Effective Climate Policy for Washington, Step Two: Attempting to Cut Emissions with Renewable Electricity is Costly and Ineffective
For the first time, Washington state is attempting to base its official climate policy on approaches that provide the greatest environmental benefit for every taxpayer dollar spent. Past efforts have done nothing to measure the actual climate impact or to prioritize the way tax money is used. As a result, Washington politicians have wasted huge amounts of money while yielding little or no benefit for the environment.
As we noted earlier this year, about 95 percent of taxpayer dollars spent to reduce carbon emissions are wasted. For that reason, the new law that created the Climate Legislative Executive Workgroup (CLEW) specifically requires an effort to measure true environmental effectiveness of different policies.
Unfortunately, the report produced by the consultant hired by CLEW, a company called SAIC, falls well short of providing useful information to policymakers or the public. Worse, their report is inaccurate, misleading policymakers about the best way to cut carbon emissions.
Washington State is Not Texas
One of the areas the CLEW is examining is the impact of carbon emissions from electricity. As we discussed yesterday, the current state assessment of emissions from electricity is significantly exaggerated. Even with that exaggerated amount, Washington state’s carbon emissions from electricity are much lower than the national average.
According to the Energy Information Administration, Washington emits 35 percent less CO2 per unit of energy than the national average. Policies that try to reduce electrical use in Washington, therefore, would yield far less benefit for the environment than the national average.
Despite that fact, the SAIC authors use national data, unadjusted for Washington state, to estimate the benefits of reducing electricity use. They admit this by saying “although not all numbers are Washington-specific,” yet they say they believe they “paint a picture of potential costs.” Actually, none of the numbers are Washington-specific. The closest they come geographically is by using California-specific data.
Here is the chart they provide to estimate how much it would cost to reduce a ton of CO2 emissions using a range of strategies. Numbers in brackets are negative.
The sources for these numbers, indicated by the small letters next to the numbers, are national studies used by SAIC. These numbers are simply incorrect for Washington state for a variety of reasons.
First, if you believe the data, people and companies are ignoring opportunities to save significant amounts of money by building more efficient buildings, improving lighting, buying more efficient electronic equipment and other ideas that would yield significant cost savings. Nobody is perfect, but it is unlikely that people are ignoring huge savings.
Second, all the studies are based on national data. As a result, SAIC authors exaggerate the reduction in carbon emissions available in Washington from adopting each strategy. This lowers the apparent cost to cut emissions, making these strategies look much better than they really are.
Third, they do not take advantage of local experience on these issues. For example, the “building shell” estimate is at odds with our experience in Washington state. Since Washington passed a law requiring schools to meet “green” building standards, most districts have opted out of those rules because they are not “practicable.” In other words, they believe the high cost of building a “green” school is not worth the potential environmental benefit.
This has been true even for schools that do follow the “green” building rules. Our own analysis, based on the state’s audit of green schools, found the cost per ton of carbon emission reduction to use these standards is about $126 per ton, significantly higher than estimates by the CLEW consultant.
This is not a perfect apples-to-apples comparison because building retrofits (“building shell” in the above chart) can be different than building to “green” standards. They do have many similar elements, so the claim that building shell projects are low cost or yield significant savings is unlikely considering actual experience in Washington state.
The High Cost of Renewables
Even with the above limitations, the report shows that expanding renewable energy is a very expensive way to meet mandated greenhouse reduction goals.
For context, economists who have modeled climate impacts argue that the reasonable price to reduce a ton of carbon is in the range of $30 per ton. Above that amount you begin to spend more to avoid climate change impacts than the benefits of avoiding it. With that guideline, most of these are beyond the reasonable price range without adjusting for Washington’s low-carbon energy.
If we make that adjustment, we see how expensive these policies truly become. Our analysis shows if wind power, for example, costs 5.5 cents more per kilowatt hour (kWh), the cost to reduce one ton of carbon emissions compared to our current energy mix is over $400 per ton, not the $22 to $114 listed above.
Even if you assume that wind replaces only coal, the most generous scenario, the cost is still about $52 per ton, more than double the low-end estimate in the CLEW report.
Another warning sign in the numbers is the fact that solar panels, called “solar photovoltaic” in the chart, are less expensive than wind. No research comparing wind and solar would agree with this. None.
For example, two studies they cite, from McKinsey and Bloomberg New Energy Finance, both indicate that solar is much more expensive than wind energy. The Energy Information Administration shows the same result.
Additionally, while the consultant uses a California study to provide the high estimate for wind energy, at $114 per ton of carbon reduced, the report’s authors ignore the same study’s estimate for photovoltaic solar which, according to the study, is $88.62. There seems to be no reason why SAIC would use the study for one number but leave it off in another.
Ultimately, the data provided is simply unreliable. The comparisons themselves are inconsistent with the studies they claim to cite. The numbers are not adjusted for Washington’s energy mix. They also fail to include a high cost estimate for photovoltaic solar.
Focus on the Real Source of Emissions
As we noted Monday, the state’s estimates of electricity-related emissions is exaggerated. Likewise, the report to the CLEW significantly overstates the effectiveness of reducing energy use as a mean of cutting carbon emissions.
The data included in the SAIC report to CLEW regarding electricity and carbon emissions are, unfortunately, largely worthless. The authors do not provide policymakers with a useful guide for comparing the effectiveness of different Washington state environmental protection policies.
In the end, the report does not meet the legislative requirement to provide an accurate estimate of the effectiveness of these various policy strategies. Without accurate data, Washington policymakers are, once again, likely to choose polices based on fads and feeling, not on real effectiveness.