Curbing Fossil Fuels with Renewable Energy in California

On Nov 10, 2014, Economist Severin Borenstein told LWVBAE E-Concerns we need to move to renewable energy due to potentially catastrophic climate change primarily caused by humans. “We have a cap-and-trade system (to limit CO2 emissions) now in California but the price associated with it is so low that it’s really not covering it. I think we should have a tax and it should be ten times higher (but) that’s not going to happen,” he said. “I don’t see a political path from here to making real political changes other than big pushes on technology – research and development on everything – solar, wind, carbon sequestration, nuclear, tidal power, batteries, geothermal, energy efficiency…We need to figure out all the options because if we decide that one technology is better… we’re pretty sure that we’re betting on the wrong technology,” he said. “It’s just impossible to predict this.”

Borenstein said greenhouse gases (GHGs) are dangerously high at more than 400 ppm and we’re headed for at least a 3°C global temperature increase by the end of the century. “What we need to do is raise the price on consuming things that actually harm the environment and lower the taxes on things we actually want people to do like earn a living,” akin the George H.W. Bush years, he added. “To determine this, we need to know what things cost including the environmental cost, which means we have to out a price on carbon – probably a pretty high price.”

Lifecycle Analysis involves making detailed measurements during the manufacture of a product form the mining of raw materials used in its production and distribution through to its use, re-use, or recycling and eventual disposal.

“January 1 the price of GHGs will have to be covered in the price of gasoline under the Cap and-Trade program, which will raise the price of gas about 10 cents a gallon, although there are gas companies out there with their scare tactics saying this could raise the price of gasoline by 50 or 60 cents per gallon,” Borenstein said.

“There’s no free lunch here. All of these technologies do something bad.” Wind turbines kill birds, he offered as an example.

“We have net metering in California, which basically says all you get charged for is the net you produce,” he explained. “This I think is a big mistake and we should discontinue it…. if you put electricity into the grid equal to the amount you take out you don’t owe anything.” Customers have monthly distribution charge estimates with true costs figured at the end of year, he clarified.

Solar power has made great strides in recent years but right now solar looks expensive because natural gas is cheap, he said. Meantime, solar is now only 70 cents/watt down from $4/watt five years ago as technology moves forward. “A big incentive for solar installation in California has to do with rate structuring, he said. PG&E uses “increasing block pricing” so the more electricity one uses the more one pays per kilowatt hour (kW-h).  “What’s troublesome to me about this is that more than half of all solar PV systems are installed by the top 20 percent of income distribution,” he offered. Legislation has been passed to ‘flatten out’ the rate by reducing high rates and increasing low rates. Meanwhile, he said, solar is “a net win for the environment” but not cost-effective unless the customer is in the higher block pricing. PG&E average electricity is 17-18 cents/kWh where the national average is 12 cents kWh so we’re paying almost 50 percent more, he said.

“California electric rates don’t reflect high cost but they reflect mistakes from the past including Diablo Canyon,” he said. “The reason rates are higher isn’t cost,” he emphasized, “It’s covering mistakes and paying for distribution.”

Learn more at Severin Borenstein’s Berkeley Blog