California’s First In The Nation Climate Plan

by |August 8, 2016

Even though the Supreme Court has frozen implementation of EPA’s Clean Power Plan Rule while it decides on its constitutionality, last week California announced its plan to meet EPA’s carbon reduction requirements. California knows it needs to reduce carbon even if the rule is deemed illegal. The California Air Resources Board, the powerful government agency that regulates the state’s air quality, will simply extend the state’s cap and trade carbon reduction policy over the number of years needed to meet the federal requirements. According to a Climate Wire piece by Anne C. Mulkern on August 3rd:

“California’s landmark cap-and-trade program for carbon emissions and proposed amendments to extend that system will be used to comply with U.S. EPA’s Clean Power Plan, the state said yesterday…Under ARB’s draft blueprint, power plants and other energy generating units (EGUs) that participate in cap and trade in addition to that state requirement would have a federally enforceable mandate to comply because of CPP. California under CPP must meet an emissions target of a 13.2 percent rate reduction from 2020’s level by 2030. It looks likely to hit that number. The only state with an economywide carbon cap, California aims to cut its greenhouse gas pollution to 1990 levels by 2020. It’s writing regulations to reach 40 percent below that by 2030.”

This forward-looking approach makes sense because even if the court throws out the Clean Power Plan, the Supreme Court has already ruled that greenhouse gases are dangerous air pollutants regulated by the Clean Air Act. That means that if the current rule is overturned, a new rule will still need to be developed by the Environmental Protection Agency. This means that states, companies and individuals will still need to reduce their greenhouse gas emissions. I believe that states that get ahead of the game will have an easier time complying than those states that decide to stall.

The same can be said for institutions such as universities, hospitals, and corporations. My view is that they should follow California’s lead and get ready for a more efficient and renewable resource based economy. This is a low risk, high-payoff strategy for saving money by lowering the long-term cost of energy. There are a number of technologies that must still be developed to complete this transition, but we have all the technology we need to get started. Modern appliances such as refrigerators and air conditioners are far more energy efficient than older appliances. LED light bulbs are already here and provide great illumination at a very low cost. Rooftop solar is currently available for single-family homes, and companies are willing to pay the cost of capital in exchange for a percentage of energy bill reduction. Solar water heating is here for everyone who wants to install it. Insulated walls and windows have been around for a while. While all of these technologies cost capital, the costs of capital can all be paid off from savings in energy bills. So the obstacles to a more efficient energy system are largely institutional, ingrained habit and uncreative finance.

The bigger lifts will be lower priced and smaller solar cells and cheaper but more convenient battery technologies. Solar and wind are intermittent, and so storage is critical. The other technology needed for a renewable energy economy is distributed or decentralized generation of energy. This requires smart grids. One goal of smart grids is to enable users to both consume and generate electricity; a second goal is to use modern computer technology to increase energy use when there is excess capacity and reduce energy consumption when supplies are strained. Smart grids have begun in the form of microgrids: small scale, computer controlled energy systems that provide backup for grid failure, but generate energy for local consumers and the broader electrical grid. Microgrids are being designed throughout New York State and institutions such as New York University already operate one. The way we get to the smart grid is by developing hundreds of microgrids and then tying them together.

The original electrical grid was not some giant federal infrastructure project. It was built incrementally in response to market demand for energy. Almost from the very start electricity has been a regulated utility, since it made little sense to invest in redundant generation and distribution systems. But the natural monopoly in electricity required government oversight. Rural electrification required government intervention because there was an insufficient ratepayer base in the countryside to amortize the cost of capital to build an energy system. Without energy, rural areas would have been abandoned and American political and social values did not favor depopulating the countryside for the sake of energy.

In other words, we know how to build an energy system and those same lessons can be used to modernize the grid. What is missing is the political will to get moving. California Governor Jerry Brown has shown us over and over again that he leads a government that is willing to look beyond the current crisis and envision the future. California is not alone; many other states, including New York are setting ambitious carbon reduction goals, even if they are not explicitly designed to comply with EPA’s clean power rules.

The picture is not all pretty. It’s true that America is responding to cheap gas by once again buying SUVs. But at the same time more and more young people are moving back to cities and small towns and don’t even own cars. They rent and share cars when they need them. The era of the auto as ego extension is showing its first cracks in half a century. Last week I spent hours driving a rental car through Los Angeles gridlock. If this is someone’s idea of a good time I’d like to meet them. California does not plan to do without energy. Every part of the modern economy requires energy and California projects that their demand for energy will continue to grow. The question is where does the energy come from? The answer is no new centralized power plants, reduced use of nuclear power, increased use of renewables and increases in energy efficiency.

The goal of the energy transition is to create a renewable energy system that is as effective and reliable as the current fossil fuel-based system. Microgrids provide backup capacity and vastly increase the reliability of power systems for consumers. A second goal of the energy transition is to switch off of fossil fuels and rely on solar, wind and geothermal sources of energy. This transition will take decades and we will need to find some way to allow the fossil fuel industry to recover the capital they invested in fossil fuel extraction and distribution once those sources are no longer needed. One possible solution is to use investment in renewable energy to provide tax benefits when they retire fossil fuel infrastructure. We need to help energy companies find their way to renewables, and the best way is through their wallets.

In this summer of political weirdness it is fitting that the guy once called Governor Moonbeam, California’s Jerry Brown, is showing us the way to overcome inertia and implement a sound energy future. California has long represented America’s future. From the gridlocked freeways of Los Angeles, to the zero waste policy of San Francisco, all our contradictions and aspirations are on display and compete for our attention. California’s population is now over 39 million people and it is home to over 12% of America’s population. It is encouraging that they are moving aggressively to reduce greenhouse gases. It increases the probability that the rest of the country will eventually follow their lead.


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