It is time for U.S. utilities to exit the climate change debate completely and focus on the best and most effective ways to reduce carbon-dioxide emissions.
It doesn’t matter what your opinion is on climate change. Carbon-dioxide reduction in the electric industry is going to occur. In fact, given the ongoing renewable energy boom and the rapid shuttering of coal-fired electric generators in the U.S., it is already happening.
I know some will read this and say, “We don’t need to reduce carbon-dioxide emissions, because any climate change is just part of a naturally occurring cycle and not man-made.” If you believe that statement to be true, you are in the minority. A recent Gallup Poll reported that 64% of Americans (an eight-year high) say they are worried a “great deal” or a “fair amount” when it comes to climate change.
True, this percentage has fluctuated over time, with the high of 78% being recorded all the way back in 2000, but that doesn’t matter either. Why? Because forces are at work that will drive carbon out of the production of electricity.
First, climate change activists are not going away. In fact, the opposite is true. Generally, young Americans tend to have stronger concerns over climate change. If that tendency holds, the percentage of climate activists will only grow as older climate skeptics depart the scene.
Even Donald Trump’s energy advisor, Rep. Kevin Cramer from North Dakota, recognized the trend. Though he describes himself as a climate skeptic, he says he recognizes the reality that we are moving toward a more carbon-constrained world. He notes that the same populism movement that has propelled Trump’s political rise also believes something should be done to address climate change.
Second, outside of the few major coal-producing states, few people like coal-fired electric generating plants. They are perceived as dirty or toxic, and most folks don’t want them, particularly in their backyards.
Third, coal can’t compete with cheap natural gas. When faced with replacing old power plants, few utilities today are bold enough to pursue new coal plants. This is particularly true with natural gas prices hovering at such low levels. Add in the lower capital and operating costs for gas plants, and the decision to go with gas becomes obvious. Since gas is less carbon intensive, and if it is burned in modern highly efficient combined cycle plants, carbon emissions for every unit of energy produced are much lower than with coal. Every time an old coal plant is replaced with natural gas, carbon-dioxide emissions will decline.
Fourth, fossil fuels can’t compete with wind and solar costs on the margin. Wind and solar have no fuel cost. In wholesale markets with a large occurrence of wind and solar capacity, prices can be driven to zero (or less in the case of wind) in times of low system demand. This can wreck economic havoc with some base-load coal plants with their limited operational flexibility and high startup costs.
Fifth, utility-scale solar costs are at record lows. This in turn has allowed utility-scale solar producers to offer purchase power agreements at prices that few would have imagined possible a few years back. Sure the current batch of solar is benefiting greatly from the continuation of tax incentives, but both wind and utility-scale solar executives are predicting declining costs that will enable both resources to compete without the incentives in the very near future.
Lastly, customer interest in and government support of energy-efficiency measures remains strong. This is particularly true for commercial and industrial customers who can deploy advanced energy management systems, combined heat and power applications as well as microgrids to reduce their consumption. For residential customers, smart home offerings and ever-improving electric appliances are also reducing demand.
More reasons could be cited, but the bottom line is that carbon-dioxide emissions will be reduced with or without the industry’s support and active participation.
Utilities need to actively engage in developing the nation’s carbon-reduction strategy. Many have jumped in, but more voices are needed. Utilities need to identify and support carbon- dioxide emissions reduction plans that are cost-effective, operationally sound and equitable to all ratepayers. Carbon reduction initiatives should be ordered in terms of their effectiveness, and those with the biggest reduction for the buck should be pursued first. Initiatives that serve cross-purposes or do not produce the necessary “carbon-reduction return on investment” should be culled.
To do less means we run the risk of spending too much to reduce the amount of carbon in an average kilowatt-hour. Those concerned about climate change should worry about this, because dollars spent on ineffective initiatives are not available for initiatives that could yield better results.
If utilities fail to take a lead in the carbon-reduction discussion, they will find themselves ultimately removed from the conversation at the time when their expertise is needed the most. In more ways than one, we simply cannot afford that outcome.