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Discussion on Future Energy Mix at NARUC Celebrates Natural Gas and Coal, Doesn’t Mention Climate

By Climate Guest Contributor on February 6, 2013 at 3:44 pm

"Discussion on Future Energy Mix at NARUC Celebrates Natural Gas and Coal, Doesn’t Mention Climate"

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By Adam James

The National Association of Regulatory Utility Commissioners recently held a session titled “Getting It Right: Gas, coal, and the Future Generation Resources Mix.” In an embarrassingly one-sided panel discussion featuring David Carroll, President and CEO of the Gas Technology Institute and Mark McCollough, Executive Vice-President of Generation at American Electric Power, the verdict came in:

The future of the American generation mix should (prominently) feature natural gas and coal.

Put a pin in that for a second, and you may also be interested to note that the word “climate” did not come up once in the entire session.

Why is one of the most powerful groups of energy regulators in the United States having a conversation about the future of energy in American that doesn’t include consideration of climate change? This is by no means an unintelligent group. They are used to optimizing for economic and environmental concerns. They have a wide range of legal and regulatory experience, and access to the best scientific data available. They should be a high priority target for local environmental activists for education and influence. And yet….

In the generation game, it is a simple fact that if you don’t mention climate, renewables are just another special interest. Although they are rapidly reaching cost competitiveness (in fact, they are competing on an even footing in some markets), renewables have one crucial selling point: They are zero-carbon, and as a result, do not contribute to climate change.

Regulators will play a massive role in shaping the conditions under which new generation projects get built — and as two panelists emphatically noted, the risks associated with investing billions of dollars in projects that span 30 or more years are huge. They called for certainty about the policies that would govern these future projects. Regulators have a responsibility to get educated about the science of climate change, and create the appropriate disincentives for high-carbon generation. In other words, if costs really are going to be the bottom line, regulators should begin by translating the “externalities” from high carbon generation, that means gas and coal, into the cost analysis and decision making process around approving new plants. If climate change is never mentioned, though, and you write off the costs of pollution and climate change as non-factors, fossil fuels will continue to win the day.

This becomes incredibly important because, again as the speakers noted, utilities are making investments today that will guide decisions in 20 years. Allowing new fossil fuel generation to come online — whether because a natural gas supply glut has clouded their vision or because the costs are not appropriately integrated — forces us down one of two paths. The first path is utilizing high-carbon generation well into the future, exacerbating climate change and its impacts. The second is creating a pitched battle between the utilities who have sunk costs into these projects and the environmental advocates who are trying to take them offline. The losers in that fight will ultimately be ratepayers, who pay the costs of these generation projects over long periods of time.

The foxhole for these speakers, as would be expected, is reliability. Clean technology is great, they say, but it isn’t reliable enough to meet our needs. Furthermore, the customers foot the bill for those projects which are higher cost than fossil fuels.

A few notes here. First of all, NREL (and many others) have shown the grid can operate reliably on very high penetrations of renewables and other clean energy resources (such as biomass, hydropower, and geothermal). Second, customers also foot the bill for the health impacts of dirty air and will pay for the worsening impacts of climate change on their daily lives. Third, when customers cannot afford to pay those bills, they are covered by the taxpayer via higher healthcare costs or FEMA appropriations; a strategy that fuels the deficit. Finally, the risks associated with fossil fuel plants are actually shifted to the consumers in a way that they are not with renewables. This is because fuel costs (coal and gas) are variable and paid by the consumer, whereas the initial investment is fixed. Renewables are the opposite, fuel costs (wind and sun) are zero, whereas the initial investment is higher. This means that, as a consumer, you are assuming more risk in fossil fuel projects than renewables because you are at the beck and call of historically turbulent price fluctuations.

The speakers of course point to the higher costs associated with renewables, but forget that a transition to a clean energy economy would create millions of jobs and a higher quality of life for us and future generations.

In any case, NARUC can do much better. Educating our nations regulators about the real costs associated with the investments they are overseeing is a top priority in the absence of federal legislation. As Renewable Portfolio Standards have shown, states can lead on clean energy and drive actual transformation — even as the federal government falters. Regulators will be linchpins of the success or failure of initiatives at the state level to transition to a clean energy economy, and must rise to the occasion.

Adam James is a Special Assistant for Energy Policy at the Center for American Progress. You can follow him @adam_s_james or email him at ajames@americanprogress.org

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6 Responses to Discussion on Future Energy Mix at NARUC Celebrates Natural Gas and Coal, Doesn’t Mention Climate

  1. BillD says:

    I am going to try to find a web or postal address for these guys. Really, how can climate change not play a major, dominant role in energy policy of the coming years and deacades?

  2. BillD says:

    I found the NARUC’s web site and left the following message on their “contact us” email. Let’s see how and whether they reply.

    “In my view and that of many scientists and citizens, climate change is the most important issue and challenge in energy policy. Please direct me to your policies on climate change.”

  3. Solar Jim says:

    One other note Adam. As the rising adoption of clean energy technologies and strategies continues, cleantech costs continue to fall. This means that over a several decade planning scenario clean energy renewables are less costly now (certainly in total social costs) than the current fuels paradigm (both fossil and fissile).

    This may be a reason why the NARUC seems politically captured, and why our investor owned utility paradigm favors the more expensive approach – it maximizes money flow to the investor class, even as it socializes many critical national costs. NARUC seems to be in favor of the most expensive, and potentially bankrupting, future in service to extractive capitalism rather than the public.

  4. Mulga Mumblebrain says:

    Nothing particularly surprising here. In Maslow’s hierarchy, the top level is represented as ‘self-actualisation’. To rise to the top in capitalist states that means that one becomes the living expression of boundless greed and disinterest in the fate of others. These are the very highest values in capitalism, avarice and egomania, and concern for others including future generations, does not compute. If you start blathering on about ‘externalities’ like the habitability of this planet for our (and, I assume, the pathocrats’ as well) species, then you’ll soon be weeded out. So the top dogs have added to Maslow. Over and above self-actualisation they have constructed a new level, an empyrean of boundless greed and infinitesimal concern for others that might be called ‘self-annihilation’(both physically and spiritually)to be attained whether we want it or not. The Masters know best.

  5. Paul Magnus says:

    THere bankers, insurers and investors will soon remind them…

  6. Hmmm. I wonder what NARUC’s official position is on evolution, germ theory and the heliocentric solar system.