Perhaps you can’t beat city hall. The plan to buy 120 Yamaha gasoline golf carts was dropped last Fall as a bad idea after citizens pointed out the high cost and the risk of increasing ozone pollution. Now, the city is planning to buy 240 Yamaha gas carts to replace their fleet of electric golf carts. That idea is twice as bad, but it is likely the city council may approve it, though the cost estimates are off and it conflicts with the ozone reduction goals of the Wichita Department of Public Works. They recommend cutting the use of small gas engines as much as possible..Ozone is a problem as it corrodes metals, rots rubber, damages plant leaves and, most seriously, and destroys lung tissue – greatly affecting the health of people who suffer from heart and lung diseases. Ozone is created by the interaction of sunlight, oxygen, and hydrocarbons in the presence of nitrogen oxides. Automobiles and small gas engines are main sources of the hydrocarbons and nitrogen oxides..Last September, Wichita abandoned plans to buy 120 used Yamaha gas golf carts over concerns about their costs and their contribution to ozone pollution. The city’s new plan is to buy 240 new Yamaha golf carts, saying it could save $300,000 over the next 10 years..Wichita’s Public Works Department has been working with businesses city residents to reduce the city’s ozone levels. Through their efforts, Wichita has been able to reduce its ozone levels from 81 ppb to 69 ppb, slightly below the new standard of 70 ppb. Small gas engines are one of the main contributors to ozone levels. Yamaha claims its fuel injected engines reduce emissions by about 30%, meaning they still emit 70%..A side by side comparison of gas and electric golf carts found that electric carts have 85 percent lower fuel costs and produce one-quarter of the emissions. They are three times more fuel efficient, have reduced maintenance costs, and are greatly preferred by golfers. For those of you concerned about carbon emissions, the electric carts cut emissions by about half, even if charge from a coal-fired power plant..The Wichita Eagle recently reported that if Wichita fails to comply with air quality standards, particularly ozone levels, the city could be fined as much as $10 million a year. Is it wise to risk a possible $100 million in penalties to save a questionable $300,000? Replacing Wichita’s fleet of electric golf carts with gas ones is a step in the wrong direction..Note On 3/08/ 2017: City Hall won. The vote was 5 to 2 to buy the gasoline golf carts, even though they will contribute to the Wichita’s air quality problem. Those who voted for buying the carts were much more concerned about the money, even though the savings from the gas carts was greatly inflated, than about the air quality.When asked to see the proposal and the reasoning presented by the golf commission, I was told I would have to submit a FOIA request, even though they could’ve just handed it to me. I’m now requesting all the information and plan to write another article on how the decision was made, although there is little chance it can be rescinded..(C) 2017 J.C. Moore
Posts Tagged ‘air pollution’
Health reasons: The American Lung Association estimates that there are 26,000 deaths and 1.5 million cases of acute bronchitis and aggravated asthma caused by small particulates, much of it emitted from coal-fired power plants and from coal ash disposal. They estimate the economic benefits of reduced exposure to particulates alone could reach as much as $281 billion annually. Recently, fine particles have been implicated as a cause of Alzheimer’s and Parkinson’s disease and new research has revealed a troubling link between mental illness and air pollution that seems to particularly effect children.
Economic reasons: Besides reducing health care costs, a switch to renewable energy will help keep our future electric rates low. Wind and solar are falling in cost and are now competitive with energy from coal-fired power plants. Recently AEP/PSO in Oklahoma purchased 800 MW of wind energy saying the cost was now less than building new coal fired plants, and that the purchase will save an estimated $53 million in the first year and even more thereafter. Kansas currently has 27,000 jobs in the clean energy sector. Of those jobs 75% are in wind energy, and are growing at a rate of 2.3% per year. By the end of 2016, 32% of Westar’s retail electricity will come from the wind.
Environmental reasons: Coal is 65 to 95 % carbon. What about the rest? Burning coal releases mercury, chromium, lead, cadmium, arsenic, sulfur oxides, nitrogen oxides, carbon dioxide, particulates, and radioactive isotopes. Burning coal releases millions of tons of pollutants into the air and leaves several hundred million tons behind in the coal ash. Some pollutants stay in the air and others eventually find their way into the water, the food chain, and into us. For comparison, mercury is 100 times as toxic as cyanide, arsenic is 20 times as toxic, and chromium(VI) is 4 times as toxic. These three are also are carcinogenic and accumulate in tissue. Even exposure below the allowed levels increases the chance of cancer over time. The sulfur, nitrogen oxides, and carbon dioxide released by coal combustion harm plants, produce acid rain, and increase the greenhouse gas concentrations. Switching to renewable energy would greatly reduce these pollutants and help preserve the environment for future generations.
Summary: Investing in clean energy protects the environment, reduces death and disease from air pollution, and creates good, local jobs. We must develop policies to encourage the development of renewable energy investments and energy conservation. Our energy needs will best be served by a mixture of traditional and alternate energy sources, and we must be proactive in developing our renewable energy resources.
(c) 2016 J.C. Moore
The Wichita Eagle recently published an interesting letter from Darrel Hart, president of the Wichita chapter the Citizens Climate Lobby. He pointed out that the House energy and water development bill , as it stands, provides subsidies of $95 million for wind, $632 million for fossil fuel and $1 billion for nuclear.
The letter goes on, “Clearly when it comes to winning subsidies, wind falls short. Legislators favoring carbon-based fuel spin the idea that if wind were economical, it could compete without government help. Well, what does that say about fossil fuel? It has been receiving billions in subsidies for decades.
Lopsided subsidies and favored treatment reveal the intent to pick winners and losers. A better solution is carbon fee and dividend legislation that cuts greenhouse gas emissions and corrects the artificially low price of fossil fuel created by tax dollars rigging the system against clean energy. Let markets reveal the true price of energy, and it will be the consumer who chooses the winner.”
Mr. Hart certainly has a good point, as carbon fuels are not paying their true cost. Besides the $632 million subsidies to fossil fuels, we are also providing an even greater subsidy by allowing them to release their waste products into the air without paying the external costs, i.e., the costs indirectly borne by society.
The external costs for fossil fuels include health and environmental damage from particulates, nitrogen oxides, sulfur oxides, chromium, mercury, arsenic, and carbon emissions. An EU funded research study, Externalities of Energys , found that including external costs would increase the cost of producing electricity from fossil fuels by 30% for natural gas to 90% for coal, if costs to the environment and to human health were included.
The carbon fee and dividend system Mr. Hart is recommending would put a fee on carbon at the source, which would require the fossil fuels to include their external costs.This would allow renewable energy sources to compete with fossil fuels on an even basis, and would greatly favor a switch to renewable energy.
(c) 2016 J.C. Moore
This presentation was given at the Great Plains Conference on Animals and the Environment at Fort Hays State University for Earth Day 2016. The first part of the program presents the evidence for climate change and explains the urgency for taking action. The second part of the presentation explains the Citizens’ Climate Lobby’s proposal to reduce our carbon emissions below 1990 levels by 2035. The plan, with broad bipartisan support, would place a fee on carbon at the source and allow market forces to encourage reduced emissions, energy conservation and investments in renewable energy.
Please click on the link above. You will need a PowerPoint program to view the slides – or you may download a free viewer here. The slides will display as set in your viewer. The slides were meant to be somewhat self-explanatory, but if you have questions you may email the author or post your questions in the comment section. The slides were prepared by Darrel Hart, Mark Shobe, and J.C. Moore.
In Paris, 196 countries agreed to develop plans to reduce their carbon emissions in such a way as to keep global warming below 1.5°C. Although each country will develop its own plan, the best plan for the US, and many other countries, would be a carbon fee and dividend system such as that developed by the Citizens’ Climate Lobby (CCL), which has broad bipartisan support. CCL’s proposal would place a fee on carbon at the source, and market forces would then encourage reduced emissions, energy conservation and investments in renewable energy. The fee collected is not a tax as it would be distributed equally to every household as a monthly energy dividend.
CO2 equivalent emissions: CCL’s legislative proposal would set an initial fee on carbon at $15 per ton of CO2 emission or CO2 equivalent emissions with the fee increasing by $10 each year until the US emissions drop to 1990 levels. The main contributors to CO2 are combustion of coal, natural gas, and gasoline, with minor equivalent emissions coming from other industrial chemicals. A little chemistry allows us to calculate the tons of CO2 that a ton of each fuel produces.
Coal: It is hard to calculate coal’s contribution exactly as it has from 65% to 95% carbon and the rest is impurities. Those include mercury, cadmium, lead, manganese, selenium, sulfur, nitrogen, and some radioactive elements. Much of the environmental damage and many cases of lung disease can be traced to the impurities and to the mining of coal. For calculation purposes we will assume that coal is all carbon as graphite, but keep in mind that each source of coal is different.
The chemically equation for the reaction of carbon with oxygen is:
Carbon + Oxygen => Carbon Dioxide
The mass of each atom or molecule in atomic mass units (MU) is written on the atom. The equation says that 12 mass units of carbon react with 32 mass units of oxygen to produce 44 mass units of carbon dioxide. The equation is like a recipe and once you establish the basic relationship, it can be scaled up to tons quite easily, i.e. :
C + O2 => CO2
12 MU Carbon + 32 MU Oxygen => 44 MU Carbon Dioxide – or –
12 Tons Carbon + 32 Tons Oxygen => 44 Tons Carbon Dioxide
Thus, each ton of carbon produces 3.6 tons of carbon dioxide.
Natural gas: Natural gas is composed mostly of methane, CH4 , with small impurities of other hydrocarbon gases. Following the method above:
CH4 + 2O2 => CO2 + 2H2O
16 MU Methane + 64 MU Oxygen => 44 MU Carbon Dioxide +36 MU of Water
16 Tons Methane + 64 Tons Oxygen => 44 tons Carbon Dioxide +36 tons of Water
Each ton of methane produces 2.8 tons of carbon dioxide.
Gasoline: Gasoline is composed of many volatile liquid compounds, but it can best be represented as octane, which has eight carbon atoms and 18 hydrogen atoms, C8H18. (The model for Octane is large so here we will just work from the equation. )
C8H18 + 25/2 O2 => 8CO2 + 9 H2O
114 AMU Octane + Oxygen => 352 AMU Carbon Dioxide + Water
114 Tons Octane + Oxygen => 44 tons Carbon Dioxide + Water
Each ton of octane produces 3.1 tons of carbon dioxide.
Note: This means that the initial carbon fee on fossil fuels would be around $40-$50 per ton of fuel. This would pay part of the external costs of using the fuel as well as encourage conservation and a shift to renewable energy. One gallon of gasoline is about 7 pounds and it produces about 21 pounds of CO2. That means that 95 gallons of gasoline will produce 1 ton of carbon dioxide. The $15 per ton carbon fee would increase the cost of 95 gallons of gas from about $200 to about $215, or about 7%.
Heat of Combustion: Each fuel releases a different amount of energy when burned, measured in kilojoules of energy per mole of fuel burned. Those are listed below along with another important quantity, the amount of heat released per mole of carbon dioxide released.
Note that Methane releases more than twice as much energy as coal for each mole of carbon dioxide produced. This was the impetus to convert coal-fired power plants to natural gas-fired plants. That would help in the short term as natural gas has fewer impurities and produces more energy per mole of CO2 released. However, there is another factor to be considered which is the Global Warming Potential of each greenhouse gas.
Global Warming Potential (GWP): The amount that each greenhouse gas contributes to global warming depends upon its concentration in the atmosphere, it’s effectiveness at trapping heat, and its lifetime in the atmosphere. The focus is on carbon dioxide as it is the greenhouse gas whose concentration has increased the most by burning fossil fuels. Methane is very efficient at trapping heat and has a GWP 28 times that of CO2. Though methane’s concentration is low, it has more than doubled since pre-industrial times. There are other greenhouse gases which are more effective at trapping heat and have longer lifetimes, such as N2O, but their contributions are small because they have such low concentrations. Below is a table comparing those. Source.
Although converting coal-fired power plants to natural gas might be advantageous in the short term, we should be concerned about methane’s volatile prices, the link between fracking and earthquakes, and its GWP. Large amounts of methane are lost from fracking operations, leaking gas wells, and pipeline leaks. If even 4% of the methane produced is lost to leaks, then any advantage of converting to methane will be lost. The EPA has taken steps to reduce methane loss to the air, but is a very difficult thing to measure. One study found that infrastructure leaks in the Boston area accounted for about 2.6% of the methane transmitted. And methane, when burned, still ends up as CO2 in the atmosphere. You can see from the table that the amount of methane in the air is growing, and rather than count on it for the future, we should focus on converting to renewable energy sources as quickly as possible.
(C) 2016 – J.C. Moore
Note: Here is a model of octane for the curious:
The leaders of the Republican Party in 26 states plan to sue the EPA to stop the Clean Power Plan. Those same leaders often justify what they want to do by claiming it is what the people want. But in this case, they are doing more what the fossil fuel companies want. The public in 23 of the states does not support the lawsuits, as in the chart below.
The governors and attorney generals of the states want to make a name for themselves as “conservatives”, but it is a losing proposition for a number of reasons. The lawsuits do not actually represent a conservative position, as the EPA’s plan will lead to a shift to renewable energy which will keep billions of tons of carbon dioxide out of the atmosphere. In that respect, the EPA has the more conservative position.
The reason often given for the lawsuits is saving money on energy, but the politicians seem more interested in campaign money than saving money for their citizens. The EPA’s plan may lead to increased electricity costs in the present, but will lead to lower electric rates in the future. Coal and transportation prices are certain to increase in the future while the cost of renewable energy is falling. It costs upfront to build wind turbines and solar installations but, once they are in place, they are expected to function for 30 years or longer without any need for fuel.
It will cost the states lots of money for the lawsuits, and their chances successes is slim. And, it will likely harm a number of citizens of the states if the lawsuit succeeds. There are many coal burning power plants in the US which operate without scrubbers to remove particulates, because coal is cheap and scrubbers are expensive. The EPA projects the Clean Power Plan’s proposed guidelines for particulates alone could prevent up to 3,600 deaths, 1,700 heart attacks, 90,000 asthma attacks, and 300,000 missed work and school days per year. As a result, for every dollar Americans spend on the Clean Power Plan, we will gain up to $4 worth of health benefits.
So in terms of future energy costs, environmental benefits, and health benefits the EPA Clean Power Plan is a winner for the citizens. Perhaps the Republican Attorney Generals clamoring to sue the EPA should reconsider.
(c) 2015 J.C. Moore
On his world tour, Pope Francis called on world leaders to address climate change in November at the Paris Climate Conference. It is not just religious leaders and climate scientist who are concerned, but business leaders who are aware that climate change will hurt the world’s economy. A recent study, published in the journal Nature, found that temperature change due to unmitigated global warming will leave global GDP per capita 23% lower in 2100 than it would be without any warming.
Joining the call for action on climate change are companies such as Nike, Walmart, Goldman Sachs, Johnson & Johnson, Proctor & Gamble, Salesforce, Starbucks, Steelcase, and Voya Financial, all who have adopted a goal of 100 % renewable energy. Food Companies are concerned that climate change is threatening our food supply. CEOs of Kellogg’s, Mars, Dannon, Ben & Jerry’s, Stonyfield Farms, and Nestlé have signed a letter urging US and global leaders to “meaningfully address the reality of climate change.”
By this week, 81 big-name corporations representing 9 million employees and $5 trillion in market capitalization have signed on to the President’s “Act on Climate” pledge.
THE AMERICAN BUSINESS “ACT ON CLIMATE PLEDGE”
“We applaud the growing number of countries that have already set ambitious targets for climate action. In this context, we support the conclusion of a climate change agreement in Paris that takes a strong step forward toward a low-carbon, sustainable future.
We recognize that delaying action on climate change will be costly in economic and human terms, while accelerating the transition to a low-carbon economy will produce multiple benefits with regard to sustainable economic growth, public health, resilience to natural disasters, and the health of the global environment.”
The list of the corporations taking the pledge and a summary of their pledges are listed in this White House fact sheet. Their pledges set ambitious, company-specific goals such as:
Reducing emissions by as much as 50 percent,
Reducing water usage by as much as 80 percent,
Achieving zero waste-to-landfill,
Purchasing 100 percent renewable energy, and
Pursuing zero net deforestation in supply chains.
Most importantly, these companies set an example to their peers who will be asked to sign onto the pledge before the Paris Conference.
The plan to reduce emissions with broad bipartisan support in the US is the carbon fee and dividend as proposed by the Citizens’ Climate Lobby. Their proposal would place a fee on carbon at the source and allow market forces to encourage reduced emissions, energy conservation, and investments in renewable energy. The carbon fee is not a tax as proceeds would be distributed equally to every household as a monthly energy dividend. It would effectively stimulate the economy and add an estimated 2.8 million jobs over the next 20 years. What could be a better plan?
(c) 2015 J.C. Moore
Many of America’s power companies have put their profits before the health of our citizens and the protection of the environment. The American Lung Association estimates that the EPA’s proposed guidelines for particulates could prevent 38,000 heart attacks and premature deaths, 1.5 million cases of acute bronchitis and aggravated asthma, and 2.7 million days of missed work or school. Yet, there are many coal burning power plants in the US which operate without scrubbers to remove particulates, because coal is cheap and scrubbers are expensive.
Scientists have known since 1980 that our increasing CO2 levels were endangering our environment. All the world’s major scientific organizations are now saying that we must take immediate action to avoid environmental disasters. There is really no effective way to remove carbon emissions from fossil fuel plants, yet our power companies have fought a shift to renewable energy. Many power companies are now being required to install costly upgrades to their coal-fired plants, and are trying to recoup the cost of their short-term thinking by raising their customer’s rates. Westar energy is a good example, and it is likely that your electric company may soon follow suit.
Westar Energy has requested a rate increase by $152 million a year, about 8% over its current rates. Most of the increase will go to upgrade its Wolf Creek nuclear plant, to install scrubbers at some of its coal-fired power plants, and to remove mercury from its La Cynge coal-fired power plant. Westar’s proposed rate design would shift more of its costs from businesses to residential customers and increase the basic charge for residential service by $3 a month each year for the next five years. That means the cost to just keep the power on would increase from the current $12 a month to $27 a month. Customers who want to install their own solar or wind power would be required to pay a $50 customer charge or pay for power at the peak rate, effectively killing private investments in solar energy. Westar’s customers are understandably unhappy about this.
CEO pay and profits : As a Westar stockholder, I felt bad about the recent rate hearing in Wichita. Speaker after speaker, including several ministers and AARP representatives, testified about how the proposed increase in rates would affect the poor and elderly. The timing of the rate increase seems inappropriate. Morningstar reported that last year the company’s top five executives received 23.5% in salary increases. Westar’s CEO now receives $3 million in compensation, more than 30 times that of our governor. A large portion of the compensation is in stock, which tends to encourage short-term decisions to increase stock value.
Many people also testified that the proposed rate structure would discourage private investments in energy efficiency, energy conservation, and solar panels. A poll by Magellan found that 76% of Westar’s customers oppose the tariff on solar panels, agreeing that Westar’s position was based on increasing its profit. Westar is also requesting a 10% return on investments which seems high for a company which has just invested several million dollars in executive raises.
A misleading process: Although Westar says it is committed to renewable energy and reduced carbon emissions, their proposal would have just the opposite effect. There are number of red flags for investors evident in the rate proposal and in Westar’s actions over the last several years. Many investors are now looking for long-term investments in environmentally and socially responsible companies. Westar may no longer fall into that category. AARP ran a full-page ad in the local newspaper protesting the rate increase. About 73% of Westar stock is held by institutional investors and many of those are retirement funds. If some of those retirement funds decide to divest of Westar’s stock, the effect will certainly not be what the CEO intended.
There was also concern about the integrity of the process, which was unnecessarily secretive and sometimes misleading. A local newspaper article pointed out that, ”Westar’s public notice fails to detail changes in billing, solar rates”. And, the CEO’s letter to stockholders claimed that outside agitators were responsible for opposition to the solar fee – which was not what the Magellan study found. His idea that solar customers were “free riders” who didn’t pay their fair share came from an ALEC meeting in Chicago. Chicago? It was propaganda created by power companies worried about solar cutting into their market share. His letter claimed that solar customers who hooked to the grid using net metering agreements were being subsidized by other ratepayers, though research has found just the opposite. I would expect such a well-paid CEO to know about the research.
Solar Research: Studies in Vermont, New York, California, Texas, and Nevada concluded that net metering provided a net positive benefit for utility companies and their customers. A 2015 study done in Missouri is even more relevant to Kansas. A cost-benefit study of net metering in Missouri arrived at the same conclusion as the other studies, “ Net metering provides a net benefit. “ Missouri has 6000 net metering customers while Westar now has approximately 300. It is unlikely that a study done in Kansas would come up with a different result, but the Westar executives claim differently.
Why should customers who cut their energy use in half by installing solar panels be charged an extra fee, while those who cut their use in half by installing extra insulation be considered differently? Westar claims they should be, but that seems unreasonable. Net metering customers are charged a fee to set up the system and for a safety inspection, but otherwise net energy metering customers should be treated just as any other customer when they use electricity and be reimbursed as any other supplier when they supply excess power. Charging solar customers an extra fee may actually cause an increase in electric rates.
Gaming the system: My son, who worked for a gas company, observed that in gas company rate cases they always asked for about twice what they wanted and settled for half of that. Other than the money to have Wolf Creek comply with federal regulations, much of the other requests are unjustified. Residential customers are already paying a customer fee, an electricity fee, a fuel charge, a distribution fee, an environmental fee, an energy efficiency charge, and even Westar’s property taxes. Last June, our bill was $24.95 for electricity, but our total bill came out to be $53.27 after all those things were added in. The $12 customer charge is already greater than most other companies charge and Westar’s rates are second highest in our region. Westar has implied that residential customers are not paying their fair share of the cost. However, residential customers use about a third of the energy, but it seems they are being asked to pick up much more than a third of the cost of upgrades and pollution controls.
Westar owes a better accounting of the money it collects. There have been over 20 rate cases in the last six years. Too much time and resources have been devoted to rate cases designed to increase the company’s profits. The executive compensation seems excessive and much of it is in stock, which means a rise in profits will greatly benefit the executives. That tends to lead to short-term thinking, which is evident in this rate proposal. It does not take into account the increasing future regulations of carbon emissions and the need to reduce dependence on coal-fired power plants.
Settlement? Just before the rate case was to go to the Kansas Corporation Commission, Westar cut its rate request in half. My son said, ” See there”. Westar also asked to postpone its request for a tariff on solar panels to a later hearing. Westar is now proposing a reduction in the subscription fee for wind energy customers, building its own solar plant, and selling solar power to customers. That is a big improvement, but Westar is still relying too heavily on its coal-fired power plants. Three of its smaller plants have no scrubbers and they should be phased out as soon as possible. Earlier, $600 million was budgeted for upgrading the LaCynge plant. I’m not sure how much of that has already been spent , but pouring more money into it to remove mercury may be a bad investment. It is expensive to remove mercury, but it is impossible to remove carbon emissions.
The Supreme Court, in Massachusetts v. EPA, ordered the EPA to make a determination as to whether carbon dioxide is a pollutant. The EPA found, based on the best scientific evidence, that CO2 is an endangerment to public health and has moved forward with regulations to reduce the carbon emissions from power plants. There will be future environmental regulations which will be costly to the coal plants. Why waste million of dollars in emission control equipment and spend millions importing coal from Wyoming when we could be transitioning to Kansas-based renewable energy?
The future: The Kansas Corporation Commission should approve upgrading the Wolf Creek plant, but carefully consider the amount of money requested. Moving forward with plans to provide customers with wind and solar energy subscriptions is in the right direction and should be encouraged. Other than that, there are better options for Kansas. The Kansas Corporation Commission should send the rest of Westar’s plan back to the drawing board.
(C) 2015 – J.C. Moore
The article “Obama orders steeper cuts from power plants” described how the EPA’s proposed limits on carbon pollution could cost $8.4 billion annually by 2030. The Citizens’ Climate Lobby (CCL) has a better way, a Carbon Fee and Dividend, which would produce deeper cuts in pollution in a shorter time. CCL’s proposal would place a fee on carbon at the source, and market forces would then encourage reduced emissions, energy conservation and investments in renewable energy. The carbon fee is not a tax and it would not raise taxes. The money collected would be distributed equally to every household as a monthly energy dividend.
CCL’s legislative proposal would set an initial fee on carbon at $15 per ton of CO2 or CO2 equivalent emissions. The fee would increase by $10 each year until the CO2 emissions were reduced to 10% of the 1990 US levels. To protect American businesses and agriculture, adjustments at the borders would be made on exports and imports by the US State Department to ensure fairness. The carbon fees would be collected by the US Treasury Department and rebated 100% to American households, with each adult receiving a dividend and each child one half dividend up to a limit of two children per household.
A similar Fee and Dividend policy is successfully working in Canadian British Columbia. In 2008, BC enacted a revenue neutral carbon tax which set an initial rate of $10 per metric ton of CO2 equivalent emissions, increasing by $5 per year until it reached $30, which it did in 2012. The revenue went straight back to taxpayers as tax reductions with a tax credit paid to low income households of $115.50 for each parent and $34.50 per child annually. The tax raised the price of gasoline by about $0.25 per gallon and the price of coal by about $60 per ton. Though there were winners and losers under the BC plan, it’s GDP grew in relation to the rest of Canada’s.
British Columbia gets most of its electricity from hydroelectric power, so it is difficult to estimate the effect it had on the price of electricity. There are now no coal-fired plants in British Columbia and the consumption of fuel there is now 19% below that of the rest of Canada.
In the US, all the money collected from the carbon fee would be distributed to US households as a dividend – which would effectively stimulate the economy. President Bush’s Economic Stimulus Act of 2008 provided a $600 rebate to each household. A 2012 study by Christian Broda found the increase in disposable income was an effective stimulus to the economy. President Bush’s stimulus, however, was only for one year and the money came from taxes. CCL’s proposal does not come from taxes, and a $30 per metric ton fee on CO2 is estimated to provide about $876 annually per person in the US. Though the price of gasoline and fossil fuel generated electricity will certainly go up, it will be offset by the dividend. People who reduce their energy consumption, or choose lower cost renewables, will be able to increase their disposable income by saving more of their dividend.
The CCL Fee and Dividend proposal has a wide range of supporters such as notable climate scientists James Hansen, Katharine Hayhoe, and Daniel Kammit. It has the support of both conservative and liberal economists such as Gary Becker, Gregory Mankiw, Art Laffer, Nicholas Stern, and Shi-Ling Hsu. CCL’s advisory board is bipartisan as it includes George Shultz, former Secretary of State under Ronald Reagan, conservative former US Representative Bob Inglis (R-SC), and RESULTS founder Sam Daley-Harris, who is an advocate for solutions to poverty.
A study by Regional Economic Models Inc. found CCL’s proposed carbon fee and dividend would achieve better pollution reduction than regulations while adding 2.8 million jobs to the economy over 20 years.
What could be a better way to reduce carbon emissions?
(c) 2015 J.C.Moore
Credit: Darrel Hart, Wichita CCL leader, who helped greatly withthe editing.
Many states are now seeing laws being introduced like Oklahoma SB 1456 , dubbed the Sun Tax. It is not a tax, but allows power companies to assess an extra fee on distributed generation (DG) customers who install renewable energy systems and hook to the power grid for backup. The end result will be higher electric rates as they reduce competition from renewable energy. Here is why.
ALEC: At the 2013 American Legislative Exchange Council (ALEC) meeting in Chicago, the Energy Committee, dominated by power and fossil fuel companies, decided one of ALEC’s goals should be to discourage the spread of renewable energy. Their plan to do so was by weakening renewable portfolio standards (RPS), by claiming that renewable energy systems would make electric rates go up, and by promoting the idea that net energy metering (NEM) customers who install their own solar panels and use the grid for backup were “free riders” who did not pay their fair share of infrastructure costs. Legislation has since been introduced in a number of states intended to increase fees on NEM customers and to reduce the state’s RPS requirements.
SB 1456: Oklahoma passed SB 1456 the next year, which allows power companies to assess an extra fee on distributed generation (DG) customers who install renewable energy systems and hook to the power grid for backup. The law was designed to discourage the investment in renewable energy by private individuals, but it may have unintended consequences for the power companies pushing the fees. Under the law, both PSO and OG &E have filed a request with the Corporation Commission to assess additional fees on DG customers. Public hearings on the law will be held in Oklahoma City on March 31 at 1:30 on the third floor of the Corporation Commission Building. Studies (see below) have shown, when all things are considered, that DG customers provide a net benefit for all other customers. It is in the public’s best interest to request that not only should the fees be denied but, to be fair, the power companies should be required to compensate NEM customers for the extra power they produce.
Fairness: The rationale for SB 1456 was fairness, so the decision should be fair to NEM customers as well. First, NEM customers should be charged as any other customer for the electricity they use. DG customers who use the grid for backup are required to have a net energy metering (NEM) contract with their power company which requires they pay for the installation and inspection of safety equipment. They also pay a customer fee which goes toward fixed costs and infrastructure, and they are currently not reimbursed for any extra power they produce, essentially providing free energy for the other customers, and they help to conserve energy. AEP/PSO’s states one of its mission is to “help customers use less energy and spend less for it”. Is it fair, then, that customers who cut their energy use in half by installing extra insulation are appreciated while those who cut their energy use in half by installing solar energy are charged an extra fee?
Second, NEM customers should be compensated fairly for the excess energy they provide. Research shows that states which encourage NEM customers have found they provide a small positive benefit both to other customers and to the power grid. Why, then, should they be charged an extra fee?
Research: Studies have found that states which encourage net energy metering (NEM) experience a net benefit to all electric customers. A study by Crossborder Energy in 2014 found NEM allows utilities to avoid costs of generation and fuel, maintenance and upgrade of transmission and distribution infrastructure, transmission losses (which account to 7% of losses), capacity purchases, and compliance with renewable energy standards. The study concluded,” The cost which utilities avoid when they accept NEM power exported to their grid shows that NEM does not produce a cost to nonparticipating ratepayers; instead it creates a small net benefit on average across the residential markets.” While it does cause power companies to have to adjust their loads accordingly, NEM reduces peak loads, transmission losses, and the need for new power plants. In California, the study found NEM “delivers more than $92 million in annual benefits to non-solar customers”.
Another important study was performed at the request of the Vermont Legislature who specifically charged the Vermont Department of Public Service with determining if there is a cross-subsidization with net metering and other retail customers. They were also asked to examine any benefits or cost of NEM customers to the distribution and transmission system. The report found the specific ratepayer benefits, the statewide, and societal benefits of NEM as: “Avoided energy costs, including costs of line losses, capacity costs, and avoided internalized greenhouse gas emission costs; avoided regional transmission costs; avoided in-state transmission and distribution costs; solar’s coincidence with times of peak demand; and the additional benefit of the economic multiplier associated with the local investment and jobs created from the local manufacturing and installation of net metering systems. The report concludes, “ Even considering subsidies, solar net metering is a net-positive for the state of Vermont.”
These studies show that NEM customers provide a net benefit to ratepayers in states which encourage investments in solar and wind generation by private individuals. To be fair, NEM customers should be charged for the energy they use just as any other customer and they should be compensated for the extra energy they produce just as any other energy provider.
Unintended Consequences: Though SB 1456 was intended to discourage private investment in renewable energy, it may not turn out that way. Upon signing the bill, Gov. Mary Fallin attached a letter requiring “the Corporation commission to conduct a transparent evaluation of distributed generation consistent with the Oklahoma First Energy Plan. It also said, ” This evaluation mandates inclusion of all stakeholders including representatives of the solar distributed wind energy industries and utilities.” and “A proper and required examination of these other rate reforms will ensure an appropriate implementation of the Oklahoma first energy plan while protecting future distributed generation customers.”
The Oklahoma First Energy Policy encourages development of wind and solar energy, but it relies heavily on the increasing development of our natural gas resources. However, fracking and the associated disposal wells may be related to the increased incidences of earthquakes in Oklahoma. If a definite link is established between fracking activities and earthquakes, it might greatly curtail Oklahoma’s production of natural gas. Oklahoma is now in the process of replacing some of its coal-fired power plants with natural gas plants. It would be prudent for Oklahoma to encourage the development of renewable energy systems. Recently, OG&E asked to increase its customer charges by $1.1 billion for federal environmental compliance and to replace an aging natural gas plant. Encouraging distributed generation customers to install extra capacity would not only help with the environmental compliance, but could eventually reduce the need to replace aging plants. Requiring that DG investors be compensated fairly for excess energy they provide would encourage them to install excess capacity to meet future demands.
A Model: Some electric co-ops , such as Oklahoma’s Indian Electric Cooperative, recognize the value of net energy metering. IEC allows net metering customers to accumulate credit for excess power and pays them at the end of the year for any excess credit at the wholesale rate, essentially treating them as any other power provider. If the Oklahoma Corporation Commission would adopt a similar model and require that NEM customers be compensated for the excess power they produce, it would greatly encourage private investments in renewable energy installations.
(C) 2015 J.C. Moore