Decarbonization. Increased physical activity. Energy equity. Protection of communities in the subduction zone.

Those are all goals or benefits cited in the energy strategy proposed by the Washington state Department of Commerce. Last Friday we submitted comments to the second draft of the strategy, noting several problems, including the fact that the plan imagines it can see 30 years into the future (it can't) and the support for a low-carbon fuel standard violates the principles of equity and effectiveness the strategy claims to support.

Below is the full text of our comments. We are waiting to comment on on additional reference cited by the plan but not made available by the comment deadline.

Re: 2021 Washington State Draft Energy Strategy

The Washington Policy Center submits these comments for consideration as part of the draft Washington State 2021 Energy Strategy. Washington Policy Center is an independent, non-profit research and education organization with members living in communities across Washington state.

We have several concerns about the current language and a few suggestions about ways the strategy can more effectively provide the energy the people of our state need for the next few decades, while reducing the state’s CO2 emissions and keeping energy affordable for small business owners, homeowners and working families.

We believe the strategy needs improvement in ways that are both particular and fundamental. Our recommendations, we believe, address these issues and will make the plan more focused and effective.

Section 2.4, which argues the state should “Pursue Universal, Statewide Deployment of Broadband,” is emblematic of the problems with the current draft. Increased access to broadband was specifically called out as a key goal in the Department’s presentation to the legislature, and the second draft notes that it is “discussed throughout this strategy.”

The strategy highlights the need for broadband, claiming it would help reduce CO2 emissions, because it would “reduce travel by enabling work from remote locations.” That claim, however, is totally unsubstantiated and there is no study indicating the usefulness of broadband on reducing vehicle miles traveled (VMT). The modeling by Evolved Energy Research, designed to estimate the impact of policies on decarbonization, did not examine whether broadband reduces VMT. The energy strategy should remove any reference to broadband with regard to VMT unless it can provide evidence.

Providing access to broadband to participate in demand-response programs for energy is more defensible. Programs like Google Nest’s Rush Hour Rewards are proven to reduce energy demand at critical peak hours.[1] To make broadband access meaningful in an energy context, the energy strategy should make it clear that demand response programs for consumers are critical.

The Energy Strategy is at its best when it promotes strategies that are reality-based and empower citizens, like providing broadband to increase access to demand response. It is at its worst when it indulges in evidence-free and speculative political arguments, such as implying broadband will reduce transportation-related CO2 emissions. Our comments below, while not comprehensive, provide some examples where the Energy Strategy makes recommendations that are not grounded in evidence.

Learning from Our Failure

Officials for the state and local jurisdictions have produced many plans over the years that they claimed would reduce carbon emissions. Every one of these strategies – the state, King County, and Seattle – have failed to reach their announced targets or even come close. Even with the COVID lockdown, Washington is unlikely to meet its 2020 CO2-reduction target.[2] There are many reasons for these failures. Chief among them, however, are a lack of accountability when officials miss the targets, as well as a number of vague, and conflicting goals.

The Energy Strategy calls for the state to “Set Clear and Ambitious Goals,” and claims “ongoing tracking of progress will increase accountability.” This claim has repeatedly been proven false. Officials for the state and local jurisdictions have all tracked their goals as they failed. The state’s Results Washington program tracked goals for CO2-reduction, but when the goals were repeatedly missed, officials removed them, saying they were shifting “away from the old data-only approach to a more human-centered approach that incorporates narratives.”[3] Unachievable (i.e. “ambitious”) targets with meaningless tracking have repeatedly shown to be toothless and do nothing to create the accountability that is necessary if the state is serious about advancing decarbonization.

Too Many Goals

Additionally, accountability is impossible when a long list of “goals” allow policymakers to point to numerous justifications for any project, no matter how tenuous the link to actual CO2 reduction.

The Energy Strategy includes many such vague and conflicting goals. For example, the strategy purports to prioritize all of the following: “Jobs” (p. 90), “Economic growth” (p. 7), “decarbonization” (p. 7), “less spending” on energy (p. 6), “Increased physical activity” (p. 40), “energy equity” (p. 111), protecting “communities in the subduction zone” (p. 19), among many others.

With so many goals, managers of virtually any project can point to something in the Energy Strategy as justification. A long list of unprioritized goals is not a strategy. It is a laundry list.

Recommendation: Focus on a few key goals and eliminate or clearly subordinate the remaining goals. The three most important policy goals should be:

• Provide people with reliable energy to maintain a growing economy
• Cut CO2 emissions by the lowest cost method available
• Allow consumers to guide the direction of energy technology by reducing regulatory barriers to market innovation

Reduce the Time Horizon to One Decade

The current Energy Strategy timeline of 30 years is not useful for planning. Imagine planners in 1990 predicting today’s world. They would have been unable to foresee three recessions, a worldwide pandemic, and the creation of the Internet. Pretending we can accurately plan that far out is clearly untenable.

The long time horizon also creates results that are extremely misleading. For example, Section 2.4 notes, “Annual energy spending as a percentage of GDP averaged over the 30-year period from 2020 to 2050 is only slightly higher than the Reference Scenario” based on modeling from Evolved Energy Research. They correctly note that projections in the final decade are speculative. The draft Energy Strategy notes that the modeling is “based on what we know today about technologies, costs, and markets.” That, however, is the fundamental limitation of predicting the future. We don’t know what the future holds and the farther we look in the future, the less we know.

Their model also shows that the costs are in the near term while the benefits are mostly in the final decade, which has the least certainty. Put another way, the costs are the most certain, and the benefits are the most speculative. Averaging over 30 years allows the claim that the costs are “only slightly higher” than the reference case. A 20-year projection, which is still challenging enough, would show significant costs and few benefits.

This is also true of the claimed air quality benefits cited on page 35. The source for this claim is “The Economic Health Impacts of Deep Decarbonization in Washington, FTI Consulting, November 25, 2020.” That document, however, was not available at the end of the second comment period. Claims based on a source that is not publicly available should be removed from the strategy.

Additionally, this claim again relies on benefits that occur largely in the final decade of the strategy, while imposing costs on people in the near term.

It is also worth noting that many of the claimed air quality benefits are a result of policies that have nothing to do with this strategy. For example, although the underlying source document is not available, the claim that “Mercury in power generation” goes down to zero is almost certainly a result of the TransAlta plant in Chehalis switching from coal to natural gas, something which has been planned for more than a decade already and will occur with or without this strategy. Claiming a pre-existing policy decision as a benefit of the proposed Energy Strategy is misleading and should be removed.

Recommendation: Shorten the timeline to 10 years. While it is true that the timeline for the impacts of energy policies go beyond that timeline, our ability to accurately predict those impacts or use them for planning is so limited, it is not useful.

Low Carbon Fuel Standard (LCFS)

The Energy Strategy should remove its endorsement of a low carbon fuel standard because it contradicts many of the goals identified earlier in the document.

First, although the Energy Strategy says it “searches for the lowest cost path to reduce emissions,” a low carbon fuel standard is one of the most expensive strategies. In California, which has the most experience with an LCFS, it costs $200 per metric ton of CO2.[4] This amount is dramatically higher than existing alternatives found in the Regional Greenhouse Gas Initiative, where the price is $7.41,[5] and the European market, where the price is at an all time high but is still only $37.90.[6] It is also higher than the EPA’s Social Cost of Carbon, which is currently $42 but increases to only $69 in 2050.[7] An LCFS is not only an expensive and ineffective way to reduce CO2 emissions, but it does more harm than good according to the Obama Administration’s EPA.

To put this in context, Governor Inslee released a policy brief on climate strategy in December 2018 that noted that, when fully implemented, an LCFS would reduce the state’s CO2 emissions by 1.7 million metric tons. Using the current price of carbon projects from certified organizations like the Bonneville Environmental Foundation, it would cost $17 million to meet that level of reduction.[8] Using an LCFS it would cost the people of Washington about $340 million, plus the cost of administering the program.

Second, the Energy Strategy cites the governor saying “social equity and environmental justice” are goals. The LCFS also violates these objectives. The experience in California shows that most of the investments to comply with the LCFS are in wealthy communities – primarily EV charging stations – along with potential air quality improvements.

Using data from the California Air Resources Board about the location of LCFS-compliant EV charging stations, we found that 43% of charging stations were located in the top three wealthiest deciles. By way of contrast, the poorest three deciles received only 22% of the charging stations.[9] This is not only a transfer of dollars into wealthy communities, it also means the air quality benefits from electric vehicles are concentrated in those wealthy communities.

Additionally, the improvement in air quality is extremely small. The Puget Sound Clean Air Agency found the reduction in PM 2.5 is “small in comparison” to reductions from federal vehicle standards.[10] Additionally, The Department of Ecology, in research cited by the Puget Sound Clean Air Agency this year, found the LCFS would reduce PM 2.5 by about one percent over ten years.[11]

If the state is truly serious about reducing CO2 emissions using the “lowest cost,” while promoting equity, and improving air quality, the draft Energy Strategy should remove support for an LCFS which violates all of these principles, especially by imposing negative impacts on the poor.

Recommendation: Instead of an LCFS, which has proven to be costly, ineffective, and regressive, the state should move exiting climate-related expenditures into the CO2-reduction market.

Energy-Intensive, Trade-Exposed Industries

One of the areas of greatest risk for the proposed energy strategy is with energy-intensive, trade-exposed (EITE) industries. The draft strategy claims, “It is possible through engineering and economic analysis to measure the actual risk of leakage for individual industries and plants.” This is not true. It is impossible to do this. Businesses, for whom predictions about the impacts of regulation and taxes are a matter of life and death, have a difficult time making these calculations. If, however, such calculations were possible, why didn’t the Washington State Department of Commerce make those calculations for The Boeing Company, which is taking manufacturing of the 787 airplane – and the associated CO2 emissions – to South Carolina where per capita CO2 emissions are 30% greater than in Washington?[12] The simple answer is that such calculations are not possible and therefore should not be claimed as part of the Energy Strategy.

The draft Energy Strategy also claims that state subsidies can prevent industries from relocating. It claims, “The state can achieve further emissions cuts and grow competitiveness by increasing incentives and support for industrial efficiency and emission control upgrades. For example, Washington could establish and capitalize an industrial transformation bank to fund the retooling and upgrading of Washington’s EITEs and low-carbon fuel pilot projects.” This clearly wouldn’t work, as we have a recent example of failure of this type of approach.

Intalco Aluminum in Ferndale received a state grant to improve the efficiency of its plant which was designed to reduce CO2 emissions and make the plant more competitive. One year later, however, the plant was closed, causing the loss of most of the jobs and directly harming working families. Additionally, aluminum will now have be purchased from plants in other states or countries where CO2 emissions may be greater.

Basing a strategy for EITEs on analysis that is speculative and government subsidies that have failed in the near past is not a useful approach to reducing CO2 emissions.

One lesson that stands out from the past decade is that innovation from the bottom up has driven energy efficiency and decarbonization. Plans at the state, county, and city level have repeatedly fallen short, wasting time and money. In its current form, the draft Energy Strategy repeats those mistakes. There is an opportunity to learn from the past. If the state makes that choice, we can put those failures behind us and engage the grassroots innovative and environmental spirit that is emblematic of our state.