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No more Berning of fossil fuels

Maximilian Auffhammer, professor, international sustainable development | March 10, 2016

For the energy sector a lot is at stake with this next election.

Of the GOP front runners, only Marco Rubio has an energy or climate plan on his website. A few choice nuggets are doing away with “Obama’s carbon mandates” (whatever that means), approving Keystone XL immediately, rewriting the offshore drilling plan and creating a National Regulatory Budget to Limit the Power of Unelected Regulators. There is no plan to address climate change, because that’s not a problem in the Rubio world. I can hear my great grandchildren crying into their organic pillows across the space-time continuum. I don’t even want to speculate about Trump’s energy plan. Well, maybe he will put gold-plated windmills made in U.S.A. on his wall to Mexico.

Hillary’s plan

On the other side of the aisle, the two front runners have spelled out their energy and climate plans pretty well on their respective sites. Hillary Clinton’s plans are an aggressive acceleration of the agenda set during the Obama administration, and it focuses (perhaps wisely) on executive actions that are feasible without new acts of Congress. The two main goals listed are:

  • The United States will have more than 500,000,000 solar panels installed by the end of 2020.
  • The United States will produce enough renewable energy to power every home in America by 2026.

Goal one is ambitious and smartly stated in units that the voter can visualize (what is a MW anyway?). This is equivalent to putting solar panels on 25 million homes or a seven-fold increase of current levels. I assume that a significant share of these panels will not be on residential roofs but in PV plants, but this is not spelled out.

Goal two is broader than goal one, since it pulls in the other sources of renewable energy (wind, hydro, etc.). Promising to power “every home” implies covering residential consumption, which accounts for about a third of energy consumption. This would require a doubling of renewable energy sources over a decade. I’m mildly skeptical (professional hazard), but intrigued.

The “how we get there” section lists a 60 billion dollar “Clean Energy Challenge.” The plan involves cutting red tape to get panels onto roofs faster, transmission infrastructure investments, a Solar X-Prize and …..drum roll…. tax incentives. I don’t want to be Debbie Downer here, but achieving this goal in four years is going to take net metering on steroids across large swaths of the country and tax credits that are significantly higher than the 30% you get now. If you spent all 60 billion dollars on subsidies (which I don’t believe is the plan) this would amount to roughly $3000 per new solar household. While that sounds like a lot, it is not. For a $21k install, you already currently get $7k in federal tax credits.

While there is no explicit mention of market based mechanisms to fight climate change, Hillary’s plan pushes for a continuation of the Clean Power Plan as proposed, which has some market mechanisms built in. Further, a carbon tax or national cap and trade is beyond the power of the executive and lacking a tidal change in Congress, is simply politically not feasible. There is also talk of more energy efficiency, reforming leasing of public lands, ending subsidies for oil and gas and cutting methane emissions.

Bernie’s plan

Bernie Sanders’ agenda is significantly more aggressive. The stated goals make this liberal heart sing. Accelerating a just transition away from fossil fuels, investment in clean energy, revolutionizing the electric and transportation infrastructure, and taking a leadership position in the international fight against climate change. How to get there? Bernie plans to charge a revenue neutral carbon tax, repeal fossil fuel subsidies and invest massively in energy efficiency and clean energy. A candidate arguing for a REVENUE NEUTRAL CARBON TAX? Sign me up! And then I read on.

“Create a Clean-Energy Workforce of 10 million good-paying jobs by creating a 100% clean energy system. Transitioning toward a completely nuclear-free clean energy system for electricity, heating, and transportation is not only possible and affordable it will create millions of good jobs, clean up our air and water, and decrease our dependence on foreign oil.”

This sounds good. Real good. Much like free Krispy Kreme donuts that don’t make you fat good. Then there is a link where for each state you can see what this 100% clean energy system for your state will look like. I clicked on California. The future mix looks like this:

transWWS

This is 35% from Wind, ~55% from Solar and the remainder from a mix of sources. No nuclear, no gas, no coal. All clean. This plan will generate 315,982 forty-year jobs in construction, and 142,153 permanent operating jobs. Also, the private costs of this system are projected to be 9.7 cents per kwh, which is one cent lower than projected costs of the fossil energy. This plan will avoid 127.9 billion dollars in health damages. And the final conclusion is that because of customer-side solar and improving energy efficiency, total demand will go down by 44%. This is not fat free donuts.

In my humble opinion achieving this goal is about as likely as me starting to work out today and looking like Ryan Gosling next week.

Why? California’s population is projected to grow by 28% by 2050. So in order to decrease demand by 44% over today, you will have to do that and add 11 million carbon free individuals. California is famous for its aggressive energy efficiency policies. They have contributed to keeping our per capita consumption relatively constant. But a decrease in demand of this magnitude is beyond what even the most optimistic energy efficiency advocates would consider reasonable.

I don’t even want to get started on these job creation figures. Severin Borenstein has written about this. I realize that you have to promise jobs to get elected in some places, but these wildly exaggerated claims are simply not honest. And neither are the claims about the costs of renewables.

We need to craft an ambitious path forward towards this brave new energy system that will address climate change and local pollution externalities. Germany is trying the path of nuclear free renewables and it is turning out to be an expensive and not necessarily “coal reducing” one. Let’s study this case closely and learn from it.

I realize that in order to get elected one has to make promises one can’t keep. But this economist dislikes it when as an adult he is promised Santa, when we know that Santa does not exist.

Crossposted from the blog of the Energy Institute at Haas.

Comments to “No more Berning of fossil fuels

  1. You obviously haven’t done your research. Bernie’s plan is completely possible technically, and you can find a dozen similar plans by various scientists who know what they’re talking about.

    If we declared global warming to be the national security threat which it actually is — and we organized the economy on a “war footing” to mass produce huge numbers of solar panels and batteries and install them everywhere, and to retrofit buildings for energy efficiency and so on — and we actually used the military to do it, enlisting people as necessary —

    We would absolutely be able to do this. No question about it. And it would create that many jobs, too.

    The only thing stopping the plan is political. If you think that Congress would never agree… maybe you’re right. But calling the plan “impossible” is intellectually lazy. Those of us who have done the technical research know that it is entirely possible.

    By *2050* it will probably happen even if we *don’t* have any political intervention, actually. Targeting 2050 is an easy target, for what it’s worth.

    Do you keep track of the trends in the solar industry? I do. Solar continues to follow Swanson’s law and is about to get cheaper than everything except wind, which is already cheaper than anything else.

    How about the coal industry? I keep track of that, too; it’s become uncompetitive and the entire industry is shutting down.

    The power industry? I keep track of that, obviously.

    The all-important battery industry? Yes, I follow that too; we’re within striking distance of beating fossil fuel costs for solar + batteries, but due to weird details of the way the batteries are deployed, we won’t actually need to. The batteries get deployed initially, for other reasons such as peak shaving, backup, and frequency stabilization, but the way the market works means they’ll get massively overdeployed, and once they exist they will get used for nighttime storage “for free”.

    Then there’s the electric car business, which I also follow: solid investment-grade estimates range from all new cars being electric in 2025, to all new cars being electric in 2035.

    Demand reduction? That’s energy efficiency.

    — When you replace incandescent lightbulbs with LED lightbulbs, you delete *90%* of lighting energy demand (that’s an exact compution).
    — When you replace a gas car with an electric car running on solar power, the numbers are debated more, but you delete about 4/5 of primary energy demand in the transportation sector (gas cars are *extremely* inefficient).
    — Replacing a leaky house with a superinsulated house removes around 80%-90% of the heating and cooling energy load.
    — Replacing resistive electric heat with a heat pump removes about 50% of the heating load (this stacks multiplicatively with the insulation obviously)

    It’s not so hard to get massive demand reductions if people actually do all this stuff.

    Basically, the numbers in Bernie’s plan are correct, to the very loose order-of-magnitude degree that any projections can be correct (no battle plan survives first contact with the enemy). The job numbers are for all the solar installers and building retrofitters obviously, since that’s all extremely labor-intensive. Those aren’t permanent jobs, of course.

    You think it’s impossible because you have not actually done your research.

  2. Interestingly almost no one addresses the issue of power distribution and the ongoing maintenance costs associated with both maintaining and replacing highly distributed PV sources and other forms of distributed energy generation.

    There are plenty of reasons why we all didn’t grow up with small coal-fired power plants near our homes, windmills in our back yards, and micro-nuclear plants in our neighborhoods. Obtaining energy, and storing power is an expense and complex issue. (Here comes the batteries!) It seems like everyone spends lots and time and money papering across some difficult and potentially intractable problems.

    It would agree, lots of data going to come from Germany, and it’s a pretty big test case. The bigger problem is human biology, which runs counter the human population sustainability at this point in history. The go-to default for humans (and all life) is biology, and that is very slow to change. Despite the hopes and promises of female education and emancipation. That hope and fact presents an uneven and uncontrolled potential population expansion.

    I would agree with Brian that a revenue neutral carbon tax provides the potential for many creative solutions and may well provide the best mechanism to make the switch to a reduced carbon economy.

    Both Hillary and Bernie set the tone for economic change. The Republican candidates sound strident, ignorant, and ultimately will be self-marginalizing.

  3. Depending on how you define total energy consumption, a reduction of 44% may be quite practical. Note that this does not mean a 44% reduction of end-use demand, but a 44% reduction of primary energy consumption. For wind and solar, the accounting usually begins with electricity, while for fossil fuels, it begins with chemical energy. If the conversion of chemical energy to work is 25-50% efficient, then switching to solar gives a 2x-4x increase in efficiency. Therefore, it is possible to drive more miles and consume more kWh of electricity while reducing primary energy consumption. I’m not saying that this version of energy accounting is intuitive, but Bernie certainly did not invent it.

    As far as cost goes, NV Energy signed a contract with SunPower about a year ago to buy solar power for $0.046/kWh, fixed for 20 years. This project benefits from a 30% ITC, but prices are still falling. I see no reason why 2050 wholesale electricity prices (100% renewable) should be higher than $0.097/kWh (assuming 2016 dollars). The 100% fossil price seems high, but remember that in this case, fossil fuel demand will increase dramatically, and prices will go up again. I’m confident the true minimum cost scenario is somewhere in between, with the exact number depending on the social cost of carbon. I think Bernie would struggle politically if he tried to present a graph of total internal and external costs versus renewable fraction and changed his slogan to “92% renewables by 2050!” We should probably cut him some slack.

    The job creation numbers are silly. Solar has cheaper operating costs than fossil fuels because it creates fewer jobs. This has the potential to be a good thing as long as we take care of the displaced workers and depressed mining towns.

    I also disagree with Bernie on nuclear. Nuclear is expensive and I don’t want to build any more, but as long as the existing plants can be operated safely, let’s keep them running. Even with Chernobyl and Fukushima, nuclear has done far less harm than coal.

    Overall, I really like Bernie’s message because it dispels the myth that switching to renewable energy is unaffordable or impractical. Even without accounting for externalities, renewables will be cheaper than fossil fuels in many cases. The extra push needed to get renewables to >80% is smaller than the average voter realizes. However, it still requires a push. Hooray for the revenue neutral carbon tax!

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