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MIT Study Finds Health Benefits of CO2 Reductions Can Save 10x the Cost of Policy Implementation

Posted By Lowell F. on August 25th, 2014

Clearly, we believe it makes sense to slash the air and water pollution that is inextricably linked to fossil fuel extraction, processing, and consumption.  We also strongly believe that moving from a dirty to a clean energy economy makes sense on a whole host of levels — economic, environmental, national security, health, etc.  Yet opponents of a clean energy transition invariably raise claims that it will cost too much to do so, even though research has shown that fossil fuels are actually FAR more expensive than they appear to be, in large part because they are allowed to pollute without having to pay for doing so. Thus, the full “lifecycle cost” of coal to the U.S. public is actually upwards of $500 billion a year, but you won’t find that $500 billion a year incorporated into the price of coal, making it artificially cheap, and strongly skewing U.S. energy markets in favor of fossil fuels. Incorporate all the health and environmental “externalities” associated with fossil fuels, while taking away the enormous subsidies they receive from taxpayers, and it’s a totally different story — one in which clean energy would win by a wide margin.

Just in case you wanted even more evidence along these lines, a new study is out from researchers at MIT which finds that policies aimed at cutting fossil-fuel pollution can more than pay for themselves.

Lower rates of asthma and other health problems are frequently cited as benefits of policies aimed at cutting carbon emissions from sources like power plants and vehicles, because these policies also lead to reductions in other harmful types of air pollution.

But just how large are the health benefits of cleaner air in comparison to the costs of reducing carbon emissions? MIT researchers looked at three policies achieving the same reductions in the United States, and found that the savings on health care spending and other costs related to illness can be big — in some cases, more than 10 times the cost of policy implementation.

…The researchers found that savings from avoided health problems could recoup 26 percent of the cost to implement a transportation policy, but up to to 10.5 times the cost of implementing a cap-and-trade program…Savings from health benefits dwarf the estimated $14 billion cost of a cap-and-trade program…The price tag of a clean energy standard fell between the costs of the two other policies, with associated health benefits just edging out costs, at $247 billion versus $208 billion.

In sum, by implementing smart policies to cut CO2 emissions, not only do policymakers help head off disastrous global warming, they also reduce other forms of pollution in the process, saving enormous amounts of money on health care costs. How much money? Enough, depending on the policy, to more than pay for the policy’s implementation. Who ever said you can’t get something for nothing? In this case, you actually get MORE than that — cleaner air and water, a habitable planet for future generations, sharply lower health problems and associated healthcare costs, as well as lower energy bills for consumers and a more competitive country in the world economy. If that’s not a “win-win-win” situation, it’s hard to know what is.

Map Shows How States Are Progressing Towards Meeting EPA’s 1.5%-Per-Year Energy Efficiency Goal

Posted By Lowell F. on August 23rd, 2014

The release in late May of EPA’s draft rules on carbon pollution at existing power plants gave individual states a tremendous amount of flexibility in how they meet the proposed targets.  For instance, a state rich in potential solar power resources might choose to focus on increasing the percentage of its electricity generated from the sun.  Same thing with wind power.  And, of course, all states can use energy efficiency gains as a key part of their plans. As the Center for Climate and Energy Solutions explains:

Through energy efficiency programs, states can drive down their total consumption, including consumption of electricity generated by fossil fuels. This in turn reduces greenhouse gas emissions, bringing states closer to their emission rate target. EPA projects that each state is capable of eventually reducing electricity demand by 1.5 percent each year, in line with the rate leading states have achieved. States are projected to meet this figure in varying years, taking into account how advanced each state was in 2012. This 1.5 percent projection is incremental, meaning EPA expects an additional 1.5 percent savings each year, for a much larger cumulative savings by 2030. Projections for states that currently reduce demand by less than 1.5 percent per year are designed in a way that allow a ramp-up period before reaching this level, but EPA has determined that all states have the capacity to meet this projection by 2025 at the latest. Note that under the proposal, states are not obligated to meet EPA’s efficiency projections in demonstrating compliance; provided the ultimate target emission rate is met, states could use any combination of measures they see fit.

The map above shows each state’s 2012 incremental efficiency savings as a percentage of the 1.5 percent projection. States colored with a darker shade of blue are closer to meeting this projection. Two states, Arizona and Maine, reported savings above 1.5 percent in 2012.

As we know, energy efficiency is generally considered to be the biggest “bang for the buck” when it comes to reducing energy consumption and carbon pollution, which means that this EPA goal makes a great deal of sense. Yet, according to the Center for Climate and Energy Solutions, only 21 states have mandatory Energy Efficiency Resource Standards, while 17 states have no energy efficiency standards at all.  That’s unfortunate, particularly given that Rocky Mountain Institute Chairman and Chief Scientist Amory Lovins has found that“adopting efficiency technologies aggressively yet cost-effectively, yield[s] at least a 12% annual real rate of return.” As states formulate their plans aimed at meeting their EPA CO2 pollution reduction goals, it seems like pushing ahead on energy efficiency improvements should constitute an easy, “no brainer” option.

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Clean Energy Guru Amory Lovins Demolishes Fatally Flawed Brookings Paper on Reducing CO2 Emissions

Posted By Lowell F. on August 8th, 2014

It’s truly astounding how a venerable think tank like the Brookings Institution can put out such a fatally flawed, even embarrassing, hack job as its recent paper (by Dr. Charles R. Frank Jr) on the most cost-effective ways to reduce carbon emissions. It also makes you want to bang your head on the desk when you see that yet another venerable institution, this time The Economist, actually highlighted such drivel.  Fortunately, there are true energy experts out there like Amory Lovins of the Rocky Mountain Institute (RMI) to set the record straight. Which is exactly what Lovins has done at RMI and at Greentech Media. The key points are as follows.

  • “How did Dr. Frank reach a conclusion so counter to market reality? Simple: his analysis relied on outdated or otherwise incorrect data. “
  • “For example, he assumed wind and PV are twice as costly and half as productive as they actually are, relying on old data in an industry where the landscape shifts dramatically each year, if not each month.”
  • Actually, “correct analysis reaches the opposite conclusions: new nuclear or combined-cycle gas capacity is not the most but the least effective way to displace coal power; wind and PVs are not the least but the most effective carbon-savers (except efficiency and most cogeneration, both of which Dr. Frank omits).”
  • In sum, Dr. Frank “assumed solar and wind to be more expensive and less productive than they actually are, and conversely assumed nuclear and gas combined-cycle to be less expensive and (for gas) more productive than they actually are. All knobs got turned in exactly the wrong directions.”
  • “Using Dr. Frank’s methodology — flawed as it is — but swapping in accurate numbers for the nine key data points mentioned in the previous paragraph reverses his conclusion. Wind and solar become the most economical options while gas and nuclear become the least economical.”

The question is, how did such shoddy “analysis” get past the editors at Brookings? Do they even have editors at Brookings? Based on this fatally flawed mess of a paper, it sure doesn’t seem like they do.

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New Report: U.S. Ranks 13th out of 16 Largest Economies in Energy Efficiency

Posted By Lowell F. on July 21st, 2014

Based on this story, it looks like the U.S. has a lot of work to do when it comes to energy efficiency.

The U.S. ranks 13th out of the 16 largest economies in energy efficiency, according to areport released today from the American Council for an Energy-Efficient Economy, an environmental nonprofit advocacy group.

The U.S. scored poorly for a number of reasons, including relatively low use of and investment in public transit, a high number of miles traveled in inefficient vehicles as well as high energy usage in both commercial and residential sectors.  A lack of energy savings targets and efficiency standards also played a role, the report’s authors said.

This poor ranking is unfortunate for a number of reasons. For one, as Tigercomm’s Bridgette Borst reported in late June, a Johnson Controls energy efficiency forum concluded that not only is “energy efficiency is a great way to save money, reduce carbon emissions [and] put lots of people to work in good-paying, local jobs,” it is also “one of the key four building blocks that states will be able to comply with the part 111-D Rule” (the EPA’s recently-announced proposal for reductions of carbon pollution from existing fossil fuel power plants).

Second, Americans overwhelmingly support energy efficiency improvements, so this is a political “no brainer.”

Third, as an International Energy Agency report in late 2013 found that energy efficiency is a “huge opportunity going unrealised,” with “investments in energy efficiency…still less than two‐thirds of the level of fossil fuel subsidies.”

Finally, with regard to the enormous potential of energy efficiency, see Institute for Building Efficiency’s Jennifer Layke: Insights on Communicating the Enormous Potential of Energy Efficiency and Is energy efficiency condemned to be the “eat your peas” technology?, in which we note that Rocky Mountain Institute Chairman and Chief Scientist Amory Lovins has found that“adopting efficiency technologies aggressively yet cost-effectively, yield[s] at least a 12% annual real rate of return.”

Given the points listed above, there’s really no excuse for the U.S. to rank 13th out of the 16 largest economies in terms of energy efficiency. To the contrary, we should be pushing hard to move towards the top of those rankings, and to do so as quickly as possible.

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Nevada Solar Net Metering Will Save the Grid $36 Million, Says State Report

Posted By Lowell F. on July 9th, 2014

Cross posted with permission from Susannah Churchill, Vote Solar

Step outside in Las Vegas on any July afternoon, and you can’t help but recognize Nevada’s tremendous solar opportunity. Recent solar price declines coupled with a restructured state incentive program and strong net metering policy mean that the state is now primed to make good on its rooftop solar promise in a big way.

And just like clockwork, cue the utility opposition to customer solar adoption. NV Energy, the biggest utility in the state, wants to raise residential fixed charges in southern Nevada a whopping 50 percent to $15.25 per month. Charges like this create a big disincentive for solar and efficiency measures because they are slapped on customers no matter how much energy they buy from the utility. Invest in a new energy-saving refrigerator? You still pay that $15.25 fee on your utility bill each month. Went solar to reduce your dependence on utility power? Still $15.25.

The fixed charge proposal is just one piece of a multipronged effort by NV Energy to make rooftop solar a bad deal for its customers. The utility is also pushing the Commission to recommend changes to the state’s net metering law, the cornerstone program that gives NV Energy solar customers credit on their utility bills for valuable power they deliver to the grid for use nearby. Like many utilities across the country, NV Energy is now aiming to quell the growth of rooftop solar with rhetoric about the costs of net metering. But a Public Utilities Commission (PUC)-ordered study released last week shows just how unfounded NV Energy’s anti-solar efforts are.

The study, conducted for state regulators by consulting firm Energy and Environmental Economics (E3), found that the grid benefits of rooftop clean energy systems installed through 2016 will exceed the costs by $36 million. Private investment in local solar generation delivers real savings to the grid and other ratepayers. If anything, net metering under-compensates Nevada solar customers for the valuable clean energy they produce.

Additional key takeaways from the study include:

  • For systems installed in 2014 and 2015, the annual grid-specific benefits of net metering flowing to other customers exceed the costs by at least $168 million over the systems’ lifetimes, or 5 cents/kWh of net metered energy generated. That means that even excluding important non-grid benefits like jobs, water savings and cleaner air, net metered customers will pay more than their fair share of grid costs in Nevada going forward.
  • If savings from avoiding distribution upgrades are included, E3’s estimated net benefit over the systems’ lifetime increases by $130 million. E3’s base case numbers, since they exclude any distribution benefits, are very conservative estimates of grid-specific net benefits.
  • For systems installed in 2016, after Nevada’s  Renewables Portfolio Standard rules have changed and clean DG no longer receives a compliance adder that boosts its value, the grid benefits of net metering to non-participating ratepayers still exceed the costs by $6 million.
  • Of course, local solar delivers tremendous societal benefits beyond the grid. The study quantifies just one of those non-grid benefits to the state — public health costs avoided from fewer harmful air emissions (NOx, Sox, particulate matter and mercury) — but uses an inaccurate proxy for those health benefits, as discussed below.

We appreciate that the PUC took input from a range of stakeholders during the study’s development, and that impacts were calculated from multiple perspectives (net metering participants, non-participants, and society as a whole). But to be clear, this report is not perfect, and it’s important to note a few big problems with E3’s Nevada approach. First, the study chose to include the price of the state’s solar incentive program as a cost. The NV Energy SolarGenerations rebate is of course an entirely separate program with a separate budget approved by the Legislature, and should not be part of a net metering study. Removing this cost would clarify that net metering delivers further net benefits to Nevada.

Second, E3 accounts for both energy consumed onsite and energy exported to the grid in its accounting of grid costs. Just like turning off the lights or buying a new refrigerator to reduce the amount of energy you use, solar that is both produced and used behind the customer’s meter places no burden on the utility system, and should not be part of the cost-benefit equation. E3 couldn’t show just the impacts from exported energy because the utility didn’t provide E3 with the necessary data on hourly load profiles. Correcting this calculation would also increase the benefits side of this net metering cost-benefit study.

Finally, E3’s Nevada study omits almost all the societal benefits of net metering. No study on the impacts of clean distributed generation is complete without taking into account public health benefits from avoided air emissions, job benefits and downstream economic effects, market price impacts, grid security benefits, and water savings. As noted above, E3 built in just one societal benefit — public health savings associated with air emissions (NOx, Sox, particulate matter and mercury), and even there, E3 used NV Energy’s relatively low cost of avoiding such emissions, which is an inaccurate proxy for the value of avoided premature deaths and healthcare cost savings. In addition, E3 mistakenly assumes that due to the state’s Renewables Portfolio Standard (RPS) rules, more rooftop solar means less utility-scale solar. But in fact, Nevada utilities have already largely met the existing RPS, and more customer-installed solar will create additional clean air, water and public health benefits for Nevada.

Including some number for a public health benefit is better than none, but E3 has left a whole lot out of the equation, especially given that the Nevada Legislature specifically included a requirement that “comprehensive” benefits “to the State of Nevada” be included in the study. Net metering programs are not established simply to perpetuate business-as-usual grid economics. They have specific policy objectives, typically related to job growth, environmental or other social benefits. It’s only right that net metering impact studies also account for these very real benefits wherever feasible.

Those shortfalls aside, the results of this study are a good indicator of what other states could and should expect when evaluating the grid impacts of net metering; namely, that this simple crediting arrangement is a fair way to compensate solar customers for the benefits they deliver to the grid.

As utility attacks on net metering have raged across the country, we’ve argued for objective studies that accurately quantify the full range of costs and benefits that flow between solar customers, non-solar customers and the grid. For more guidance on what makes a good cost-benefit study, be sure to read A REGULATOR’S GUIDEBOOK: Calculating the Benefits and Costs of Distributed Solar Generation from our friends at IREC.

When a utility in any given state argues that the sky is falling because a small percentage of their customers are going solar — in Nevada, rooftop solar generates less than 1 percent of total power demand — we need facts to determine whether or not changing course is warranted. E3’s Nevada study is a great example of how data can dispel the utility hype, showing that net metering provides all Nevada ratepayers with grid savings, in addition to tremendous economic, water conservation and environmental benefits. E3’s analysis makes clear that the PUCN and the Nevada Legislature don’t need to change the state’s successful net metering program, or increase fixed charges for Nevada ratepayers. Instead, what really needs to change is the old-school utility model, which isn’t reflecting utility customers’ growing desire to make the switch to solar.

Lead image: Nevada sign via Shuttertock

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