With the release of the Environmental Protection Agency’s proposed rules limiting carbon pollution from the nation’s electricity sector, you’ve no doubt been hearing a lot of industry outrage about “Obama’s War on Coal.”
Don’t believe it.
Despite the passionate rhetoric from both sides of the climate divide, the proposed rules are very moderate — almost remedial. The rules grade the states on a curve, giving each a tailored emissions target meant to be attainable without undue hardship. For states that have already taken action to curb greenhouse gasses, and have more reductions in the works, they will be easy to meet. California, Oregon, Washington, and Colorado, are all several steps ahead of the proposed federal requirements — former Colorado Governor Bill Ritter told Colorado Public Radio that he expects the state to meet the proposed federal emissions target for 2030 in 2020, a decade ahead of schedule. This isn’t to say that Colorado has particularly clean power — our state has the 10th most carbon intensive electricity in the country, with about 63% of it coming from coal — but we’ve at least started the work of transitioning.
Furthermore, many heavily coal dependent states that have so far chosen to ignore the imperatives of climate change (e.g. Wyoming, West Virginia, Kentucky) must only attain single-digit percentage reductions, and would be permitted to remain largely coal dependent all the way up to 2030. Roger Pielke Jr. and others have pointed out that in isolation, the new rules would be expected to reduce the amount of coal we burn by only about 15%, relative to 2012 by 2020. By 2030, we might see an 18% reduction in coal use compared to 2012. Especially when you compare these numbers to the 25% reduction in coal use that took place between 2005 and 2012, and the far more aggressive climate goals that even Republicans were advocating for just two presidential elections ago, it becomes hard to paint the regulations as extreme. Instead, they look more like a binding codification of plans that already exist on the ground, and a gentle kick in the pants for regulatory laggards to get on board with at least a very basic level of emissions mitigation.
So, in isolation, there’s a limited amount to get either excited or angry about here. Thankfully, the EPA’s rules will not be operating in isolation!
We should begin levying a modest carbon tax, in the range of $5 to $25/ton of CO2e.
The tax must be applied to the fossil fuels used in electricity generation (coal and natural gas). Ideally it should also be applied to gasoline, diesel, natural gas used outside the power sector, and fugitive methane emissions from the oil and gas industry, but those are less important for the moment.
New electricity generation resources must be allowed to compete economically with the operation of existing carbon-intensive facilities, and fuel costs must not be blindly passed through to consumers without either rigorous regulatory oversight, or utilities sharing fuel price risk.
Carbon tax revenues should be spent on emissions mitigation, providing reliable, low-cost financing for energy efficiency measures and a standard-offer contract with modest performance-based returns for new renewable generation.
Over time the carbon price should be increased and applied uniformly across all segments of the economy, with the eventual integration of consumption based emissions footprinting for imported goods.
Bill McKibben rants eloquently about the need for more than individual actions to combat climate change — it’s a systemic problem, the solutions to which can only come with changes to the systems we are all embedded in. Changing your light bulbs and riding a bike are the easy parts. Organizing a devastating political campaign against the fossil fuel interests is much more challenging, and utterly necessary.
NRDC blogs about a new study on federal use of discount rates in calculation of carbon costs, which suggests we grossly underestimate the present value of reducing emissions. Did you even know that the feds had put an internal price on CO2? They behave as if it costs $21/ton to emit. But that’s based on a discount rate of around 3%, which is the highest rate OMB suggests using for inter-generational costs. Part II of the very detailed NRDC post is here.
The UK has one of the world’s most aggressive building energy efficiency targets: all new homes to be zero carbon by 2016, and all new buildings to be zero carbon by 2019. They’ve got a ways to go toward realizing this goal, but they’re doing what they can to learn from other countries in the meantime. The Zero Carbon Compendium 2010 is a compilation of zero carbon building strategies and progress being made by nations all over the world. A good look at what was already possible a couple of years ago… and it’s a lot more than we’re talking about doing here today.
Bill McKibben looks at Global Warming’s Terrifying New Math via three numbers. The problem at hand: if we want to limit warming to 2°C, we can only (globally) put about 565 more gigatons of CO2 into the atmosphere. Unfortunately the fossil fuel industry already has about 2800 gigatons worth of reserves on their balance sheets. If we are to avoid profound alteration of the climate, all those reserves will have to be written off and taken as a loss. This will, of course, bankrupt the entire industry. That’s the goal. It’s them, or the atmosphere.
First each side got to make a 10 minute introductory statement or presentation, followed by a series of pre-submitted questions, posed by the moderator. Finally, written questions from the audience were vetted by someone from Plan Boulder and passed on.
We can achieve rate parity with Xcel while reducing CO2 emissions by 67%, using natural gas and a 40% renewables mix, if we assume startup costs of $250M to $400M.
Coal and renewables simply can’t play well together on the same grid. The renewables get curtailed because coal fired power takes a long time to turn on and off.
Xcel’s business model, based on large existing investments in coal, can at most accommodate a 15% reduction in CO2 emissions.
David Miller was supportive of meeting our Climate Action Plan goals, but seemed unsure whether going after the emissions due to power generation was the best strategy, suggesting we might instead focus on demand side management, energy efficiency, and the use of RECs. As with the flyer circulated by his organization, most of the points he made focused on cultivating uncertainty. He was apparently choosing to ignore, or unwilling to accept the conclusions of the City’s consultants and the citizen modeling effort. Two points he made which I thought did warrant real concern:
About 75% of Boulder’s energy consumption is commercial/industrial, and that constituency isn’t directly represented in the voting public.
It is important that we not let the municipal utility’s revenues get entangled with the City’s general funding, as it sets up all kinds of poor incentives for the organization, and leads to an opaque city revenue scheme.
All in all Miller seemed earnest, but less informed than he ought to have been. Maybe that’s not his fault — based on the Plan Boulder flyer, it looks like Craig Eicher, Xcel’s community affairs manager for Boulder, was supposed to be sitting in his seat.
Bob Bellemare on the other hand seemed like a more practiced, more active disinformer, mostly trying to seed doubt in the minds of listeners. Among his recurring points:
Hardly anybody ever succeeds in this process. Maybe one city every decade nationwide.
Once you vote in November to begin, it will be very difficult to actually stop the process, regardless of what “off ramps” you’ve supposedly put in place. The only way it ever seems to happen is by voting in a new city council.
Your cost estimates are wildly wrong. It will be much more expensive, and take much longer than you think. You will probably lose money.
There’s no reason to think that your local monopoly (the municipal utility) will be any less monopolistic than Xcel.
The point about stopping the process often requiring the voting in of a new council seemed like a thinly veiled political threat.
Often the debate became one side asserting some number, and the other simply claiming it was wrong. Stranded costs, separation costs, fuel costs, interest rates, etc. At some point Bellemare claimed that Xcel was going to be shutting down half its coal plants, which got shocked and appalled looks from both Ken and Sam. Half? Really? Their counter claim was that generation was dropping from 2400MW to 2000MW of coal (a 1/6 reduction, not 1/2). When quantitative issues become he-said, she-said, all you can do is get someone to go look at the calculations or data. In this sense, I think the proponents of municipalization have a big advantage. Their models are all public. They’re willing to have you examine their assumptions and check their work. Xcel on the other hand has been very cagy with their data, and are unwilling to give detailed background on where their estimates are coming from (it took months just to get the city’s power consumption profile… and only happened after we’d gotten similar data from Ft. Collins). All you get the end result and a “Trust Us…” which unsurprisingly makes municipalization look like a lousy deal.
Some of the audience questions were actually quite good. Somebody requested that each debater disclose how much they were being paid (if anything) to participate, and by whom. Weaver and Regelson (and the Plan Boulder moderator) are volunteering their time without pay. Miller received a few hundred dollars from the Boulder Smart Energy Coalition. Bellemare is a paid consultant working for Xcel and “[his] financial arrangements are not a matter of public information.”
At some point near the end of the debate, it became clear that the proponents of municipalization were winning pretty unambiguously in terms of both information and eloquence, and they became a bit more aggressive. Miller claimed that obviously our rates would have to go up in a less carbon intensive scenario, as renewables are simply more expensive — just look at all the renewables assessments on our bills. Weaver took almost violent objection to this point, noting that wind is already the same price as coal, we just can’t take advantage of it with the coal fired grid we’ve got today because of the baseload/curtailment issue. He further noted that while solar is more expensive today, it’s dropped 40-50% in cost over the last 5 years to around $5.15 per installed watt, and if/when it gets to $2.75, it will be cheaper than grid power. At which point, he envisions an explosion of distributed generation, “behind the meter” i.e. outside of Xcel’s control, which he believes will prove disruptive to Xcel’s business model. It came off as being somewhere between a warning and a threat.
The final question, which came directly from the moderator, was on the larger consequences of the decisions being made, both for other communities watching the process, and for the future Boulder 10, 20 or even 50 years on. The proponents of municipalization clearly felt that we are attempting to set an example for others, of creating a scalable, replicable, financially and climatically responsible power system. One which a few decades hence they also expect Boulder ratepayers to be thankful for, due to much lower exposure to high and volatile fossil fuel prices.
Miller held out hope that we would find a “third way” to achieve our goals, also setting an example for other communities, though he didn’t lay out in any detail what such a third way would look like, and how it could work from within the confines of the Xcel energy system.
Bellemare felt that regardless of the outcome of the election it would have little effect more broadly. Every franchise agreement is different, state regulations are different, what you learn in one place doesn’t really transfer well to others. (Nobody’s watching. What you’re doing doesn’t really matter.) Should the ballot measure succeed, he expected 5 years of wrangling to get the utility set up, and another 5 years before we really figured out how to run it. Twenty or fifty years on? Well, who knows… If the ballot measure fails, he expects Xcel and Boulder to keep on working together as they have for years, continuing to build one of the nation’s best energy efficiency programs.
This inspired a pretty loud response from Ken… who noted that yes, we do have one of the best efficiency and renewables programs in the nation for an investor owned utility, but several municipal utilities do far better, Austin, TX and Sacramento, CA were mentioned as examples.
Based on their overall performance, it seemed pretty clear to me that the proponents of municipalization can win if they’re given a fair forum. It’s less clear to me how they will fare in the decidedly unfair landscape of full page newspaper ads, push polling, semi-anonymous glossy mailers, radio sound bites and yard signs. In those fora, money talks much louder than good information, and Xcel has a lot more money at their disposal than we do. We need to change that.