldwide threat, although there existed research efforts suggesting the link between CO2 emissions and global warming.

  7. The skepticism was a response to the idea that it is environmentally friendly to destroy a mountain environment and plant a few trees in the crater. And that burning coal with minimal emission credits was good for the environment.

  8. AS a young adult at that time (I graduated from college in 1969), I can tell you my reaction to this form of advertising–they were purposely trying to “paint themselves green” with their untruthful statements. I don’t know who fell for it, but I did not.

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