SB32

Renewables Have Glaring Obstacles to Overcome for California

February 1, 2017 By Todd Royal 1 Comment

Bloomberg is now reporting that solar energy is cheaper than coal, and could become the lowest form of energy within a decade. Economies of scale are causing solar to drop from an average of $1.14 a watt all the way to .73 cents per watt by 2025. This should be great news for California’s overwhelming embrace of renewable energy.

Agencies such as the U.S. Department of Energy’s National Renewable Energy Lab to the International Energy Agency all confirm this decline in costs. Capacity for solar is doubling causing lower costs for bank loan premiums and manufacturing capacity in the solar energy space; and now with Tesla’s gigafactory opening, the cost of batteries is also expected to drop for electric vehicles and home battery systems.

China also plans to invest over $360 billion on renewable energy and fuels to help decrease their serious smog issues. Unsafe, coal-fired power plants are currently suffocating that country’s air supply. And California can feel the affects of China’s crippling smog depending on seasonal wind patterns.

California could be entering a new era in energy, and an era renewable investors and environmental advocates have been touting this century. Unfortunately they are overlooking glaring weaknesses, and for renewables to truly breakthrough into a low-cost, scalable energy along the lines of coal, oil and natural gas numerous obstacles such as costs, back-up generation power, storage and grid modernization will need to be solved.

Gov. Brown, the California Legislature and the California Air Resources Board need to understand the true costs and limitations at this time when using renewable energy.

Yes, costs are possibly going down for solar and wind, but is that truly the case? And while costs for manufacturing and kilowatts per hour are dropping that isn’t the final costs when it comes to renewables. The BP Statistical Review of Global Energy in 2015 showed renewables provided only 2.4 percent of total worldwide energy needs, hydroelectric power generated 6.8 percent and nuclear came in at 4.4 percent. California citizens and businesses need clean fuel, and at this time renewables can’t provide that for them.

Moreover, no matter how much renewables are touted as a replacement for fossil fuels, and even with positive economies of scale, they still will not overtake coal, oil and natural gas in the near future even with AB32 and SB32 in effect.

Weather is the biggest hindrance for both solar and wind, but not as much for biomass or hydroelectric – though hydroelectric, or the process of damning water for electric use, can run into serious environmental issues. But if the sun isn’t shining and the wind isn’t blowing then solar and wind become difficult to use without fossil fuels – particularly natural gas and coal-fired power plants – backing them up. Additionally, batteries have not caught up to enhanced storage for renewables, and they aren’t productive enough for entire California cities, counties and the state at-large.

When looking at the total cost of renewables versus fossil fuels there really isn’t a comparison in the near-term future because wind and solar can only generate intermittent electricity. Fossil fuels can run without backup supplies, and then factoring in levelized costs for renewables makes them under-productive and more expensive as a wide-scale energy source for California.

As much as California continues using renewables it still hasn’t been achieved without fossil fuels backing them up. The Energy Information Administration’s Annual Energy Outlook 2017 to 2050 (page 13) only has renewables at 18-26 percent penetration by 2050 in the United States. The equivalent of not understanding the facts about renewables are how electric vehicles currently only have 1 percent of the market and are projected to only have 6 percent by 2040, but are highly touted as being able to replace the combustible engine vehicle.

Energy storage and grid modernization are separate issues for California policymakers to understand, yet the two issues are linked together in many ways. How energy is stored from fluctuating renewable sources (wind and solar) are needed to accommodate, “multiple grid services, including spinning reserve and renewables integration.” To improve the problem of intermittent generation for resources such as wind and solar the EIA recommends:

“Examine the potential for transmission (grid) enhancements to mitigate regional effects of high levels of wind and solar generation while developing higher resolution time-of-day and seasonal value and operational impact of wind.”

Further, the EIA also perceives utility rate structure for different levels of photovoltaic solar generation being needed to control costs for consumers and industry when using renewable energy. What the EIA is saying is that renewables fluctuate in power generation based upon different weather patterns, which causes the grid to fluctuate. These upward grid spikes are then passed on in higher electricity costs to utility’s customers. It is one of the reasons California has some of the highest energy costs in the United States due to its heavy reliance on renewable energy.

The most important component in the entire process of renewables overtaking fossil fuels for a cleaner future is grid modernization. According to T. Boone Pickens, “The electrical grid of the future will have to be built,” for renewable energy to overcome the above-mentioned hurdles. With California’s exploding pension costs it is difficult to envision a brand new, multi-trillion dollar grid being built in the near future.

Renewable energy has incredible potential for California, but until power grids are modernized renewables will lag behind fossil fuels through rising costs and unstable energy delivery. California’s electric grids can’t handle millions of electric vehicles, varying, spiked energy from wind and solar and the ability to be flexible the way a natural gas power plant is at this time. The best power plants for energy efficiency and lowering carbon emissions while keeping costs reasonable are natural gas. A natural gas-fired power plant is the biggest reason coal is losing market share in the United States.

Majorities of Californians want renewables to be the number one source of energy in our state’s portfolio for cleaner air, water and a healthier environment. But instead, renewables like electric vehicles have taken on a fad-like quality without the technology having caught up to the hype. CARB needs to look at the facts, and not the emotions that currently lead the renewable energy debate. Let’s not pit renewables against fossil fuels, but look to incorporate the different energy sources into what’s best for California and the United States.

Todd Royal is a geopolitical risk and energy consultant based in Los Angeles.

Filed Under: Top Stories Tagged With: AB32, California Air Resources Board, Renewable Energy, SB32, Solar Power, Todd Royal, U.S. Department of Energy

How Do Voters Really Feel About Climate Change Legislation?

August 27, 2016 By Joel Fox 11 Comments

When the greenhouse gases extension bill seemed to be stalled in the legislature, Gov. Jerry Brown’s Executive Secretary, Nancy McFadden, said that the administration would get its way on the climate change: Either the bill would pass the legislature or the governor would take his agenda to the ballot. He filed papers for a ballot measure committee as a first step.

Now the bill has jumped a difficult hurdle by passing the Assembly. However, new polling by the California Business Roundtable indicates that the voters might not be so supportive of new regulations if they heard a complete explanation of the law’s effects.

Maybe the climate change debate should go to voters.

The greenhouse gases extension bill, SB 32, which would require greenhouse gas levels to be reduced 40% of 1990 levels by 2030, made it out of the Assembly to face fairly clear sailing in the Senate. Expect it to land on the governor’s desk.

There could be a complication because SB 32 is joined to AB 197, which would give more power to the legislature to oversee the California Air Resources Board. An argument is made that AB 197 could undermine the cap-and-trade law, something the governor wants, especially to help fund his financially struggling bullet train.

The Assembly vote came on a day when the latest cap-and-trade auction results were announced and they continue to show poor results. Hanging over the head of the cap-and-trade law is a question of legitimacy. A lawsuit filed by the California Chamber of Commerce and other business interests presently sits with appellate court judges to determine if the cap-and-trade revenue is a tax. If so, the law requires a two-thirds vote, a standard that was not achieved in the legislature.

Business is particularly concerned with the costs to the economy and to workers if the climate change legislation passes. Tom Scott, president of the small business organization, National Federation of Independent Business/California, said after SB 32 passed the Assembly, “SB 32 will make California even more hostile to small businesses, increasing costs and making them less competitive, discouraging growth and expansion across the state.”

The California Business Roundtable poll showed strong support for the first greenhouse gases (GHG) law. By 66% to 18% the 1200 voters surveyed agreed with the goal of reducing GHG by 2020. The extension to 2030 also received strong support, 63% to 21%.

But when asked if voters knew that state regulations to combat global warming would increase the price of gasoline, electricity and groceries, support collapsed to 47%; opposition rose to 46%.

Opposition skied when the question of lost manufacturing jobs was tested. The potential loss of thousands of middle class jobs garnered only 24% support for the climate change regulations, 66% opposed.

Such arguments would be part of a campaign if the issue comes before voters.

The Business Roundtable poll asked who should enact tougher environmental regulations, the legislators or un-elected state bureaucrats. The legislators prevailed 42% to 28%. But the question seems incomplete. Given the poll results, it probably should have included the voters.

This piece was originally published by Fox and Hounds Daily

Filed Under: Top Stories Tagged With: AB197, California Business Roundtable, Cap and trade, Climate change, Global Warming, Jerry Brown, SB32

Let’s Pump the Brakes on Cap-and-Trade

August 19, 2016 By George Runner 4 Comments

In 2006, elected officials gave the California Air Resources Board virtually unchecked authority to implement AB32, which aims to reduce carbon emissions to 1990 levels by the year 2020. The legislation, including the controversial cap-and-trade program, expires in four years.

Some lawmakers have already introduced legislation, such as SB32, to extend CARB’s authority. However, instead of rushing to renew this controversial and expensive program, we should slow down and come up with a more affordable solution that benefits all of California.

Cap-and-trade limits carbon emissions by energy producers and raises money through the sale of carbon credits. It’s supposed to fight global warming by making it more expensive to use carbon-based fuels. But that’s not the only thing it does.

It turns out the program has made life more expensive for Californians as well.

Since being given the authority, CARB has implemented a steady stream of costly regulations, such as the “hidden gas tax.” Experts agree that this hidden tax costs California drivers at least 10 cents more in added cost per gallon of gasoline. They also acknowledge CARB’s “low-carbon fuel standard” could add another 13 cents per gallon by 2020.

Motorists might be open to paying these costs if the money actually went towards repairing our crumbling roads. Instead it seems the cap-and-trade program has become a multi-billion dollar slush fund for politicians’ pet projects.

Perhaps intentionally, CARB still hasn’t come up with a systematic way to determine if cap-and-trade dollars are really doing anything to help lower emissions levels.

There is little consensus on what constitutes a “green project.” When pushed for answers, CARB officials deflect. This obscurity allows the governor to direct cap-and-trade funds towards his $71 billion high-speed rail project, which is actually increasing the state’s carbon emissions.

Some cap-and-trade funds were supposed to go towards programs for low-income communities that want to invest in renewable energy. Because CARB is largely free to do as it wishes, there’s no real way of knowing if these grants are reaching their intended targets. That’s a kick in a gut to the less fortunate who supported AB32.

Like you, I want breathable air and clean parks for our children and grandchildren. But do CARB’s unelected bureaucrats really need this much power? Government mandates can be very expensive and inevitably the costs are passed down to consumers. Not everyone can afford a Tesla.

Why can’t we use cap-and-trade funds to solve real problems like emission-causing traffic congestion? Think about it: What pollutes more, a car that reaches its destination quickly or one that’s stuck idling on a freeway for an extra 20 minutes?

A state appeals court has already put the future of cap-and-trade in doubt. And many questions remain, such as how to spend the billions collected and whether or not the program is really an illegal tax. Some doubt CARB has the right to collect the money at all.

There’s also a fierce debate over whether or not regulators can extend the program without the Legislature’s permission. The Legislature’s chief counsel doesn’t think so.

California is already a leader on climate change, and our current law doesn’t expire until 2020. Perhaps we should leave lawmaking to our elected officials, not abdicate power to unelected regulators. Rather than rush an extension, let’s invite the public to join the discussion. Californians deserve clean air, but they also deserve affordable energy—and to know how their dollars are being spent.

George Runner is an elected member of the California State Board of Equalization.

Filed Under: Top Stories Tagged With: AB32, Air Resources Board, Cap and trade, CARB, Carbon, George Runner, Pollution, SB32

Legislature Returns to Action in August: What to Watch For

July 31, 2016 By Matt Fleming 4 Comments

August is sure to be a busy month in Sacramento, as legislators fight to get their priorities passed before the legislative session ends on August 31.

While a large number of bills will be debated, there are four things to watch for:

Environment

With the political backing of new polling, Senate Bill 32 — which would extend and increase the state’s greenhouse gas emission reduction goals — is sure to reappear.

Not only is it a legacy project for the termed-out Sen. Fran Pavley, D-Agoura Hills — who authored the 2006 measure that this bill would extend — but it is backed by both Democratic leaders, Speaker Anthony Rendon and Senate President Pro Tempore Kevin de Leon.

“A clear majority of Californians strongly support our state’s climate policies and expect their elected leaders to build on our progress battling climate change and air pollution while making investments in clean energy across our state,” de Leon said in a statement on Wednesday. “This is why the Legislature should extend our climate targets in statute by passing Senate Bill 32.”

Republicans are opposed to the measure, which leaves the power to a handful of moderate, pro-business Democrats. The bill passed the Senate in 2015, but was defeated on the Assembly floor and then granted reconsideration.

An interesting data point: 15 Assembly members didn’t vote — which is a way of voting “no” without any accountability.

Transportation

The Legislature has been in a special session on transportation since last summer to come up with a funding plan to fix the state’s crumbling roads — but with little headway. Gov. Jerry Brown estimates there are almost $6 billion worth of unfunded repairs throughout the state each year.

The dispute is largely between Democrats who have proposed additional revenues (taxes) and Republicans who believe new taxes aren’t necessary as the money already exists but has been redirected to stop budget shortfalls in other areas.

Rumor has it that Democrats will propose what could be a massive package including new revenue, like a gas tax hike, sometime next month — although, since there’s a special session, it could be introduced after the regular session ends.

Republicans are unlikely to budge, but it may not matter what they want. Republicans are in danger of ceding a supermajority to the Democrats in November. If that happens, Democrats would be able to approve new revenues without Republican support.

Of course, the required two-thirds majority wouldn’t leave much room for defections from moderate Democrats.

Overtime for farmworkers

While farmworkers do get overtime, it has a much higher threshold than other professions. A revived bill would, over time, bring the threshold in line with other professions. You may remember that this bill was defeated in June, but it has been repackaged into another bill.

Proponents argue that farmworkers shouldn’t be exempt from the same overtime and break rules as everyone else. Opponents say farmers can’t afford it, and that an industry dependent on weather and external price setting can’t be regulated the same as other professions.

It’s unclear what would be different when the next vote comes that would make business-friendly Democrats, who sided with Republicans to defeat the measure, change their votes. Election year pressure may sway some vulnerable incumbents.

Of course, the measure was only three votes shy of passage, so proponents may target the seven Assembly members who simply didn’t vote, six of whom are Democrats.

Housing

It’s widely reported that the state faces an affordable housing crisis, particularly in urban centers.

Gov. Jerry Brown has been trying to increase affordable housing supply with a plan to reduce regulatory barriers for developers trying to build low-income housing. His ideas have not been embraced by the Legislature and he faces opposition largely fromunions and environmentalists.

Meanwhile, Sen. Jim Beall, D-San Jose, still has hopes of putting a $3 billion, low-income housing bond on the November ballot.

Filed Under: Top Stories Tagged With: AB32, affordable housing, farmworkers, Fran Pavley, Housing, Jerry Brown, Kevin de Leon, Legislature, SB32, Transportation

Renewables Have Glaring Obstacles to Overcome for California

How Do Voters Really Feel About Climate Change Legislation?

Let’s Pump the Brakes on Cap-and-Trade