ANNOUNCER: Tonight on FRONTLINE- SUNITA NARAIN, Ctr. for Science   and Environment, New Delhi: We're  standing at the precipice of hell.   If everybody else was to live like an  American, then the planet is doomed. ANNOUNCER: In the midst of a campaign  dominated by economic anxiety- Sen. JOHN McCAIN (R-AZ),  Presidential Nominee: The facts   of global warming demand our urgent attention. ANNOUNCER: -FRONTLINE investigates what will  be the most important issue facing our world. Sen. BARACK OBAMA (D-IL), Presidential  Nominee: We can't wait to solve one of   the greatest crises that mankind has ever faced  and roll back greenhouse gases global warming! ANNOUNCER: Tonight, correspondent  Martin Smith travels the planet to   uncover the scale of the problem,  and the scale of any solution. Rep. RICK BOUCHER (D), Virginia: By the year 2050,   we need to reduce greenhouse gas  emissions between 60 and 80 percent. MICHAEL MORRIS, CEO, American Electric  Power: It's an un-accomplishable goal. MARTIN SMITH, Correspondent: As simple as that? MICHAEL MORRIS: Just that simple. ANNOUNCER: It is an investigation of the  resistance to change inside major corporations- MARTIN SMITH: Why did Toyota  beat you to the Prius? BETH LOWERY, VP, Environmental Affairs, GM: Toyota  looked at the hybrid from an overall standpoint,   and General Motors really looked  at, "Can this vehicle make money?"

MARTIN SMITH: But yet Toyota is eating your lunch. ANNOUNCER: -and a report on  resistance to change in Washington- Sen. SAXBY CHAMBLISS (R), Georgia: This  bill will attack citizens at the pump- ERIC POOLEY, Contributor, TIME Magazine:  Congress is in no mood to debate anything   that was going to increase gas  prices, even by a little bit. ANNOUNCER: -and an examination of  the hard choices that lie ahead. JEFF GOODELL, Author, Big Coal: We  seem incapable of grasping what's   at stake here perhaps because so much  is at stake. If we don't do something   about reducing CO2 emissions,  we're going to cook the planet. ANNOUNCER: Tonight, Heat, a  FRONTLINE global investigation. MARTIN SMITH, Correspondent: [voice-over]   When we set out to investigate climate change,  we had already heard a lot about polar bears  

in the Arctic and collapsing ice shelves in  Antarctica. I decided to go to what some call   the Earth's third pole, the Himalayas. My guide  was climber and filmmaker David Breashears. He's   been to the summit of Mt. Everest five times.  This time, he was returning on a special mission. [on camera] So where are you going? DAVID BREASHEARS: I'm going to go right up  there to about 19,000 feet, on these rocky   ridges here that are in this early morning  light to get a viewpoint here to shoot from   the place where George Mallory shot in 1921 and  see how much has changed in that amount of time. I'm going up here, right up  there on those pinnacles. TIBETAN GUIDE: He passed this river? DAVID BREASHEARS: Yes. It's a long way. And then  we'll see how much this glacier has melted here.

MARTIN SMITH: First, Breashears  had to cross a small river of icy   water with his three porters. I  stayed behind. It was going to   take a fast climb in thin air up the  side of a steep ridge with no trail. Eight hours later, Breashears reached this spot  at 19,000 feet. He'd identified it as the outcrop   where British explorer George Mallory took his  photograph of Everest in 1921. At the foot of   the mountain, the main Rongbuk glacier, a frozen  river of ice that flows from Everest's north side. DAVID BREASHEARS: I first was on this side of the  mountain in 1996, so I know this place well. And   to look at the glacier here in 1921 and to look at  it out there now, it's- the glacier's just gone.

MARTIN SMITH: Using photographs and maps,   Breashears has calculated that the glacier  has lost up to 40 percent of its ice.   Glaciers are disappearing fast here. The United  Nation's Intergovernmental Panel on Climate Change   estimates that 80 percent of all glacier ice in  Tibet and the Himalayas will be gone by 2035. Earlier, I had visited one of the world's  foremost glacier labs located in Columbus,   Ohio. Here, ice cores from glaciers  all around the planet are collected   and studied. The lab's founder  and director, Dr. Lonnie Thompson,   is said to have spent more time at high  altitude than any other scientist in the world.

Editors' Note: The IPCC stands by its core  conclusion on glaciers -- i.e. that "Widespread   mass losses from glaciers ... are projected to  accelerate throughout the 21st century." But   they have retracted their assertion that "80  percent of all glacier ice in Tibet and the   Himalayas will be gone by 2035" attributing  it to a scientist in a popular magazine who   now says he was misquoted. It should not  have been in the IPCC report they say. [voice-over] How will warming affect the people  that live on either side of the Himalayan range? LONNIE THOMPSON, Ph.D., Glaciologist, Ohio  State Univ.: Well, you can think of glaciers   as water towers. They kind of store the water  from the wet season and during wet times,   and they disperse it during the dry season  and the dry times. And they do that for free.   You go down in these valleys and  they're really dry parts of the world,   except for the water that's coming from the  glaciers and from the higher elevation sites. MARTIN SMITH: For now, the melting glaciers  are bringing more water to these slopes,   but it's a mixed blessing. More  water has attracted more settlers   and thrown their environment out of balance. NEPALI MAN: [through interpreter]  As the population has increased,   deforestation has also increased, so our cattle  have less food and they're giving off less milk.

MARTIN SMITH: And what's happening  here will not just hurt these farmers. LONNIE THOMPSON: What really makes our  time so different- people talk about,   you know, "Oh, we've had these huge climate  changes in the past." Yeah, that's true,   but we never have had 6.5 billion people. MARTIN SMITH: And nearly half the  world's people depend on Himalayan and   Tibetan glaciers for water. Among the major  rivers that flow from here are the Ganges,   the Indus, the Mekong, the Brahmaputra, the  Irrawaddy, the Yangtze and the Yellow Rivers. LONNIE THOMPSON: We're talking about  millions of people living downstream,   and therefore, what happens to  those glaciers and what happens   to the water supplies at the  source is extremely important. MARTIN SMITH: The Intergovernmental Panel on  Climate Change predicts that in the near future,   as the glaciers dry up, some major rivers will   no longer flow year-round. IPCC  chairman Dr. Rajendra Pachauri.

RAJENDRA PACHAURI, Intergovernmental Panel  on Climate Change: Over a period of time,   about 500 million people on the subcontinent  are going to suffer from water scarcity as a   result of the melting of those glaciers,  and 250 million people in China. In terms   of the impact on the lives and livelihoods  of people, we're turning thousands of years   of human history around and perhaps  leaving people with no choice now. MARTIN SMITH: Millions of people in China  live in areas already starved of water.   As their glaciers dry up, conflicts  with their neighbors are inevitable.   China's idea to divert water from the Brahmaputra  has already heightened tensions with India. Melting glaciers are just one problem. Scientists  warn of many other consequences. Sea levels are   rising, their waters absorbing CO2, contributing  to the creation of vast dead zones devoid of life.   Fisheries are failing. Deserts are also  expanding. People are being forced off   their land by frequent droughts. Worldwide, storms  are becoming more violent, fires more frequent.

JOSEPH ROMM, Author, Hell and High Water: I think  it is important for people to understand global   warming is not the sole cause of everything that  happens. What it does is it just makes certain   things more likely. So you cross a threshold  and you get a collapse. And unfortunately,   once you've changed the climate, it becomes  very hard to un-collapse, and it may be - it   may very well be impossible. I mean, it may be  that some of these changes are irreversible. MARTIN SMITH: The overwhelming majority  of the world's climate scientists warn   that the only way to avoid larger disasters  is for the world to dramatically reduce its   emissions of greenhouse gases, cutting  them by 60 to 80 percent by mid-century. RAJENDRA PACHAURI: If we just sit back  and say, "Oh, it'll happen," it's not   going to happen. Climate change is being  caused by human actions and we need to do   something about it. And I think the  sooner we realize that, the better.

MARTIN SMITH: Before the dawning of the Industrial  Age, the level of carbon dioxide in the earth's   atmosphere had remained relatively steady for  hundreds of thousands of years. But as people   began to burn fossil fuels - oil, coal and natural  gas - on a large scale, CO2 levels began to climb. By the mid-'50s, scientists had begun to  wonder if there might be a consequence. This   episode of the popular TV show The Bell  Telephone Science Series aired in 1958. Dr. FRANK C. BAXTER: ["The Unchained Goddess,"  1953] Even now, man may be unwittingly changing   the world's climate through the waste products  of his civilization. Due to our release through   factories and automobiles every year of  more six billion tons of carbon dioxide,   which helps air absorb heat from the sun,  our atmosphere seems to be getting warmer. RICHARD CARLSON: This is bad? Dr. FRANK C. BAXTER: Well, it's been  calculated a few degrees rise in the   earth's temperature would melt the polar ice caps.   And if this happens, an inland sea  would fill a good portion of the   Mississippi valley. Tourists in  glass-bottomed boats would be - MARTIN SMITH: But at the time, no one paid much  attention to such theories, and in the U.S.,   industrial growth and human consumption  accelerated through the '60s, '70s and '80s.

By the 1990s, we were consuming as  never before, manufacturing more goods,   using more electricity and driving  bigger cars and trucks. Gas was cheap. JEFFREY BALL, The Wall Street Journal: The  history of the U.S. is a history of cheap   energy. This country sits or sat on vast  pools of oil. There was no reason to care. MARTIN SMITH: Cheap and abundant  coal also played its part. JEFF GOODELL: Coal is the rock that built America.  It was the engine of the industrial revolution.   We should all be very grateful for all  the miracles of modern life that coal   has brought to us. But CO2 emissions  are rising and rising and rising. BOB MURRAY, Chairman, Murray Energy:  OK, fellows, let's make it roll! MARTIN SMITH: Today, carbon dioxide in  our atmosphere has risen to record levels,   and people's demand for energy  shows little sign of slowing down.

BOB MURRAY: Our electric needs in this country,   according to the federal government, are  going to increase 41 percent between now   and 2020 - 41 percent between now and 2020.  If the coal industry were eliminated and   the 52 percent of the electricity that it  accounts for, this country would go black. Pres. GEORGE H. W. BUSH: In the United States, we  have the world's tightest air quality standards. MARTIN SMITH: In 1992, the world started  talking about climate change at the Rio   summit, but there was no action. At  Kyoto, 1997, there were higher hopes. Vice Pres. AL GORE: The human consequences and the  economic costs of failing to act are unthinkable. MARTIN SMITH: But the U.S. Senate balked because  developing nations were exempted from making cuts.   They feared that signing the treaty would  put the U.S. at a competitive disadvantage.   Four years later, President Bush made  it clear he also rejected the treaty.

Pres. GEORGE W. BUSH: The Kyoto protocol  was fatally flawed in fundamental ways. MARTIN SMITH: Meanwhile, developing nations  were entering a new era of rapid growth.   Today, the rise of China threatens to overwhelm  any hope of controlling CO2 emissions. JAMES BROCK, Energy Consultant, Beijing:  China is growing at a rate that is just   massive. China is the proverbial teenager. The  hormones are going in one direction. The body's   growing faster than the brain. Some parts  are not in coordination with other parts.   The Chinese deny, at this point, that  they should aspire to a lower standard   than any other country. When people say,  "Well, you can't develop a society where   everybody can own a car like the United  States," and the Chinese say, "Why not?"

MARTIN SMITH:   At Geely, China's largest  privately owned car company,   they are racing to keep up with demand.  Among their biggest sellers, the King Kong. LI SHUFU, CEO, Geely International Corp.:  [through interpreter] The car industry is   growing quickly. We sold 160,000 cars last year.   My plan is to reach 400,000 to 500,000  by next year and 700,000 in two years. MARTIN SMITH: [on camera] You know,  I've looked at your corporate profile,   and I could find no mention of initiatives of any  kind into higher efficiency vehicles of any kind. LI SHUFU: [through interpreter] We haven't  such a model yet, but we will in the future.

MARTIN SMITH: [voice-over] Nothing epitomizes  China's growth more than the building of two   new coal plants here every week. This plant  outside Beijing belongs to Shenhua Energy   Corporation, one of the biggest, fastest  growing energy companies in the world. [on camera] You grew 80 percent over the  last year? You almost doubled your capacity? LING WEN, CEO, Shenhua Energy: Yes. MARTIN SMITH: Of electricity generation? LING WEN: Correct. MARTIN SMITH: And you expect to continue to  grow 20 to 30 percent over the next five years. LING WEN: Yes. MARTIN SMITH: That's a huge amount of growth. LING WEN: Yes, it's a very fast growth. MARTIN SMITH: What kind of plans do you  have to address emissions of carbon dioxide? LING WEN: As a responsible company, I think we  will do our best to reduce the CO2 pollution,   if we can. But, how to say,  as the CEO of this company,   we must consider other issues. We must create  money, not lose the money. It's my - I mean,   my responsibility as the CEO of this company.

MARTIN SMITH: Your responsibility  is to the shareholders. LING WEN: First to all of the  shareholders, second to the society. MARTIN SMITH: Why not public first? LING WEN: If all of the shareholders  say, "Oh, see, Dr. Ling, the CEO,   could you make the - your first responsibility  to the public, then to all the shareholders,   it's OK." But I'm afraid maybe all the  shareholders, they cannot accept that concept. MARTIN SMITH: [voice-over] Asia's other booming  giant, India, will surpass China as the world most   populous country by 2030. Here I found factories  pumping out SUVs for India's growing middle class,   and soon a $2,500 gas-powered car for millions  more emerging from poverty. Today, everywhere you   look, there's new construction. For India, it's  a great success story, a triumph of free markets.

HAMEED BHOMBAL, V.P., Aditya Birla Industries:  Everywhere you go, you're seeing construction   going on. And everywhere you go, you see  these kinds of things happening. You see   all these store buildings that are coming  up. They almost seem to be sprouting up over   night. You wake up one morning, "Whoops!  There's another tall building out there." MARTIN SMITH: But as in China,   growth is also the problem. Even the most  basic building material, cement, is an issue.   The process of making cement is one of the biggest  industrial sources of CO2 emissions in the world. [on camera] It surprised me when I learned  that cement was the third largest - the process   of making cement was the third largest  contributor to greenhouse gas emissions. S.K. MAHESHWARI, Sr. Exec., UltraTech  Cement: Well, it's true because almost   about 5 percent of the carbon dioxide  emission which comes out in the world   is from the cement industry. And  looking at the volume of the cement   industry, it is - is one of the biggest  contributor for the greenhouse emission. MARTIN SMITH: [voice-over] Most of the CO2 comes   from roasting powdered limestone and  clay inside large rotating furnaces.

HAMEED BHOMBAL: That's where the real heat is  generated and that's the cause of pollution,   that you have to supply energy  to get it the right temperature. MARTIN SMITH: [on camera] Are there alternatives? HAMEED BHOMBAL: Everybody in the world uses that. MARTIN SMITH: How do you get to a point  where you can actually reduce the emissions? S.K. MAHESHWARI: I mean, the CO2 emissions  will be there. But there will be reduction. MARTIN SMITH: Can you get to 80 percent  reductions by 2050? Is that realistic? S.K. MAHESHWARI: Eighty percent is  maybe- may not be there. But definitely,   about 10 percent reduction can take place. MARTIN SMITH: [voice-over] In India, cement  production is growing 10 percent a year and   will continue to grow as India  builds up its infrastructure. SUNITA NARAIN, Ctr. for Science and Environment,  New Delhi: We are standing at the precipice of   hell. The Western model of growth is inherently  toxic. It's highly capital-intensive and highly   resource-intensive, uses a lot of materials, uses  a lot of energy and generates a lot of waste.   If every Indian was to live like an American,   then the planet is doomed and  the planet is doomed forever.

MARTIN SMITH: In December 2007, 9,000 delegates  from 187 countries arrived in Bali, Indonesia,   for the United Nations Climate Change Conference.   Diplomats and scientists were convening  to try to strike a new global climate   treaty. As Dr. Rajendra Pachauri arrived, the  IPCC had just issued a string of ever more   urgent reports. He was hoping that governments,  especially the U.S., were finally listening. Ironically, the Bush administration  had welcomed Pachauri to the IPCC,   expecting that this engineer and economist, on the  board of several large Indian energy companies,   would be cautious and sympathetic to  the U.S. position on climate change. RAJENDRA PACHAURI, Inter-Governmental Panel on  Climate Change: If we lose momentum over here,   then we have a very short period of time - MARTIN SMITH: Instead, Pachauri has  repeatedly sounded the alarm and put   responsibility squarely on businesses and  governments in the industrialized West.

RAJENDRA PACHAURI: If one looks at the historical  responsibility for the problem, the fact that   the concentration of greenhouse gases is  essentially the result of emissions that   have taken place for 150-plus years, largely in  the developed countries, that's one reason. And   the second reason is that in terms of economic  and technological capacity, the developed   countries are certainly better equipped to do  something about this than the developing world. MARTIN SMITH: U.S. negotiators  in Bali didn't see it that way. IPCC PRESIDENT: Next is the United States. PAULA DOBRIANSKY, U.S. Negotiator:  Thank you, Mr Chairman. Unfortunately,   there have been many strong statements - MARTIN SMITH: They maintained  that America would make no cuts   unless developing nations also agreed.  They didn't expect what happened next. DELEGATE: -so I just want to state this  preference of the developing countries - PHILIP CLAPP, Pew Environment Group: For the  first time, the developing countries stepped   forward and said, "We will negotiate verifiable,  measurable and reportable emissions reduction   measures to be incorporated in the treaty."  The developing countries called their bluff.

IPCC PRESIDENT: May I now call upon China. PHILIP CLAPP: And China was in the lead in saying,  "We should do that." The U.S. negotiator said no. PAULA DOBRIANSKY: I have to say that,   you know, the formulation that has been put  forward we cannot accept. [delegates boo] IPCC PRESIDENT: Thank you.  Thank you, United States. PHILIP CLAPP: And they were  booed on the floor. And suddenly,   Paula Dobriansky recognized that  the story that was going to come   out of Bali was that the United States  destroyed a major climate agreement. IPCC PRESIDENT: The United  States wishes to speak again. PHILIP CLAPP: So she sat there,  flipped the microphone back on,   shut the meeting down by saying, "We  won't stand in the way of a consensus." PAULA DOBRIANSKY: Let me say to  you that we will go forward and   join consensus in this today. [delegates applaud] PHILIP CLAPP: Who knows whether there was  actual direct communication with the White   House on that or not. The cell phones were  going like crazy at the U.S. delegation   table. But it was clearly, I think, in her  negotiating instructions that, above all,   don't let the United States get  blamed for blowing up a deal.

MARTIN SMITH:   There were other changes under  way in Washington. Democrats had   won the 2006 mid-term elections. At  the Senate Environment Committee - AL GORE (D-TN), Former Vice  President: Local restrictions on - Sen. JAMES INHOFE (R), Oklahoma: All right,  Senator Gore. I'm very sorry. I don't want to   be rude, but - MARTIN SMITH: Republican Chairman James  Inhofe, a global warming skeptic, was out. Sen. JAMES INHOFE: Since  you're not going to respond - Sen. BARBARA BOXER (D-CA), Environment  Committee Chair: -just for a minute.   I want to talk to you a minute, please. MARTIN SMITH: In was Barbara  Boxer, a California Democrat. Sen. BARBARA BOXER: You're not making the  rules. You used to when you did this. You   don't do this anymore. Elections have  consequences. [laughter, applause] MARTIN SMITH: Some American business  leaders seemed to get the message - Sen. BARBARA BOXER: Today we'll hear  from a group of leading corporations - MARTIN SMITH: -and showed up as part of a new   organization called the U.S.  Climate Action Partnership. PETER DARBEE, Chmn., Pacific Gas & Electric:  Our organization is here because we share   a view that climate change is the most  pressing environmental issue of our time. JEFFREY BALL, The Wall Street Journal: They  basically called for carbon regulation,   a huge switch from what their - their public  lobbying positions in the past. Why did they   do it? Well, they didn't do it because  suddenly they changed their environmental   outlook. They did it because they could  read the political handwriting on the wall.

MARTIN SMITH: Whatever their  motives, some senators were won over. Sen. JOHN WARNER (R), Virginia: It was  a recognition that those most affected,   i.e. the industrial base, are ready to  do something to reduce the CO2 emissions. MARTIN SMITH: [on camera] Did it have more impact   than listening to all the  scientists over the years? Sen. JOHN WARNER: Well, there's  real money in that group. Sen. BARBARA BOXER: The meeting stands adjourned. MARTIN SMITH: [voice-over]  And on the campaign trail,   both candidates were  promising bold new leadership. Sen. JOHN McCAIN (R-AZ), Presidential Candidate:   The facts of global warming demand our  urgent attention, especially in Washington. Sen. BARACK OBAMA (D-IL), Presidential  Candidate: We can't wait to solve one of   the greatest crises that mankind has ever faced  and roll back greenhouse gases and global warming! Prof. STEPHEN SCHNEIDER, Climatologist, Stanford  Univ.: Both of the candidates have strongly said   they're endorsing serious policies that will  bring the United States back into the fold   of the civilized nations, looking at what it is  doing in our - in our share to the contribution   to global warming. So I am very optimistic  that we're moving in the right direction.

MARTIN SMITH: But the big question is,  will all the momentum bring real change? Prof. JEFFREY SACHS, Earth Institute,  Columbia Univ.: For a long time,   we ignored the problem. For a long time,  we debated the problem. For a long time,   the U.S. government ran away from the  problem, pretended it wasn't there. ERIC POOLEY, Fmr. Managing Editor,  Fortune Magazine: We have to overcome   our natural way of doing business. If  this is all just a compromise between   various special interests,  we're not going to get it done. JOSEPH ROMM, Author, Hell and High  Water: Fundamentally, we have about,   you know, 10 years to reverse course. If  we stay on our current path for 10 years,   it will be all but impossible to  avoid catastrophic global warming. JEFF GOODELL, Author, Big Coal: We seem  incapable of grasping what's at stake   here. And perhaps it's because so much  is at stake and addressing this really   means changing sort of the essential economic  engine of our lives, which is fossil fuels. MARTIN SMITH:   To understand the magnitude of the  task, consider the scale of America's   addiction to fossil fuels like coal.  Every year, Americans consume over a   billion tons. In the Powder River Basin in  Wyoming, they shovel a million tons a day.

STEVEN LEER, CEO, Arch Coal: Our single mine of  Black Thunder produces more energy every year,   or every day, than the North Slope of Alaska.   And every 24 hours, we'll have  approximately 35 miles of trains loaded. MARTIN SMITH: Most of the trains  head east to power plants in the   Midwest and South. Coal shipments make up  half of all rail traffic in the country.   At this railyard in Nebraska, coal  trains account for 70 percent of traffic. CAMERON SCOTT, Union Pacific Railway:  Every day, we process 150 to 170 trains,   which if you do the math is, you know,  about a train every seven minutes. MARTIN SMITH: [on camera] So they're coming  out of the Powder River Basin through here,   on to the east and to the south? CAMERON SCOTT: That's exactly right. And as - MARTIN SMITH: The empties going back. CAMERON SCOTT: And the empties coming  back the other way. There is no question   that there's nothing like this anywhere on earth.   It is absolutely the world's largest  conveyor belt. And it never stops.

MARTIN SMITH: [voice-over] There are 600  coal-fired power plants in the country.   A large plant will burn through one  whole trainload in just 12 hours. CHARLIE POWELL, Manager, Mountaineer  Plant: We generate 1,300 megawatts per   hour at this generation facility. So we  power up many cities from this one unit. MARTIN SMITH: This plant in West Virginia  is owned and operated by American Electric   Power. In 2007, AEP was the single  biggest emitter of CO2 in America. [on camera] Nowadays, everybody's talking  about climate change, everybody's talking   about global warming, everybody's talking  about going green. What does that mean for you? CHARLIE POWELL: The thought of green is nice.  It's politically the right thing to do. But   people also like their electricity. When they  flip the switch, they want the lights to come on.

JEFF GOODELL: Most Americans don't have any  idea that we still burn coal. They think of   it as something that went out with, you know,  top hats and corsets and because they don't   see it because it's burned far away and it  just powers our lights, and we don't think   about where that electricity comes from and  what really goes on behind the light switch. MARTIN SMITH: [voice-over] The facts  are these. It takes one pound of coal   to power your TV for four-and-a-half hours,  another pound to power your bedside light for   two evenings. The average American household  uses nine-and-a-half tons of coal every year.   Fifty-two percent of all electricity  consumed in America comes from coal.   And with electricity consumption  rising, utilities like AEP say coal   is indispensable. They refer to it as  base-load power. It means it is always   available, unlike intermittent  sources, such as solar or wind.

ANNOUNCER: Welcome to the 2007 second  quarter employee earnings Webcast. DIRECTOR: Stand by. Stand by, camera four. ANNOUNCER: Today's panel includes Mike Morris. MARTIN SMITH: Mike Morris is AEP's CEO. Here  he's doing live Webcast for his employees. MODERATOR: I want to just run  through the numbers real quickly. MARTIN SMITH: After an earnings update, the  moderator asks Morris a few friendly questions. MODERATOR: With global warming a hot-button issue  and with some presidential candidates suggesting,   naively, that wind and solar will solve it,  shouldn't we do more to shape the public debate? MICHAEL MORRIS, CEO, American Electric  Power: That's an excellent question.   What I don't want to do is recreate  the impression that American Electric   Power is a "just say no" utility, that we are - MARTIN SMITH: When I visited AEP, Congress  was just beginning to debate how to regulate   carbon emissions. Utilities were  vying for a seat at the table. MODERATOR: How optimistic are you  that we'll get our voice heard? MICHAEL MORRIS: Oh, I'm certain  we'll get our voice heard because   we are constantly queried on these issues.

MARTIN SMITH: What needs to be heard, says Morris,   is that America desperately needs  to burn not less coal, but more. MICHAEL MORRIS: If we don't build more  base load generation, and the U.S. economy   continues to grow, we will ultimately get to  an economic brownout environment that'll have   tremendous negative impacts on  what goes on in this country. MARTIN SMITH: [on camera] And you're going to  meet that demand by building more coal plants? MICHAEL MORRIS: Clean coal. We hope so. You bet. COAL TELEVISION COMMERCIAL: You're looking  at the most abundant fuel in our country. MARTIN SMITH: [voice-over] In the summer  of 2007, America's coal companies,   railroads and utilities launched  a major advertising campaign. 1st COAL COMMERCIAL: Coal. It's the resource  that generates half of our electricity at a   third the cost of most other fuels. It's  the fuel that powers our way of life. MARTIN SMITH: The ads stress  that coal will be clean. 2nd COAL COMMERCIAL: -including  the capture and storage of CO2.   It's a big challenge, but we've made  a commitment, a commitment to clean.

MARTIN SMITH: We found some coal activists outside  a Democratic primary debate in Philadelphia. CATHY COFFEY, Americans for Balanced  Energy Choices: There's technologies   that are going to make electricity from coal  emissions free within the next 10-15 years,   so we're saying don't cut it out of the mix yet. MARTIN SMITH: It turned out they'd spent the year  shadowing the candidates, working the crowds. CATHY COFFEY: Let me give you some  information about energy in Pennsylvania- MARTIN SMITH: In Washington, the coal lobby  has traditionally gotten its way. Consider the   story of the coal-fired power plant that  sits just a few blocks from the Capitol. FRANK O'DONNELL, President, Clean Air Watch: The  Capitol power plant is about a century old at this   point. It burns coal. It provides ice water to  Senators. That's its primary mission. A couple   of years ago, the architect of the Capitol, who  manages it, decided, "Well, maybe we ought to try   to convert it to a lower-polluting natural gas."  And he was immediately told by powerful senators   who control his budget - Mitch McConnell of  Kentucky and Robert Byrd of West Virginia - "Oh,   no, you're not. We'll cut your budget if you  try to tamper with our baby." It's as if Tony   Soprano had a seat in the Senate. If this Congress  can't even clean up the most egregious polluter  

in its own back yard, how can they deal with  the problem across the entire United States? MARTIN SMITH: But in 2008, there was  a new push on Capitol Hill to rein in   carbon emissions. Senator John Warner had drafted  legislation, along with Senator Joe Lieberman,   to mandate a 60 percent cut in greenhouse  gases by mid-century. And while how the   industry does that is unclear, the  bill's authors are betting on it. [on camera] Is there a future for coal? Sen. JOE LIEBERMAN (I), Connecticut: There's  got to be a future for coal in the U.S. It's   too important to us. And again, I think once  you create this law, this mandate, the coal   industry and a lot of others are going to figure  out how to use coal and not pollute the air. ANNOUNCER: [GE video] In the marshlands of central  Florida, there's not much activity for people - MARTIN SMITH: [voice-over] To make the case  for clean coal, the industry likes to point   to a power plant outside Tampa, Florida, known  as Polk One. GE made a short film about it.

ANNOUNCER: With the help of GE's  advanced cleaner coal technology,   Tampa Electric is converting  coal into a cleaner burning fuel. MARTIN SMITH: We went down for a visit.  Mark Hornick is the plant's manager. MARK HORNICK, Manager, Polk  Power Plant: This is the top   floor of the gasifier. We call it the burner deck. MARTIN SMITH: The plant touts a  process known in the technical   jargon of the utility business  as Integrated Gas Combined Cycle,   or IGCC. It's essentially a process of  turning coal into a cleaner burning gas. MARK HORNICK: And it doesn't take long to do that.  So we mix that coal with the pure oxygen and that   reaction happens very fast and converts that solid  coal into that fuel gas, what we call syngas. MARTIN SMITH: And then, in theory - and this  is the big prize - they can capture CO2. MARK HORNICK: And then we would take that captured  CO2, compress it and inject it into the ground,   deep into a saline formation, a salt water  formation. It would go in as a supercritical   fluid and kind of mix with that water, and it  would be deep enough where there's confining   layers above it such that it would not migrate  to the surface, wouldn't impact drinking water   or have any adverse impacts. So that's what's  envisioned for carbon capture and storage.

INTERVIEWER: You've done some tests  here then, have you? Looking at that. MARK HORNICK: No, we haven't done any tests,  actually. We've looked at the potential- MARTIN SMITH: The reason they haven't  tested carbon capture and storage is   that the state of Florida refuses to indemnify  the utility for damages in case of a CO2 leak. JEFF GOODELL, Author, Big Coal: The problem is  carbon dioxide is an asphyxiant. If the CO2 is   buried 2,000 feet underground and there's  some minor earthquake and - and it can leak   up through a fissure and get into someone's  basement, and you could be asphyxiated without   knowing it. It's odorless gas. It's -  you know, there's no way to detect it. MARTIN SMITH: And so until liability  issues are overcome, Polk will not be   running a test. But IGCC plants continue  to be promoted as carbon capture-ready. ANNOUNCER: [GE video] -leaving a nearly  undetectable impression on the horizon. CHARLIE POWELL, Manager, Mountaineer Plant:   Presently, there's a lot  of talk about CO2 removal.

MARTIN SMITH: At AEP's Mountaineer  plant in West Virginia, they may be   closer to actually running a  test. Some time in late 2009,   they plan to inject CO2 into a well  beneath this shed next to the parking lot. CHARLIE POWELL: The well to hell,  as I've been known to call it,   is approximately a 10,000-foot deep  well that we drilled four years ago - MARTIN SMITH: [on camera] Wait  a minute. That's two miles deep. CHARLIE POWELL: That's two miles deep. MARTIN SMITH: [voice-over] They are not  using the IGCC process we saw in Florida   but experimenting with a kind of CO2 scrubber.  Its advantage is that it can be installed in   America's existing fleet of power plants.  Most have 20 or 30 more years of useful life,   and the industry doesn't want to  scrap them. But even if it works,   plant manager Charlie Powell points out,  removing CO2 may still be too expensive. CHARLIE POWELL: You can get it  out, but at what price? It may be   that other options become more economically  viable than the technologies to remove CO2.

MARTIN SMITH: Another obstacle is that not  every plant is near a suitable storage site. JEFF GOODELL: It doesn't work everywhere. Wyoming,  for example, the geology is well suited to it.   Parts of Appalachia, it's well suited to it. But  other parts, New England, the Southeast, it's not. MARTIN SMITH: And that means building a lot of new  infrastructure. Every year, U.S. power plants emit   up to two billion tons of CO2. These emissions  alone equal the total worldwide flow of petroleum   today. Disposing of such a volume of CO2 would  require building a massive new pipeline grid. CONFERENCE CALL MODERATOR: Ladies and gentlemen,   welcome to the American Electric Power  second quarter 2007 earnings conference call. MARTIN SMITH: Even before  the global credit crunch,   big banks were getting nervous  about carbon capture and storage - MODERATOR: And our first question this  morning comes from the line of Dahlman Rose. MARTIN SMITH: -asking utility executives  more and more questions about cost.

DANIELE SEITZ, Energy Analyst, Dahlman  Rose: I was just wondering if you could   compare the price of the new coal  plants that you are planning - MICHAEL MORRIS, CEO, American Electric  Power: What we said all along,   that we thought integrated gas would  be 20 to 30 percent more costly than   the more traditional pulverized coal -  that really has proven to be the case. MARTIN SMITH: [on camera] What's  the cost of this going to be? MIKE MORRIS: Right now, it's too early to tell. MARTIN SMITH: No idea? MIKE MORRIS: Well, no, no. I wouldn't say  that. I don't want to be too forecasting   about something like that, to be considerably  off base with it. People say it may add 20,   30 percent to the cost of energy. That seems  like a reasonable number. If you're blessed,   as we are along the Ohio River Valley, with  sub-surface geology that will accept captured   carbon for storage, it's a very different place  than if you're in the great Southeast and you've   got to transport your CO2 through a pipeline  system for considerable distances. That adds cost.   So to say today that we all are very comfortable  with some price forecast would just be silly.

MARTIN SMITH: [voice-over] And  consider the situation facing   Georgia-based utility Southern  Company. Its coal plants generate   CO2 emissions second only to AEP.  Southern's CEO is David Ratcliffe. [on camera] The word on the street  is that Southern doesn't really favor   carbon capture and storage because you  don't have the geology in the Southeast. DAVID RATCLIFFE, CEO, Southern Company:  Martin, I think the truth is that we don't   know where we have storage capability  in this nation at this point in time.   We haven't even come close to defining  what will be required in storage,   what are the legal liabilities and what are  the permitting requirements, much less the   infrastructure needed to develop that storage and  to move the carbon - the CO2 into that storage,   whether it's pipelines or trucks or whatever it  is. We haven't even scratched the surface yet. JEFFREY BALL, The Wall Street Journal: I think  there's a reality check going on about carbon   capture and storage right now. There was  huge rosy optimism about carbon capture   and storage. It was a - it was really the  quintessential silver bullet. It would allow   you to take what was fundamentally a dirty  fuel and burn it cleanly - cheap and dirty   fuel and you can burn it cleanly - and at least  a huge chunk of the problem would be solved.   What's wrong, I think, is  that reality is intruding.

JEFF GOODELL: And at a certain  point, you have to ask, "Well,   if I'm going to go to all this expense, why not  just do something else?" Why not do, you know,   clean renewable power or something that is -  perhaps the same price or maybe a small percentage   more expensive right now but vastly simpler and  eliminates all of these technological problems? MARTIN SMITH: If carbon capture  and storage doesn't work,   is the game over for your business  of generating electricity with coal? DAVID RATCLIFFE: I would say that we'd have  a hard time in a carbon-constrained future   burning coal without the ability to capture CO2. MARTIN SMITH: [voice-over] Meanwhile,   the candidates routinely promote carbon  capture and storage in their stump speeches. Sen. BARACK OBAMA: Good to see you guys,  and all of you up there. Look at you! MARTIN SMITH: No one mentions cost. Sen. BARACK OBAMA: We'll invest in the  technology that will allow us to use more coal,   America's most abundant energy source,  with carbon capture and sequestration for- Sen. JOHN McCAIN: Clean coal  demonstration projects alone,   just the demonstration projects,  will employ over 30,000 Americans.

ERIC POOLEY, Contributor, TIME Magazine: Look,  in order to run for president in this country in   2008, you have to be for clean coal. You can't  go to Indiana and Ohio and say, you know,   "I want to do away with coal." You're  just not going to win votes that way. [www.pbs.org: Explore the candidates' positions] Sen. JOHN McCAIN: In the state of Colorado, over 80 percent of the electricity comes  from coal. In Ohio, it's over 90 percent. ERIC POOLEY: There's an amazing  correlation between being a swing   state and being dependent on coal.  You look at that map, and you know   why both candidates are very strongly  in favor of clean coal. That's politics. MARTIN SMITH:   This is the other big challenge, the second  largest contributor to greenhouse gases. But   capturing and storing tailpipe  CO2 emissions is not feasible.   What's needed is dramatically more efficient  or zero emission vehicles. America's cars and   trucks emit more CO2 than all the cars in  Europe, Japan, China and India combined.

Rep. RICK BOUCHER (D), Virginia: We continue  our focus on the proper response to the   challenge of climate change. We have a  very distinguished panel of witnesses - MARTIN SMITH: In March of 2007, the  automakers were in Washington to   discuss raising fuel economy standards.  Congress has been trying for years. Rep. MIKE DOYLE (D), Pennsylvania: I  think the way we're going to achieve   this is maybe thinking differently than  how we've thought about it in the past,   to start to think outside the  box. And it just seems to me - JEFFREY BALL, The Wall Street Journal:  There have been many attempts over the   years to force improvements in  fuel economy in this country.   And the most notable is in the late  '70s after the Mideast oil crisis. ALAN MULALLY, CEO, Ford Motor Co.: When  the CAFE law was passed in the 1970s,   the goal was to reduce our  dependence on foreign oil - JEFFREY BALL: And the history is  that that attempt early on worked.   When those rules came into effect, the  average fuel economy of the U.S. fleet   was about 20 miles per gallon. And  by the mid-'80s, early to mid-'80s,   it had gone up to about 25 or so. That was  quite a significant step in a few years. MARTIN SMITH: But ever since then,  fuel economy - or CAFE standards,   as they are known - have remained  frozen. Car companies and autoworker   unions have always fought them. They  insist they never were effective.

RICK WAGONER, CEO, General Motors:  Yes, sir, against its stated goals of,   and I'm quoting, "reducing U.S. gasoline  consumption and oil imports," it wasn't   effective. And I think it's for the reason that - BETH LOWERY, VP, Environmental Affairs, GM: Over  time, we have looked at the CAFE policy and said,   "If we're really looking at reducing dependence  on petroleum and reducing CO2 emissions, CAFE   standards have not been very effective in this  country to do so." As an overall policy, if you're   looking at reducing dependence on petroleum,  that alone is not going to get you there. Rep. EDWARD MARKEY (D),  Massachusetts: Mr. Mulally,   you said that CAFE was not a  success. You couldn't be more wrong. FRANK O'DONNELL, President, Clean Air Watch:  There had been many members of Congress   saying we needed to have more aggressive  fuel economy standards. And for years,   literally decades, the car companies lobbied  aggressively to prevent that from happening. MARTIN SMITH: The man the car companies routinely  turn to is Democrat John Dingell of Michigan. Rep. JOHN DINGELL (D), Michigan: And  third, that I understand a statutory   increase in fuel economy standards may have  unintended consequences in the marketplace - MARTIN SMITH: Over the years, Dingell  has fought virtually every regulation,   from seatbelts and airbags to tailpipe  emissions and fuel efficiency standards.

[on camera] Why has it taken so long to  increase fuel efficiency standards in the U.S.? Rep. JOHN DINGELL: There have been some small  changes in both trucks and automobiles, but   the basic problem has been  the absence of technology. MARTIN SMITH: Critics say that elected officials  like yourself are too beholden to large   corporate interests to really get anything done. Rep. JOHN DINGELL: I disagree with  that. I'm not too beholden to anybody,   except the 800,000 people that live  in the 15th District. I'm their man in   Washington. It's my job to look after  them and to see that they do well. MARTIN SMITH: [voice-over]  And with Dingell's help,   Detroit has successfully resisted attempts to  raise fuel economy standards for more than 32   years. In the absence of action by the federal  government, the challenge has come from here. Gov. ARNOLD SCHWARZENEGGER (R), California:  You know, when I became governor of the great   state of California, I promised that I  will protect California's environment.

MARTIN SMITH: Governor Arnold Schwarzenegger has  pledged to raise fuel economy in California to   42.5 miles per gallon and is removing 20,000 old,  dirty gas guzzlers from the roads every year. Gov. ARNOLD SCHWARZENEGGER: Let's crush the car,   terminate the waste and have  cleaner air and breathe easier. MARTIN SMITH: Ultimately, he's pledged to  cut California's greenhouse gas emissions   from all sources by 90 percent by mid-century. TELEVISION COMMERCIAL:   Warnings couldn't be clearer. This is  the hottest summer on record. Forest   fires in the west, fueled by global  warming, can be seen from outer space - MARTIN SMITH: Schwarzenegger embraced  California's Global Warming Solutions Act,   introduced to the state legislature in 2006. TELEVISION COMMERCIAL: Cut  greenhouse gas pollution now.   Tell your representative to  vote yes on Assembly Bill 32. JERRY BROWN (D), California Attorney  General: This is a commitment to an   objective that's measurable, but how we  get there has yet to be fully articulated.

MARTIN SMITH: [on camera] Can you do it? JERRY BROWN: That remains to be seen. Physically,  can we do it? Yes. Psychologically, politically,   spiritually - that has to remain an open question. MARTIN SMITH: [voice-over] The bill put  Schwarzenegger on a collision course with   Detroit, where a billboard depicted the  governor as their enemy. But California   has a long history of demanding and  getting cleaner cars. Back in the '70s,   under pressure from the state, automakers were  forced to address California's smog problem.   Over the years, officials came to expect that  the automakers would eventually cooperate. TERRY TAMMINEN, Governor's Environmental Adviser:  The auto business has always had a love-hate   relationship with California. Obviously, they  love the fact that we're the biggest car market   on earth. They hate the fact that we try to  regulate what comes out of their tailpipes. MARY NICHOLS, Chair, California Air Resources  Board: But overall, we've had a very cooperative   relationship. And frankly, I was taken aback when  I found out that the industry was not only not   prepared to be cooperative, but that they were  determined to fight us in every possible arena.

MARTIN SMITH: The stakes were very high.  Eighteen other states were lining up to   adopt the California standards. But to  make it law, California needed a ruling   from the EPA to allow them to set stricter fuel  economy standards than the federal government. TERRY TAMMINEN: We still have to go to the Bush  administration to get what's called a waiver from   the Clean Air Act to go ahead and implement  those regulations. And the car companies have   lobbied strenuously, successfully, with the Bush  administration to prevent us from doing that. FRANK O'DONNELL, President, Clean Air  Watch: They lobbied not only the EPA,   but they lobbied Congress. They  lobbied the White House. They   lobbied the Transportation Department.  The U.S. Transportation Department was   caught red-handed actually trying to line  up members of Congress to lobby the EPA. MARTIN SMITH: Internal Department of  Transportation documents show that   more than 70 congressmen and governors  were called by department officials   and warned that an EPA waiver could have  significant impacts on the car industry.

On Capitol Hill, Congressman Dingell proposed a  law to make California's waiver request illegal.   There were also several key visits to the  White House by car company executives. FRANK O'DONNELL: This all-out war by  the car industry against California. MARTIN SMITH: In December 2007,  the EPA denied California's waiver. [on camera] Have you been denied a waiver before? MARY NICHOLS: This is the first  time that California has ever   been denied a waiver under the Clean Air Act. JERRY BROWN: The Bush White House,  and I presume the president himself,   gave the direction to the Environmental  Protection Agency, "Don't do it." TERRY TAMMINEN: And that's resulted in  us having to take the Bush administration   to court because they're withholding that  waiver in violation of the Clean Air Act. MARTIN SMITH: So you've sued  them to get them to act. TERRY TAMMINEN: Correct. MARTIN SMITH: And nothing. TERRY TAMMINEN: So far, nobody's home which  somewhat exemplifies the Bush administration. MARTIN SMITH: [voice-over] We wanted to  talk to someone in the White House about   why the administration blocked action  and about the extent of lobbying by the   car companies. They refused to offer an interview. Sen. BARBARA BOXER (D), California:  The mission of the EPA is to protect- MARTIN SMITH: And when California Senator Barbara   Boxer demanded to see internal  EPA memos, she was thwarted.

Sen. BARBARA BOXER: This is what they  did to us. They put this white tape   over the documents. And staff had to  stand here. It's just unbelievable. MARTIN SMITH: EPA administrator Stephen Johnson  was called before the committee and scolded. Sen. BARBARA BOXER: This isn't classified  information, colleagues. This is information   the people deserve to have. Now, I  want to show you what your staff said- MARTIN SMITH: Boxer focused on the advice  Johnson had received from his staff. Sen. BARBARA BOXER: -and we're going to share that  information with the American people. You said- MARTIN SMITH: Among the memos uncovered  by the committee was this one,   notes from the EPA's director of transportation  and air quality as she prepared talking points   for a meeting with Johnson. "The eyes of the world  are on you," it reads. "The stakes are huge. If   you deny this waiver, I fear the credibility  of the agency will be irreparably damaged." Sen. BARBARA BOXER: The professionals at the  EPA have been solid on all of the things. All   of the environmental issues, they've  come down on the right side. But this   administrator has just walked away from them  and walked into the arms of the White House,   walked into the arms of the special  interests. It's just really very, very sad.

STEPHEN JOHNSON, EPA Administrator: First of all,  the staff presented me with a range of options- MARTIN SMITH: Johnson said he took  everybody's view into consideration. STEPHEN JOHNSON: Certainly, people within the  administration had their view. But ultimately,   it came to me and making a decision and a judgment  call on my part, and I made that decision. FRANK O'DONNELL: Johnson himself initially  was in favor of granting the waiver. MARTIN SMITH: [on camera]  What's the evidence of that? FRANK O'DONNELL: Well, we've heard anecdotal  evidence for sure from people within the EPA that   he was going to do that. We know that the White  House was heavily involved in the final decision.   We know this because the White House has invoked  executive privilege and has refused to disclose a   lot of the documents about what went on in the  White House in its interactions with Johnson. MARTIN SMITH: [voice-over] It's not known  exactly what went on in the White House.   But just before the waiver was denied, on Capitol  Hill, Congressman Dingell brokered a compromise.   Congress would raise fuel economy standards but by  considerably less than California had requested.

FRANK O'DONNELL: The California standards  were going to be considerably tougher   than the standards being considered by Congress.  Once Congress passed its bill, the car companies   lined up behind it. The White House then told  the EPA, "Stand down. You're to do nothing." MARTIN SMITH: Had the California standards been  adopted by all 50 states, they would have reduced   greenhouse gas emissions 40 percent over the  more moderate standards adopted by Congress. ERIC POOLEY, Fmr. Managing  Editor, Fortune Magazine:   So the big picture here is that every time  we get a good idea about how to move forward,   there's delay, there's huge battles on the Hill.  The lobbyists come in and get a compromise that's   a victory for the old Washington way  of doing things and a defeat for the   kind of new way that we need to begin doing  things if we're going to solve this problem.

MARTIN SMITH:   No one has resisted change more than big oil.  They sell carbon for a living, and their rigs,   pipelines and refineries represent trillions  in sunk investments. This rig sits 200 miles   off Newfoundland and rises 16 stories above the  surface of the ocean. It cost ExxonMobil and its   partners $4 billion. It's the largest  oil platform in the world, Hibernia.   It's rooted to the ocean floor in about 250  feet of water in an area famous for disasters. WAYNE WARWICK, ExxonMobil: The Titanic went down   about 200 miles south of here. So  we - we are - you do see a lot of   icebergs through here. Pack ice has been  a design basis that we were set up for.

MARTIN SMITH: [on camera]  Does the thing shake at all? WAYNE WARWICK: Just a small vibration. MARTIN SMITH: How much oil  are you looking at here? WAYNE WARWICK: We're sitting on - we're  hoping to recover upwards of just over   a billion barrels of oil. Right now, we're  at 10 years into production. First oil was   in 1997. And we've just hit the milestone of  500 million barrels produced off the facility. MARTIN SMITH: [voice-over] Along with  major projects off Angola and in Russia,   Hibernia is one of ExxonMobil's biggest  investments. And it's paying off.   Every five to six days, a tanker leaves here  with a payload of crude oil worth about $100   million. Multiply that times hundreds of wells  and tankers feeding Exxon's refineries and   it adds up to make ExxonMobil the  largest corporation in the world. EXXON REFINERY WORKER: We manufacture a lot of   different products. We manufacture  gasoline, jet fuel, diesel fuels- MARTIN SMITH: In 2007, Exxon's revenues  surged to over $400 billion. After expenses,   the company cleared $40 billion, the  largest corporate profit ever reported.

EXXON SCIENTIST: -have our geoscientists  going all over the world, looking at rocks. MARTIN SMITH: At Exxon's Houston research center,   their best and brightest scientists and engineers  spend all their time deciding where to drill next. EXXON SCIENTIST: A common technique is  something called the geophone. You can see   motions in the ground that are 10,000 times  smaller than the thickness of a human hair. MARTIN SMITH: For now, ExxonMobil  is investing less than one tenth of   1 percent of its profits in renewable energy,  much to the consternation of environmentalists. EXXON ENGINEER: If we run the animation on the  left now, this is a fly-through of the Guadalupe- MARTIN SMITH: [on camera] Isn't this the time to   be getting out of oil and  gas and- and diversifying? SHERRI STUEWER, Vice President, ExxonMobil: If  you look at what the energy balance is over the   future, in spite of the growth of the renewables -  which will grow in the near future - for decades,   the predominant source of energy is going to be  fossil fuels - oil, gas and coal. So we see a role   for us in the near term in helping to deliver  those fuels that meet the needs of the world.

MARTIN SMITH: Why not take more of your resources  and deploy them towards development of alternative   energies? Why the balance is so heavily  tilted towards oil and gas exploration? SHERRI STUEWER: I think that no matter what a  company spends on research in a particular area,   there would probably always be someone that said,   "It's not enough." I think we feel like we're  doing a responsible job of evaluating how we   can bring our strengths to the challenge of  finding energy technologies for the future. EXXON SCIENTIST: The longest  well that we've drilled to date   is about seven miles measured depth.  It happens to be an industry record. JEFFREY BALL, The Wall Street Journal: None of  the oil companies are investing in alternatives   in a meaningful way, if by meaningful you -  if you define meaningful as a sizable chunk   of their total energy investment. They are all  of them investing the vast majority of their   money in finding more and natural gas, even BP,  even Shell. The differences are at the margins.   And fundamentally, all these oil companies are  still oil companies. No one is beyond petroleum.

[www.pbs.org: Real Ball's interview] MARTIN SMITH: [voice-over] Professor Dan  Kammen specializes in renewable research.   He serves as an adviser to Arnold  Schwarzenegger and Barack Obama. [on camera] When you look at Exxon  or Chevron or even Shell and BP,   and they're putting such small percentages  into renewable research, should we be outraged? Prof. DANIEL KAMMEN, U.C. Berkeley Inst. of the  Environment: Well, I think we should be outraged.   Companies that profess to be sensitive  and aware of public need and what's good   for citizens overall need to respond. So  we are waiting for the big companies to   really play the role that they profess  to on TV and in advertisements. And so   I do think there's a real reason to be  outraged at the lack of action so far. MARTIN SMITH: Not only have big oil companies  not invested much in renewables, but for years   they were among the largest contributors  to so-called climate change denier groups,   groups like the Heartland Institute,  the organizer of this 2008 convention.

CONVENTION SPEAKER: Let's reiterate that   human-produced greenhouse gases are  not responsible for global warming. MARTIN SMITH: Exxon was also a principal funder of   the Competitive Enterprise Institute,  the group responsible for this ad. TELEVISION COMMERCIAL: Now some  politicians want to label carbon   dioxide a pollutant. Imagine if  they succeed. What would our lives   be like then? Carbon dioxide - they  call it pollution. We call it life. MARTIN SMITH: Exxon dropped  funding for the Institute in   2005 but continued to support other denier groups. SHERRI STUEWER: It is very painful  to hear the allegation that we have   somehow supported poor quality science  or ignored the science on this issue. MARTIN SMITH: [on camera] But true, you did  support groups like Competitive Enterprise   Institute, Heartland Institute. Was  it a mistake to support those groups? SHERRI STUEWER: When we look  at those groups over time,   we make the best decision we can make at the  time about whether to continue supporting them.

MARTIN SMITH: I'm not sure what your  - what your answer to the question is,   whether it was a mistake to  support those groups or not. SHERRI STUEWER: The support for those  groups I think you cannot take out of   time context. We made the best decision we  could at the time about whether the - the   mix of issues that those groups were  supporting fit with out needs. We   made that decision. We are making those  decisions every year on an ongoing basis. PROTESTERS: Expose Exxon!  Expose Exxon! Expose Exxon! MARTIN SMITH: [voice-over] Protesters routinely   gather outside ExxonMobil's  annual meeting in Houston. PROTESTERS: Exxon, enough! Exxon, enough! MARTIN SMITH: But this year, there was  something new. Major shareholders filed   a resolution insisting that the company  and its CEO, Rex Tillerson, change course. MINDY LUBBER, Shareholder Advocate: At ExxonMobil,   investors from across the company went to the  board and filed shareholder resolutions and said,   "We want you to address climate change. We want  you to bring the carbon footprint down. And we,   as investors, want that to happen now  because we think it's good for the company."

MARTIN SMITH: [on camera] Have  you talked to Rex Tillerson? MINDY LUBBER: Rex Tillerson, interestingly  enough, has been one of the only CEOs,   who when asked by huge investors to sit down  and have a meeting, has denied them a meeting   and instead has sent senior staff. I mean, we  are talking about some of his largest owners,   not activists, who have been asking for a  meeting for years. The company is smart.   They make a lot of money. They need to get  on the bandwagon and be part of the solution. STEPHEN HEINTZ, Rockefeller Brothers Fund:  It's time for ExxonMobil to become one of   the creative leaders in this field. It has  the sophistication. It has the knowhow- MARTIN SMITH: [voice-over] Leading the  charge were not just any shareholders,   they were descendants of Exxon's  founder, John D. Rockefeller. They   filed a resolution calling on ExxonMobil  to do more renewable energy research. NEWSCASTER: Inside the meeting, CEO and  board chairman Rex Tillerson faced the   very real chance of having to  give up his seat on the board.

MARTIN SMITH: The resolution received  support from 27 percent of all shareholders,   a high tally for a dissident  shareholder resolution. NEWSCASTER: After the vote, Tillerson  said while ExxonMobil is investing in   new technologies, the focus  will remain on oil and gas. REX TILLERSON, CEO & Board Chmn., ExxonMobil:  We have a corporate social responsibility,   in my view, to ensure the world continues  to receive the energy it needs in a fashion- MARTIN SMITH: Facing rising criticism, ExxonMobil   and other oil companies were summoned to  Capitol Hill to explain their policies. Rep. EDWARD MARKEY: Why is your  company not investing in renewables? STEPHEN SIMON, ExxonMobil Sr. Vice  President: Well, thank you, Mr. Chairman,   for giving me the opportunity to address the  area of alternative fuel. When you go back- MARTIN SMITH: An Exxon Mobil senior vice  president, Stephen Simon, began to answer. STEPHEN SIMON: We looked at it on an  energy basis, on the energy balance- Rep. EDWARD MARKEY: How much have you  invested in renewable energy, Mr Simon? STEPHEN SIMON: And I will  get to that, Mr Chairman. Rep. EDWARD MARKEY: I only have five minutes. What  is the investment in renewable energy? Please. STEPHEN SIMON: Recognizing that we needed  to do something of a great magnitude,   we initiated the Global Climate and Energy  Project at Stanford University, which is about- Rep. EDWARD MARKEY: How much money are- STEPHEN SIMON: -about $100 million- Rep. EDWARD MARKEY: A hundred million dollars?  But you made $40 billion dollars last year.

STEPHEN SIMON: Mr. Chairman,   putting more money into something  does not necessarily equal progress. JEFFREY BALL: Exxon would tell you that they are  watching the development of a whole panoply of   renewable energy technologies but that they  don't think that any of those technologies   have gotten to the point of economic viability  yet. And meanwhile, Exxon will do what Exxon   knows best how to do, which is run around the  world trying to pull oil out of the ground. MARTIN SMITH: The consequences can  be very negative. In recent years,   the big oil companies have put down  stakes in the Canadian tar sands.   There's a lot of oil here, enough to keep  generating oil company profits for a long time. [www.pbs.org: Watch this program on line] CHRISTIAN HOULE, Royal Dutch Shell: We can  extract oil for about 155,000 barrels per   day for about 40, 50 years ahead of us. Even  at minus-40, we keep going, keep digging. It's   cold here, obviously, for the people, for  the mechanics, but we keep going non-stop.

MARTIN SMITH: The problem is that the oil here  is mixed with sand and clay and extracting it   comes with a cost to the climate. That's  because the process uses lots of heat,   pressure and chemicals. The result  is that oil from the tar sands has a   carbon footprint two to three times  greater than ordinary crude oil. JOSEPH ROMM, Dept. of Energy, 1995-'98: And  the tar sands are a goopy mess. The tar sands   are not really sustainable. There's no way  Canada can meet its global warming commitments   with the tar sands. Any claim the Canadians have  ever had to being green and greener than the U.S.,   which I think they'd like to believe, the  tar sands, you know, throws out the window. But look, oil is $90 a barrel, so the tar sands  are incredibly profitable. You can't do it in an   environmentally responsible fashion. But  at $90 a barrel, everything looks good. JEFFREY BALL: These companies don't  exist to be morally upstanding,   although they would certainly tell you that  they want to be. They exist to make money for   their shareholders. They will respond to the  signals with which they're presented in the   market. And I think at the end of the day, Exxon  hasn't had market signals to shift away from oil.

MARTIN SMITH: In this election year, the  political signals have been very clear.   It's the high price of oil, not climate change or  renewable energy, that's on most people's minds. RUDY GIULIANI (R), Fmr. NYC Mayor:  [Republican Nat'l Convention,   Sept. 2008] Drill, baby, drill!  [laughs] Drill, baby, drill! CONVENTION DELEGATES: Drill,  baby, drill! Drill, baby, drill! MARTIN SMITH: The candidates have responded. Sen. JOHN McCAIN: And, yes, yes, as that  sign says over there, my friends, drill,   baby, drill! We've got to offshore  drill, and now! [cheers and applause] ERIC POOLEY, Contributor, TIME Magazine:  When we began this campaign, John McCain   was opposed to offshore drilling. When he  saw where the political winds were blowing,   he reversed course and  supported offshore drilling. McCAIN SUPPORTERS: Drill, baby,  drill! Drill, baby, drill! ERIC POOLEY: John McCain, having flipped  his position on offshore drilling,   started bashing Obama for being against  drilling. In other words, he's attacking   Obama for holding the same position that McCain  had held up until about two weeks before.

Unless you were in favor of some form of drilling,  the American people didn't want to hear anything   you had to say on energy. They didn't want to hear  anything you had to say on climate. Drilling was   sort of the litmus test. Obama finally realized  he was in the wrong place, and so he switched. Sen. BARACK OBAMA: Increased domestic oil  exploration certainly has its place as we   make our economy more fuel-efficient  and transition to other renewable- MARTIN SMITH: As I've traveled through  America's energy landscape this past year,   it's become increasingly clear that tackling  climate change is going to require a huge   and concerted from government. But when it  comes to government leaning on big business,   the recent past contains some instructive lessons.

Fifteen years ago, President Clinton invited  Detroit's Big Three CEOs to the White House   and announced the Partnership for a  New Generation of American Vehicles. Pres. BILL CLINTON: [September 29,  1993] Today we're going to try to   give America a new car-crazy  chapter in her rich history,   to launch a technological venture as ambitious  as any our nation has ever attempted. MARTIN SMITH: Clinton thought he  could bargain his way to a solution. JOSEPH ROMM, Dept. of Energy, 1995-'98: I  worked at the Department of Energy during   the Clinton administration, where we created  a deal with the automobile companies that   we would not work to pass regulations to make  tighter fuel economy standards, but in return,   they would partner with us to develop a  triple-efficiency, 80-mile-per-gallon family car. Vice Pres. AL GORE: This is not an ordinary kind   of decision. These three men really  have done something extraordinary. MARTIN SMITH: The project got off to a  good start. The car companies went to   work on building prototypes of diesel electric  hybrids. The Clinton administration pledged over   a billion dollars to the effort. Within  a few years, Ford, Chrysler and GM each   rolled out a concept car - the Dodge ESX, the  Ford Prodigy, and General Motors's Precept.

REPORTER: When will we see this  kind of hybrid on the road? HARRY PEARCE, Vice Chmn., General Motors:  Well, we've made a commitment to have a   hybrid vehicle in production by the year 2001. MARTIN SMITH: But that was a  commitment they failed to keep. GMC COMMERCIAL: What's behind  the grill is what matters most. MARTIN SMITH: Instead, the Big Three  chose to sell big cars and trucks. FRANK O'DONNELL, President, Clean  Air Watch: I mean, they did a lot of   posturing for photos in the Rose Garden  and photo ops. But at the same time,   they were grinding out sport utility  vehicles and Hummers that got atrocious   fuel economy. And that's where  their big money was coming from. MARYANN KELLER, Car Industry Analyst: I  think that they were just as amazed in   Detroit that every time they made  something bigger, more powerful,   more doors, and more stuff in it, we  bought as many as they could build. MARTIN SMITH: Quietly, the Partnership for a New  Generation of American Vehicles faded from view. [on camera] What happened with that initiative? BETH LOWERY, VP, Environmental Affairs, GM:  Actually, I'm not that familiar with the   specific stuff, but I'm - my understanding is that  that was a project that all the teams worked on.   And we learned a lot from that project. There  were a number of technologies it put in place,   and as a project, we worked on what would  be achievable at that point in time.

MARTIN SMITH: [voice-over] But  what wasn't achievable for the   big three U.S. automakers was  achievable for Toyota and Honda.   Ironically, the Japanese scrambled because  they feared they were going to get left behind. JOSEPH ROMM: Because the Department of Energy had  excluded Toyota and Honda from this partnership   because they were foreign auto companies,  Toyota and Honda built hybrids on their own   and introduced them into the U.S. market and  got an advantage in the marketplace by being   perceived as interested in fuel economy. And  Detroit has, until the last year or two, stuck   its head in the ground and it has given to Toyota  a 10-year advantage in fuel economy technology. Prof. STEPHEN SCHNEIDER, Climatologist,  Stanford Univ.: Detroit waited until they   got murdered in the market and until the supply  and demand just simply drove their monster cars   out of public favor before they started  to act. Foresight - they need foresight. MARTIN SMITH: [on camera] Why  did Toyota beat you to the Prius?

BETH LOWERY: Toyota looked at the hybrids  and the Prius from an overall standpoint,   knew there would be the loss of money  for some time on the cost of that,   but looked at it from a overall  marketing and image standpoint,   and General Motors really looked at it from  a business case. Can this vehicle make money? MARTIN SMITH: But yet Toyota is eating your lunch. BETH LOWERY: Well, I - as I mentioned before,  General Motors is very committed to reducing   emissions. We're very focused on bringing  products to market that are going to satisfy   the customers not only in the U.S. but globally,  and we are working every day on fuel efficiency. CHRYSLER COMMERCIAL: I want  a hybrid that fits my life- MARTIN SMITH: Today, American car  companies are playing catch-up,   furiously offering new hybrids  while ramping up their alternative   car research. The most promising of the  alternatives is the plug-in electric car. GM COMMERCIAL: The electric car is here. MARTIN SMITH: GM's most recent effort  was the EV-1. Its story was first told   in a popular investigative documentary, Who  Killed the Electric Car? The film reported   how the EV-1 was developed in response to a  California mandate for zero-emission vehicles,   how when California loosened the  mandate, GM abandoned the project.

CHRIS PAINE, Filmmaker: ["Who Killed the  Electric Car?"] I don't imagine there are   very many EV-1s left that haven't  been crushed out. It's pretty sad. MARTIN SMITH: [on camera] Why'd you have to  crush them? Why'd you have to destroy them? BETH LOWERY: Well, actually, we have  a number of them that are in museums   and that are in universities. And  then with respect to some of them,   we did recycle them, which is what we do  with vehicles at the end of the life cycle. MARTIN SMITH: So that was a recycling program,  which was crushing them and - for scrap? Right? BETH LOWERY: Yeah. Absolutely. MARTIN SMITH: [voice-over] Now, years later,  GM is starting over. They're betting billions   of dollars that this car, the Chevy  Volt, will put them back in the game. ROBERT LUTZ, General Motors: A GM  electric vehicle is an inconvenient truth. MARTIN SMITH: It's a unique concept. While the  engine is fully electric and can operate as a   plug-in, the Volt can alternatively use on-board  fuels like hydrogen, ethanol or gasoline to   recharge its battery. GM invited FRONTLINE to  come see the Volt during a publicity shoot.   It didn't go well. The car could hardly make it  up this small hill. Then it stalled altogether.   The shoot was canceled.

[on camera] I went to see the Volt on display.  It was running at about 10 miles per hour. Your   representative there suggested that, if we  wanted to, we could speed up the tape. And then,   after about 15 minutes, it conked out. It wasn't a  confidence-builder. Where are you now on that car? BETH LOWERY: Well, the Chevy Volt was  introduced last January as a concept   vehicle. We have a production team in place to  really advance the production of the vehicle,   as well as working on the batteries. So  we're in the process of testing lithium   ion batteries that could be used for a  plug-in capability at this point in time,   and we're hoping in the spring to  have additional vehicles for driving. MARTIN SMITH: When's that car going to be  on the market? How much is it going to cost? BETH LOWERY: Well, we certainly  don't know what the cost would be,   and we don't have a specific date. We  really have a "stretch objective" by the   end of the decade to have something in the  marketplace with respect to the Chevy Volt.

MARTIN SMITH: [voice-over] GM is now saying that   the Volt is on target to be  in dealer showrooms by 2010. FRANK O'DONNELL: The question is,  Why are we reinventing the wheel   when they already had a car that  was serviceable, then junked it?   Now, a decade later, they seem  to be starting all over again. MARTIN SMITH: And once again, GM has  gone back to Washington. This time,   the big automakers have asked for and  received $25 billion in low-cost loans   to help them build a new generation of vehicles. Another cautionary tale about business  and government is the story of corn-based   ethanol. Initially, it had nothing  to do with climate change. But today,   ethanol is routinely promoted as a green solution. JEFFREY BALL, The Wall Street Journal:  Ethanol started in this country before   concern about climate change was pervasive. It was  a political push by corn producers in the Midwest.

CORN ETHANOL COMMERCIAL: Hi.  I want to talk to you today   about something that's really important, ethanol. MARTIN SMITH: Ethanol took off after  the oil shocks of the 1970s as a   domestic alternative to Middle Eastern  oil. Farm states embraced the boost   to their economies and dozens of corn  ethanol refineries sprang up overnight. MINDY LUBBER, EPA official,  1995-'01: Everybody thought,   "New gold rush - ethanol. It's just the  alternative fuel, and let's make as much   of it" - and we saw investments from Wall  Street, from pension funds across the board. MARTIN SMITH: Texas oilman T.  Boone Pickens was told by corn   state Senator Bob Dole that resistance was futile. T. BOONE PICKENS, President, BP Capital: Senator  Dole said, "You're against ethanol. Let me explain   to you how it works. There are 21 farm states  and 42 senators. Those people want ethanol and   they're going to have ethanol. And you're wasting  your time trying to explain it's a bad idea." MARTIN SMITH: [on camera] Just that simple. T. BOONE PICKENS: That simple.  I think it was just that simple. MARTIN SMITH: [voice-over] Good idea or not,   ethanol is now a huge business with more than  $7 billion in annual government subsidies.

ETHANOL COMMERCIAL: What if we could  lower greenhouse gas emissions with   a fuel that grew back every year? What  if we could live green by going yellow? MARTIN SMITH: Car companies like  GM have jumped on the bandwagon. JEFFREY BALL: The reason is that GM can tweak  an existing engine to accept E85 - 85 percent   ethanol, 15 percent gasoline - for about 150 bucks  a car. And GM believes that at the end of the day,   people may say that they want a green car but  people aren't willing to pay that much more. MARTIN SMITH: [on camera]   Let's say everybody's driving an E85 vehicle.  What does that do for reducing carbon emissions? JEFFREY BALL: Well, there are disagreements  about that. It has to do with how that ethanol   is produced. There are studies which say that  there's a net benefit in carbon emissions. There   are studies that say that that net benefit in  car in reducing carbon emissions isn't so great. MARTIN SMITH: What does the flex fuel  vehicle really do for reducing CO2 emissions?

BETH LOWERY: Actually - and the CO2 reduction,   it depends where you get the ethanol from. So  corn is different than sugar cane is different   than cellulosics. So it ranges from 15  percent all the way to about 65 percent. MARTIN SMITH: But the few service stations that  we have are putting out corn-based ethanol, right? BETH LOWERY: Absolutely. At this  point in time, it is corn-based. MARTIN SMITH: And so the savings  that you get on CO2 emissions   from using corn-based ethanol would be how much? BETH LOWERY: It's about a 15 percent reduction. MARTIN SMITH: [voice-over] GM  is using an optimistic estimate.   Some studies show that corn-based ethanol  may actually increase overall emissions,   depending on how the corn is farmed, fertilized,  harvested and transported. All these processes   have their own carbon footprints that  can offset savings over using gasoline. Prof. DANIEL KAMMEN, U.C. Berkeley Inst. of the  Environment: Corn ethanol is simply a bad biofuel.   And it's a bad biofuel several times over. We,  in this country, have optimized corn, ironically,   to be as greenhouse-gas-intensive as possible.  We reward farmers for using more fertilizer,   more irrigation because those things have been  cheap historically. So we have lots of greenhouse   gasses and carbon embedded in what it takes to  grow an ear of corn. And the analysis that my lab   and many others have done says very clearly that  corn is simply not a good feed stock for biofuels.

MARTIN SMITH: Regardless, the corn lobby  continues to throw its weight around Washington   and has helped the auto companies win a fuel  efficiency credit for every E85 car they sell,   even though very few drivers have  access to ethanol filling stations. [on camera] You say you have 2.5  million E85-ready vehicles on the road. BETH LOWERY: Yes. MARTIN SMITH: How many of those  are actually using ethanol? BETH LOWERY: Well, there's  a few pumps there, and also- MARTIN SMITH: A few. But there's not much. BETH LOWERY: Right. It's not widespread. MARTIN SMITH: Negligible amounts. BETH LOWERY: It's not widespread. MARTIN SMITH: [voice-over] In fact, out of  a total of 120,000 gas stations nationwide,   only 1,600 offer ethanol, most in the Midwest.  California has just 10, New Jersey none. [on camera] We've invested a lot of money  in ethanol. Is that getting us anything? AMY MYERS JAFFE, Baker Institute, Rice Univ.:  The corn-based ethanol program is going to   be considered one of the biggest follies  ever implemented in energy policy anywhere   in the world in the history of energy policy.  Ethanol is not a solution to greenhouse gases.

MARTIN SMITH: [voice-over] There are some who  believe that the answer lies in making ethanol   from other plants, like switchgrass.  But even then, there are problems. Prof. DANIEL KAMMEN: And the problem is that we  don't know how quickly we will have a crop that   itself produces enough biofuel. And that's  not the whole equation. In the last year,   we've learned a fairly striking piece of new  science, and that is that there's an indirect   land use effect of growing biofuels  that is very negative. And that is,   if a piece of land goes out of food production in  the U.S. Midwest, in the global market for food,   that opens up an opportunity for a  producer in Brazil, in Indonesia,   in Ghana, or somewhere else to go into production.  And frequently, that comes at the expense of new   land being carved out of rain forests, carved out  of the savanna, that was already storing carbon. MARTIN SMITH: The World Bank says using  more land to grow fuel inevitably will   lead to greater food shortages  and higher food prices. Meanwhile,   President Bush has called for a seven-fold  increase in ethanol production by 2017.   U.S. corn ethanol producers have  seventy new ethanol refineries planned.

Sen. JOHN McCAIN: I opposed ethanol  subsidies because I thought they were   going to distort the market.  They distorted the market. ERIC POOLEY, Contributor, TIME Magazine: John   McCain wants to get rid of ethanol  subsidies. Barack Obama does not. Sen. BARACK OBAMA: And I have been a big  supporter of ethanol because Illinois is   a big corn-producing state. It's been good for  farmers. It's been good for the rural economy. ERIC POOLEY: Obama is from Illinois, which  grows a great deal of corn. And so it was only   natural for him to be for ethanol. McCain  is from a state that does not grow corn. MARTIN SMITH: [on camera]  There's no corn in Arizona. ERIC POOLEY: That's right. MARTIN SMITH: Only when food prices began to  rise did Obama begin to soften his position. Sen. BARACK OBAMA: ["Meet the Press," May 4, 2008]  If it turns out that we've got to make changes in   our ethanol policy to help people get something  to eat, then that's got to be the step we take. AMY MYERS JAFFE: Everything that's  happened wrong in energy in the   United States has happened because  there was a group of voters that   put their own parochial needs ahead of  our nation. West Virginia coal miners,   Michigan autoworkers, farmers from Iowa - none  of these groups have thought about our nation.   They're thinking about their small local  community. We have to think as a nation. We   need a leader who is going to stand up and say,  "We need to do this together," and it's doable.

MARTIN SMITH: In Europe and in  Japan, governments have been much   more successful instituting policies  that foster efficiency and renewable   energy. It stems from the fact that  Europe and Japan never had much oil. Prof. STEPHEN SCHNEIDER, Climatologist, Stanford  Univ.: They had fewer fossil fuel or other kinds   of energy resources by themselves and they  had to husband them better. And they also   were acutely aware of the security threats to  their country if somebody cut off the supplies. JEFFREY BALL: And as a result of that, governments  bit the bullet in Europe and Japan and imposed   policies that were not popular with  consumers, but over a period of years,   imposed tax policies that had the effect of first  making gasoline much more expensive, and second,   making cars that got lower fuel economy much  more expensive through painful tax policy. Prof. STEPHEN SCHNEIDER: That combined  with the fact that Europe has had a long   tradition of public investment and  public protection and the U.S. has   long had suspicion of big government  and suspicion of public investment.   So you have some political and cultural  differences between us and Europe and Japan.

[www.pbs.org: Read the interview] MARTIN SMITH: The result has been that in Europe  and Japan, cars are smaller and more efficient.   Europe is also the world's leader in deploying  renewable power. This solar farm just outside   Berlin is one of the largest in the world.  The German government began granting large   subsidies to alternative power providers. Their  contribution is still small. Solar produces just   0.6 percent of Germany's electricity, but  that's six times what the U.S. produces. Wind is a similar story. "Mr. WIND": [television commercial]  I think I was always misunderstood. MARTIN SMITH: This ad compares  wind to an underappreciated giant. "Mr. WIND": People just didn't seem to like me. MARTIN SMITH: Today wind provides over 7  percent of Germany's electricity, about   10 times what wind energy provides in America, in  spite of the fact that Germany is not very windy.

"Mr. WIND": I finally feel useful. Prof. DANIEL KAMMEN: Germany has a wind  resource poorer than that of North Dakota.   In North Dakota, we have about 200  megawatts of wind power installed.   Germany has 20,000 megawatts. And yet we have  a better wind resource in one state alone. MARTIN SMITH: In sharp contrast to Europe,   wind and solar energy in America have  received inconsistent government support. JEFFREY BALL: If you look at a graph of the  construction of wind power in this country,   it looks like an EKG chart, with peaks and  valleys that essentially exactly approximate   decisions in Washington on subsidies. And if  you're in business and you're watching this,   you don't have much reason to be  confident that there's going to   be suddenly consistency here by  Washington. So you're skittish. MARTIN SMITH: One businessman who's not skittish  is Texas oilman T. Boone Pickens. He's already   amassed a fortune of around $2 billion  second-guessing the big oil companies,   but at 80 years old, he's still interested  in making more. Sensing that the mood in   Washington is about to shift, he's planning  to build the world's biggest wind farm.

[on camera] So you went into the wind  business to make money. How are you doing? BOONE PICKENS, President, BP Capital: Haven't  made any money, but I think I will make money.   We're getting ready to commit for about $2  billion worth of turbines next month. So yeah,   I believe in it, and the only dollar  that's in the game right now is mine. MARTIN SMITH: [voice-over] Pickens  plans to install 2,500 wind turbines   and generate 4,000 megawatts of  electricity. He's expecting to   gross hundreds of million dollars a year.  And he say's there a lot more potential. T. BOONE PICKENS: If you  gave me the assignment today,   "We need 150,000 megawatts in the next  10 years," I'd go to Sweetwater, Texas. MARTIN SMITH: Starting in Sweetwater  and running north through Oklahoma,   Kansas, Nebraska and the Dakotas  is America's biggest wind corridor. T. BOONE PICKENS: Then if you take off west  from Sweetwater, you can pick up solar. And   the Californians love that. So you're  talking about increasing in 10 years to   150,000 megawatts. It could be accomplished  in that corridor - north, south, east, west.

MARTIN SMITH: In the spring of 2008, Pickens  took to the airwaves to sell his idea. T. BOONE PICKENS: [CNBC "Squawk Box"] And if  you look at a corridor, a huge corridor of wind- MARTIN SMITH: And he called on  the federal government for help. T. BOONE PICKENS: Somebody got  to sit down and look at it and   decide what we're going to do because it is huge. T. BOONE PICKENS: [television commercial]_ I'm T.  Boone Pickens. I've been an oil man my whole life,   but this is one emergency we  can't drill our way out of. MARTIN SMITH: He followed up  with a nationwide ad campaign,   positioning himself as a savior of the American  economy who can deliver energy independence. T. BOONE PICKENS: [town hall meeting] I've   committed $58 million to this  project. And that's my money. MARTIN SMITH: What he wants  from the federal government   is the same thing that all wind producers want. T. BOONE PICKENS: You're going to  have to have production tax credits. MARTIN SMITH: [on camera] In order to- T. BOONE PICKENS: -which- MARTIN SMITH: -help you with operating costs? T. BOONE PICKENS: Yes. MARTIN SMITH: To make it cost competitive? T. BOONE PICKENS: Exactly. You have to have it. MARTIN SMITH: [voice-over] He also  needs the government to open corridors   for transmission lines to move electricity  from wind farms to customers. To be viable,   both wind and solar will require  billions in infrastructure investment.

T. BOONE PICKENS: The way I see government should  operate in this, they should open up corridors and   help with that and make it happen. You can't  go in and invest a huge amount of money and   not have a way to get your money back and make a  profit. I would expect to make money out of it. MARTIN SMITH: As calls for carbon-free  power grow, nuclear power is getting a   fresh look. It's already the source of  20 percent of America's electricity. Patrick Moore is a paid spokesman  for the nuclear lobby representing 32   utilities with nuclear plants in their portfolios. PATRICK MOORE, Nuclear Industry Lobbyist:  [radio interview] The statistics show that   nuclear energy is among the safest technologies. It is simply and clearly obvious that nuclear  energy is going to be the most important base   technology for energy, like providing the  bulk of our electricity in the future,   and, hopefully, charging our cars and running  heat pumps in our houses so we can eliminate   fossil fuels from our transportation  and our infrastructure at the same time.

MARTIN SMITH: Moore wasn't always  so enthusiastic. In the 1970s,   he was a founding member of Greenpeace  and a fierce nuclear opponent. [on camera] In 1976, you called nuclear power  plants "slow atomic bombs. Nuclear power plants   are, next to nuclear warheads themselves, the  most dangerous devices that man has ever created." PATRICK MOORE: That's how I saw the world at  that time. I was wrong. And it's - I mean,   it was a fact back then in the cold war that we  saw nuclear energy and nuclear weapons as all   part of the same technology and all part of the  same thing, as if all things nuclear were evil. MARTIN SMITH: By the late '70s, nuclear energy  was a troubled industry. In large part due   to the success of anti-nuclear activists,  it was burdened with numerous federal and   state regulations and was experiencing  massive construction cost overruns. The nuclear accident at Three Mile  Island was the final nail in the coffin.

PA SYSTEM: There has been a state of  emergency declared on Three Mile Island. MARTIN SMITH: [on camera] People look  at Three Mile Island, it scares them. PATRICK MOORE: Well, it's not rational to be  scared by Three Mile Island, that's for sure. MARTIN SMITH: Why not? PATRICK MOORE: Because, no one was injured at  Three Mile Island. It did not leak, the radiation.   And that was because engineers designed a reactor  dome that was made to prevent the radiation from   coming out in the event of an accident. And  it worked. It was a safety system that worked. MARTIN SMITH: [voice-over] To be fair, there was  some leakage of radioactive gas, but it didn't go   far and any serious leak was contained. Still,  it frightened communities. No application for   new nuclear plant construction has been approved  since. And new plants still face big obstacles. Prof. DANIEL KAMMEN, U.C. Berkeley Inst. of the  Environment: They've become fabulously expensive,   $5 billion to $10 billion per nuclear power plant. Prof. STEPHEN SCHNEIDER, Climatologist,  Stanford Univ.: And also, what are you   going to do with the waste? I think  that there are technical solutions,   but you can't get any location.  Nevada doesn't want any of that waste.

MARTIN SMITH: These issues of waste  and cost make it unclear whether an   expansion of nuclear energy will ever  be politically or economically viable. ERIC POOLEY, Contributor, TIME Magazine: A lot of  the opponents of nuclear point to the spiraling   cost of projecting new plants, the price of cement  has gone up so much, the price of steel has gone   up so much. So nuclear power may be a low-carbon  option, but it's not a low-cost option yet. PATRICK MOORE: I find that really interesting,   that people are challenging the cost of nuclear  energy. All you have to do is look at France,   which has 80 percent nuclear energy and  does not have unreasonable energy prices. MARTIN SMITH: [on camera] If the  French can do it, why can't we do it? Prof. DANIEL KAMMEN: Well, the French have  done a couple of things differently than we do,   one of which is they've standardized  the designs to a large extent. MARTIN SMITH: But we've done that now. Prof. DANIEL KAMMEN: Well, we've done  it now. But our process to permit and   to evaluate how a plant will work, and do  the financing, is all over the map. It's   a hodgepodge based on where you are, who the  financing team is, how you work with utilities.

JEFFREY BALL: And this returns to sort of a theme  we've been talking about. France didn't happen   simply because someone decided that they wanted -  that they like nuclear energy. It happened because   the government decided it was going to impose  a strict policy, and it followed through with   that policy, much to the consternation of a lot of  consumers and environmentalists over decades. But   that takes immense political will, and it's not  clear that other countries are going to follow. MARTIN SMITH: The future of  nuclear power in the U.S.   could be very different depending  on who becomes the next president. Sen. JOHN McCAIN: Nuclear power is the most  dependable source of zero emission energy we have. ERIC POOLEY: McCain wants to double down  on nuclear power. He wants to - like,   he's an old nuclear Navy guy, right?  He thinks it's safe. He thinks we can   solve the problems and he wants full steam ahead. Sen. JOHN McCAIN: And we've been sailing  Navy ships around the world for 60 years   with nuclear power plants on them  and we've never had an accident. ERIC POOLEY: Obama says we need to  solve a few problems before we go   down that road. He's not opposed to  nuclear power, but he's not willing   to move ahead with it yet. So this is a  strong difference between the two of them.

Sen. BARACK OBAMA: Until we can make  certain that nuclear power plants are safe,   that they have solved the storage problem, I  don't think that's the best option. I am much more   interested in solar and wind and biodiesel and  strategies in alternative fuels that not only - MARTIN SMITH: So can America summon the political  will necessary to address climate change? In December of 2007, the Senate  Environment Committee sat down to   decide whether the Lieberman-Warner climate  bill, an economy-wide effort to cut carbon   emissions by 60 percent, should be recommended to  the Senate floor for a vote. At the last moment,   Senator Inhofe led an effort to derail the  legislation by submitting hundreds of amendments. Sen. JAMES INHOFE (R), Oklahoma: At the  heart of the matter is that this bill   is all pain and no gain. If this bill should pass,   which it won't - but if it should pass, this  is the going to be the greatest boon for China.

MARTIN SMITH: China, Inhofe argued, would  benefit because legislation would drive   up energy costs, and as a result force  American companies and jobs overseas. Sen. KIT BOND (R), Missouri: I represent millions  of families, farmers, drivers and workers who will   pay higher heating bills, suffer more pain at  the pump and lose more jobs because of the bill. Sen. BENJAMIN CARDIN (D), Maryland:  I happen to think that the economy's   going to respond in an appropriate way and  that energy costs may, in fact, go down. Sen. BERNIE SANDERS (I), Vermont:  Global warming is a catastrophic   crisis facing our planet. If we do not act boldly- MARTIN SMITH: After nine-and-a-half  hours, the bill was put to a vote. Sen. BARBARA BOXER (D-CA), Committee  Chair: On this vote, the ayes are 11,   the nays are 8. The ayes have it, and the  bill is reported favorably to the Senate. MARTIN SMITH: The real test was  to come on the Senate floor.   A lot was at stake. The bill would grant  utilities hundreds of billions of dollars for   carbon capture and storage technology and hundreds  of billions more for wind and solar incentives and   other renewable research. Automakers would  also get billions to develop cleaner cars.   It's estimated that the total package over  the next 40 years would run anywhere from   $1.5 trillion to $7 trillion, by any standard,  one of the largest bills ever debated by Congress.

FRANK O'DONNELL, President, Clean Air Watch:  The amount of money involved here is staggering.   You're talking about legislation that could affect  the power industry, the car industry, the chemical   industry. Every manufacturing industry in America  is going to have some say in what happens here. MARTIN SMITH: At the heart of the bill is  a market mechanism called "cap and trade,"   designed to penalize businesses  that don't cut their emissions. JEFFREY BALL, The Wall Street  Journal: The government imposes   a cap beyond which companies cannot emit.   Companies that emit more than their quota of  allowances buy from companies that emit less. MARTIN SMITH: And over time, the number of  available pollution permits is reduced. Scarcity   drives up their cost. In theory, businesses  will then invest in new clean technology,   creating new business opportunities and new jobs. JEFF GOODELL, Author, Big Coal: It would force  the coal guys to come up with making carbon   capture and storage work. It would begin  to level the playing field so that other   forms of power and other ways of thinking  about power could compete competitively.

MARTIN SMITH: But when the bill hit the Senate  floor, gas prices were hitting all-time highs. Sen. MITCH McCONNELL (R-KS), Minority  Leader: Families are already struggling   to pay a record gas tax, gas prices at nearly- Sen. DAVID VITTER (R), Louisiana: It  mandates nothing on the part of other   industrializing powers, like China and India- MARTIN SMITH: It was practically dead on arrival. Sen. SAXBY CHAMBLISS (R), Georgia: This bill will   attack citizens at the pump and  increase their electricity costs- ERIC POOLEY: The Lieberman-Warner bill,  it never really had a chance of passing. Sen. KIT BOND (R), Missouri:  -would increase energy prices- ERIC POOLEY: It hit the floor as gasoline  prices were peaking. Congress was in no   mood to debate anything that was going to  increase gas prices even by a little bit. Sen. TOM CARPER (D), Delaware:  Our planet is growing warmer. We,   as human beings, are a major contributor to that. SENATOR: Mr President, I yield the floor,   and I make the point of order  that a quorum is not present. MARTIN SMITH: Senate Minority Leader  Mitch McConnell moved to cut off any   debate by ordering Senate clerks to  read the entire 500-page bill into the   record. The bill fell into a procedural  black hole and never came to a vote.

ERIC POOLEY: The proponents of this  bill - Joe Lieberman, John Warner,   Barbara Boxer - the people that were really  trying to push this ahead did not have their   communications strategy together when they hit  the floor of the Senate. They were scrambling,   if you will. They didn't have the  votes. The debate was creaming a lot of   Democratic senators who were up for  reelection. They didn't want to be there. MARTIN SMITH: [on camera]  Where were the candidates? ERIC POOLEY: The candidates were  hiding. [laughs] The candidates   both support the concept of cap and  trade, but neither of them showed up. MARTIN SMITH: [voice-over] Both candidates may  have determined that in the midst of an election,   it wasn't a good time to vote yes  on a big government spending bill.   The real question is what will  Obama or McCain do once elected? Meanwhile, the planet is  operating on its own timetable.

JOSEPH ROMM, Dept. of Energy, 1995-'98: We  don't have a lot of time to reverse course.   The Arctic is probably going to be  ice-free by 2030, and possibly by 2020,   which is stunning because people used to think  it was going to be 2080 or 2100. And we have   seen a fantastic explosion of wildfires  around the world and in the United States. I think we are starting to see a perception  shift that maybe climate change is as serious   as people thought. I think Hurricane Katrina  played into that. I think these unbelievable   droughts in the United States that  we've been seeing - Australia's been   seeing an unbelievable drought. Parts  of China have seen brutal droughts. At the same time we are heating up the  oceans. We're cramming carbon dioxide   into them. And there are great fears that you  will render large tracks of the ocean lifeless.

MARTIN SMITH: Emissions continue to rise.  China has now passed America as the biggest   emitter of CO2. India, Indonesia, Mexico,  Brazil, Russia - all are emitting more,   too, the inevitable result  of more and more development. A global recession may slow the rate of growth  in emissions, but it will also crimp governments'   ability to act. And a recession will make it  more difficult for America to take the lead. ERIC POOLEY, Contributor, TIME Magazine:  We're not going to be able to spend all   the money that the nuclear industry wants us  to spend on nukes and all the money that the   coal people want us to spend on coal and all the  money that solar and wind and hydro people want   us to spend on those things. So where do we  make our bets? Where do we spend our dollars? Prof. STEPHEN SCHNEIDER,  Climatologist, Stanford Univ.:   What makes this challenge so daunting is  that it has to fly in the face of habits,   like more consumption and more  and more and more is good,   as opposed to maybe not good. Maybe we  need a different kind of consumption.

Prof. JEFFREY SACHS, Earth Institute, Columbia  Univ.: We have to change the way we live,   change the way we produce, have a new kind  of energy system. I would suggest we roll up   our sleeves and that - see what we have, try  out what we can do, invest in what we need. SUNITA NARAIN, Ctr. for Science and Environment,  New Delhi: If we understand what climate change   is going to do and we understand what kind of  cuts are needed, we will have to be far more   serious about what we do. I believe today there's  a lot of rhetorics, there's very little action. JERRY BROWN (D), California Attorney  General: Our wealth, our society,   our being is driven by oil and carbon. And when  we say we have to make a shift, that is extremely   difficult. It's intellectually dishonest  to somehow say we can get some lightbulbs,   or you know, get a Prius and we're all done.  No. This is going to take massive technological   innovation. It's going to take changes in the  way we live and work. And it's going to take   cooperation of unprecedented degrees among  business and government and among countries.

That's where we are. There's no other word  except daunting. I'm hopeful. I'm cautiously   optimistic. But I would have to say one  has to approach this with great humility.

How the World Reacted as Global Warming Warnings Grew | Heat (full documentary) | FRONTLINE (PBS)