Posted by: bkivey | 20 May 2012

Green Dreams

A couple of months ago the local paper of record published an article detailing some ideas floated by a blue-ribbon panel of energy experts and environmentalists. The purpose is to find ways to reduce carbon emissions and so-called ‘greenhouse’ gasses like CO2 and N2O. Finding ways to increase energy supply for a growing population and reducing the cost of that energy is not a priority.

Oregon is blessed with one of the nations premier hydro power locations, and is in the top-tier for wind power potential. The state has been aggressively pursuing wind power, to the point that thousands of turbines populate the high desert. So many wind farms have been built that proponents are starting to become opponents, citing the huge amounts of land required, the distinct lack of visual appeal, the high tax subsidies required to make wind farms cost-effective, and the fact that wind turbines are regular Cuisinarts when it comes to birds.

Some of the ideas floated by various panels include:

Carbon Tax

This is a favorite of the neopagans. The idea is to levy a tax on the carbon emissions from the burning of fossil fuels, typically by the tonne.  A variation is cap-and-trade, where the polluting entity can offset some of tax burden by trading pollution credits to lower emitters, or by investing in reduced emission power production. The motivating idea is that production of pollutants has a negative effect on society, and those marginal costs should be recouped.

Utilities are understandable against these schemes, because they impose additional operating and administrative costs. Because utility rate increases are limited by law, they can’t immediately pass on costs to consumers. Assuming a utility is allowed to raise its tariffs the maximum amount each period, it could take years before rates accurately reflect the cost of doing business. Meanwhile, the regulations are in place, and the money to comply has to come from somewhere. That somewhere might be in deferred maintenance, labor costs, or conservation programs, but some part of the operation will suffer.

A carbon tax is also a regressive tax, because utility rates will go up, and those in lower-income groups will be more affected. Politicians will make political hay and demonize the ‘evil, polluting utility’ while calling on the state to ‘do something’. What will happen is that tax revenue will be used to fund low-income assistance programs, thereby adding more cost and complexity to government. Then there’s the army of lawyers, accountants, and financial specialists whose entire careers will be spent finding ways to game the system for their respective client’s advantage.  Now you need more bureaucracy to deal with that mess.

Meanwhile, the underlying assumptions for the tax are in doubt, and even if the climate alarmists are right, any benefit realized by the imposition of a carbon tax will be marginal at best, and nowhere near worth the cost. Here’s an idea: NO.

Renewable Energy

Oregon already gets nearly half of its electric generating capacity from renewable sources; 42% from hydro, and 3% from wind. Coal and gas-fired plants make up 48%. It’s state law that major utilities must generate 25% of their power from renewable resources by 2025. As this handy website shows, only one major utility produces less than 25% of its electricity from renewable resources now. Because the expansion of wind farms is reaching the limit of public acceptance, and it’s unlikely people are going to be any more disposed toward large-scale solar installations, any utility that doesn’t currently meet the standard is going to have a tough time.

I’m guessing that because there isn’t any enforcement mechanism in the standard,  it’s going to fall by the wayside. You can already write the speeches: “We came up short, but it was a good idea and a noble effort. We’ll work harder in the future to identify ways to increase renewable energy production blah, blah, blah.”

Conservation

This is my area of professional expertise. I enjoy the work, and making anything better is inherently cool. There is some justified concern that organizations are only interested in energy efficiency options with a quick (<3 year) payback, and are not interested in more expensive, longer horizon projects. The fact is that in this part of the country, electricity is cheap enough that any effort with a payback period much longer than 2 – 3 years is a tough sell. The economics just don’t work.

Largely unknown to the general public is that major utilities are actively involved in energy efficiency programs and spend considerable resources on them. It’s much more cost-effective for a utility to extend available generating capacity through conservation efforts than to build new capacity.

Some of the conservation ideas proposed include time-of-day (TOD) metering, and automatic demand management. Most utilities offer TOD options, but for the great majority of people who live on traditional schedules, they’re not really cost-effective. Demand management is the statist solution to conservation, as your demand is managed by the utility, not you. Think of having your air conditioning cut off in the middle of the day.

In the twisted logic of the progressive world, resource extraction or building capacity won’t alleviate an energy crisis, but ever more restrictive and expensive conservation efforts will. Conservation and efficiency are generally good ideas, but at some point you’re gonna have to come up with additional resources.

Great Moments in Political Courage

Last week the Governor of Vermont signed a bill into law banning the practice of hydraulic fracturing, or fracking, in the extraction of natural gas. Because Vermont has little or no natural gas reserves, this is the political equivalent of banning ski resorts in Hawai’i, and reminds me of the nuclear-free zone ban fad of the ’90’s.

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