Ransoming the Planet?

Ransoming the Planet?

- in Weekly Briefing

Big Business Extracting a High Price for Greener Energy

By Rob Schofield

Quick Take:

  • As the 2007 legislative session heads into the final lap, lawmakers are attempting to strike a deal on legislation that would require the state’s electric utilities to use more renewable resources.
  • Last week, a bill was unveiled in the state Senate that would require commercial utilities to generate 12.5% of their electricity through the use of renewable resources and increased efficiency by the year 2021.
  • Though praised by industry and endorsed by some environmental groups, others are raising serious and legitimate concerns that the bill is far too generous to big utilities and manufacturers and a bad deal for residential consumers.

Some policy issues do not lend themselves to compromise and horse trading. Survival of the human species, as we know it, seems like a strong candidate for such treatment. Here’s a brief reminder from the Pew Center on Global Climate Change of why such dire language is almost certainly appropriate in the confrontation with global warming.

“Scientists predict that if the increase in greenhouse gas emissions continues unabated, temperatures will rise by as much as 10 degrees Fahrenheit by the end of this century, potentially causing dramatic—and irreversible—changes to the climate. The consequences, both anticipated and unforeseen, will have profound ramifications for humanity and the world as a whole. Water supplies in some critical areas will dwindle as snow and ice disappear. Sea levels will rise, threatening coastal populations. Droughts and floods will become more common. And hurricanes and other powerful storms will increase in intensity. Adding to the threat will be the impacts of climate change on agricultural production and the spread of disease. Human health will be jeopardized by all of these changes.”

Given current population trends and the likely result of even a one meter increase in ocean levels, literally hundreds of millions of humans could be displaced from the land they currently occupy by the latter part of this century. In other words, the global warming threat is not just about an increase in sweltering summers, stormy weather and beach erosion. According to the overwhelming body of reputable, peer reviewed, science, global warming is likely to cause the inundation of thousands of square miles of currently inhabited and cultivated land. Prime areas for early (and permanent) flooding include many areas of the densely populated nations of south Asia and the southeastern and mid-Atlantic sections of the United States.   

Responding to the Crisis

Right now, all over the world, a growing number of humans are taking stock of what must be done in order to try and avert the unthinkable catastrophe that will result if global warming proceeds unchecked for a few more decades. Many governments and large corporate interests are fast coming to the realization that they must act now in order to preserve our way of life and hope for future progress.

Even many who still harbor a measure of skepticism about the certainty of global warming seem to be coming to understand the prudence of assuming the worst. Even these doubters understand that the long-term, irreversible harm that could result from inaction dwarfs the sacrifice that will result from swift action. Better safe than sorry.

Here in North Carolina, the need for action is evident. According to The Carbon Boom, a new analysis of state fossil fuel consumption data by Environment North Carolina released earlier this year, global warming pollution in North Carolina increased by 36% between 1990 and 2004. Other major finding from the report included:

  • North Carolina ranked 4th nationwide for the largest absolute increase in carbon dioxide emissions over the 15 year period.
  • Carbon dioxide emissions from coal-fired power plants jumped by 50% between 1990 and 2004, rising from 46.1 million metric tons to 69.4 million metric tons, the fourth highest increase in absolute carbon dioxide emissions from coal-fired power plants.
  • Carbon dioxide emissions from fossil fuel consumption grew from 110 million metric tons to 149.2 million metric tons between 1990 and 2004, an increase of 36%.

New Legislation: Good, Bad and Ugly  

Reports like The Carbon Boom have helped pave the way for legislation in the General Assembly that attempts to rein in North Carolina’s explosive growth in carbon emissions. Last week, state Senators took their first official look at a proposal that would require the state’s commercial electric utilities to generate 12.5% of their electricity through renewable means by the year 2021. (The standard would be 10% for municipally owned utilities.) Forty percent of the new standard could be met through increased efficiency, while the remaining three-fifths must come from the use of actual renewable resources like solar, wind, hydro and bio-fuels.

These new “renewable portfolio standards” (RPS, for short) represent the “front side” of the proposed legislation and have received generally positive reviews from those who champion the fight against global warming. While neither of these numbers will be enough, in the long run to do what is necessary, they do constitute a helpful first step.

Unfortunately, there is, at this point, a horse trading flipside to the bill that threatens to undermine much of its promise. Rather than simply pushing ahead with aggressive, straightforward legislation, senators appear to be acquiescing to the demands of large utilities and manufacturing interests that the bill be amended to include other provisions – some of which have no real relation to the issue of global warming and could undermine the impact of the legislation. 

One highly questionable “add on” to the bill is a provision long sought by utilities that would shift some of the risk for financing new coal and nuclear plants from the companies and their stockholders onto the state’s ratepayers. Under the language floated before the Senate Committee last week, “baseload financing” costs usually reserved for utility investors could be shifted to consumers. Indeed, consumers could end up footing the bill even if a planned facility is cancelled half way through construction. Though improved in the latest version of the bill, by a requirement that would make such cost shifts contingent upon a general Utilities Commission “rate case,” this shift seems all but certain to encourage the construction of new coal and nuclear plants.

As noted by advocates at Environment North Carolina, the societal costs of building new coal and nuclear plants are not just those of the waste and pollution they create. There are also opportunity costs: billions of dollars that might have instead been spent on renewable energy sources and efficiency measures that satisfy energy demand, produce little to no waste, and reduce more global warming pollution faster. As Representative Pricey Harrison put it when apprised of the proposed language, “I just don’t know why we need to run those provisions in a renewable energy bill that’s about weaning us off fossil fuels and stimulating a green energy economy. It’s dragging us back to new coal plants, making it easier to build new coal [plants]."  

The second objectionable add on involves an attempt to shift current regulations of fuel costs so that residential ratepayers pay a larger share than large scale industrial consumers. This provision is opposed by the lawyers, engineers and economists at the state’s official consumer watchdog, the Utilities Commission Public Staff.

Finally, reports also indicate that the bill is likely to include a large ($50 million) cut in the sales tax on energy paid by manufacturers – a provision that also appeared in similar form in the House’s version of the budget bill. How such a provision has anything to do with carbon pollution (other than to encourage more of it) remains a mystery.

Ultimately, a Moral Question

Given the urgency of the crisis that confronts the state (and the planet), the fact that large corporate interests are, in effect, holding green energy legislation hostage and playing political games in order to maximize profits is a profoundly disturbing development. Unfortunately, it’s also a game that these interests have played for decades. Let’s hope that at some point very soon, those who run these giant corporations face up to the hard reality that global warming is a crisis that threatens everyone’s life and livelihood – even the children and grandchildren of utility and manufacturing executives.

About the author

Chris Fitzsimon, Founder and Executive Director of N.C. Policy Watch, writes the Fitzsimon File, delivers a radio commentary broadcast on WRAL-FM and hosts "News and Views," a weekly radio news magazine that airs on multiple stations across North Carolina.
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