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The Obama climate move that nobody noticed

The Obama administration just made a fairly significant move on climate change, and it flew right under the radar.

To explain, let me back up a bit.

How much damage does a ton of carbon emissions do? That dollar figure is known as the "social cost of carbon" and it is, as economist Frank Ackerman put it a few yeas ago, "the most important number you've never heard of."

Why does it matter? Because the U.S. government uses it to assess the costs and benefits of regulatory action. The higher the social cost of carbon, the more action can be economically justified.

Specifically, regulations are assessed by the White House Office of Management and Budget (OMB). (There are reasons to lament that process, but put them aside for now.) The OMB runs cost-benefit analysis on every big regulation that issues from the executive branch.

One thing Obama doesn't get enough credit for is the Interagency Working Group on Social Cost of Carbon, which his administration convened to establish a social cost of carbon that OMB and other agencies can use in assessing carbon-related regulations. In 2010, the working group released its report [PDF]. While there's no single, final number given as a social cost of carbon -- there's a range, depending on discount rates and estimates of climate impacts -- the number "in the middle," the one that became the headline, was $24. (That's for 2015; it rises year on year.)


Imagining power utilities for the 21st century (with slow lorises!)

"This is no longer a vacation. It's a quest. It's a quest for fun." -- Clark Griswold

The slow loris will be your guide for part 4.
David Haring / Duke Lemur Center
The slow loris will be your guide in this quest for fun.

I hope you've been enjoying our road trip to Utility Land. (If you’re just joining us, start here.) We have arrived, at long last, at our destination. We face the big question: How can we make utilities work for us in the 21st century?

Let's recall the basic shape of the problem.

Right now, electric utilities come in two flavors: They are either vertically integrated, which means they own both power plants and transmission and distribution (T&D) lines, or they are deregulated, which means they own only T&D. Either one can be investor-owned or publicly owned (municipal). So there are four varieties overall, but it's worth noting that the majority of U.S. ratepayers still pay their bills to investor-owned, vertically integrated utilities.

Regardless, for almost all utilities the problem is the same: The regulatory structure in which they operate incentivizes them to sell more electricity. They make long-term investments in power infrastructure and then charge customers a per-kilowatt-hour rate based on "cost plus" pricing, i.e., a rate that covers the cost of the investments plus a reasonable return. (For municipal utilities, the returns go back to the city or county rather than to investors.)


Tesla was not in fact worse than Solyndra, I argue on TV

Last week, Scott Woolley published a piece in Slate with the headline, "Tesla was worse than Solyndra." It argued that the U.S. government, by not insisting that its loan be repaid in part with stock options, left money on the table when Tesla broke big -- more money than it lost in the Solyndra deal. Thus, "worse than Solyndra."

Yeah, it's a goofy argument, as immediate pushback from Brad Plumer and Will Oremus illustrated. Woolley says it began as a tweet, and honestly it should have remained one, as it is about tweet deep. But it's exactly the kind of flashy argument designed to catch the attention of the business media, which is primed to believe anything bad about government loan programs.

Anyway, Bloomberg TV invited me on to discuss it. The last-minute nature of the request left me unable to prepare with my usual impeccable grooming, so here I am, shaggy and oddly bloated (I don't think my face is that fat in real life):


Coal is the enemy of the human race, video edition

Here's a short, plainspoken video from the Sierra Club that explains why coal sucks:

(Kind of leaves out the role of natural gas in displacing coal, but let's not get picky.)

It was one thing when there were no viable alternatives to coal -- you could make the brute utilitarian argument that all the lost lives, suffering, and ecological destruction were worth it for the benefits of electrification. But now there are alternatives. That means the suffering imposed by coal is a choice. And it's the wrong choice. Phasing out coal entirely is one of the great humanitarian projects of the 21st century.

Read more: Climate & Energy


Where greenhouse gases come from, in one graph

Here's a tiny version of a large, information-dense graphic from research consultancy Ecofys:

Ecofys: global GHG flowchart
Click to embiggen.

You should click and look at the big version, or better yet get the PDF from Ecofys and zoom in really close, where you can see the sectors further broken down.

Read more: Climate & Energy


What’s threatening utilities: Innovation at the edge of the grid (with dik-diks!)

What's threatening the dik dik: Everything. The bouncy dik dik will be your guide for part 3.
The dik-dik will be your guide for part 3.

The U.S. electricity system is fun and fascinating! The beatings will continue until everyone agrees.

In my last two posts, I have argued that electrical utilities in the U.S. are not well-suited to contemporary circumstances. In the first, I explained that the "regulatory compact" governing utilities was designed for an era of rapid electrification; it discourages innovation and encourages perpetual expansion. In the second, I explained that utilities are structured to treat electricity as a commodity, produced in central power plants and delivered to consumers over long distances in a one-way transaction, with price and reliability of supply the sole concerns.

(now featuring cute animals!)
(Now featuring cute animals!)

None of that is working anymore. Lots of forces are conspiring to put the current arrangement under stress, but the most important, in my mind, is a wave of innovation on the "distribution edge" of the grid. (I stole the term from an eLab report that I'll discuss in a later post.) The distribution edge includes the point where customers interface with the grid, typically a meter, and everything on the customer side of it, "behind the meter."

So what exactly do I mean by innovation on the distribution edge? This post will explore that a bit, to offer a sense of the kind of things coming down the pike, the stuff utilities will have to deal with in five to 10 years.


Utilities for dummies, part 2: Why we need competitive electricity markets (with fennec foxes!)

The fennec will be your guide for part 2.
Joachim S. Müller
The fennec fox will be your adorable guide for part 2.

Electric utilities! They are to me what sideboobs are to Huffington Post -- I just can't stop writing about them.

A couple of days ago I posted a brief introduction to utilities and the way they currently work. The take-home lesson is that current regulations give utilities every incentive to build more infrastructure and sell more power, but very little incentive to cut costs or innovate.

(now featuring cute animals!)
(Now featuring cute animals!)

The situation is no longer working for us. We need rapid, large-scale innovation in low-carbon electricity systems, and we need it now. It's time to fundamentally rethink the utility business model.

I hope you'll indulge me just one more scene-setting post before I finally get to the long-awaited post on solutions. Today we're going to take a look at the way electricity has typically gotten from generator to customer, the electricity "value chain," so we can better understand which parts need to change. This is a complicated topic, to say the least, but I'll do my best to break it down in the simplest terms I can, with the proviso that I'm glossing over lots and lots of important details.

The electricity value chain

OK. Think of the electricity value chain as having three basic links:


Utilities for dummies: How they work and why that needs to change

This quokka has no clue how utilities work.
This is a quokka. It's got nothing to do with utilities, but it's cute.

Last week, I posted on the fight between electric utilities and solar advocates over rooftop solar power. Today, I want to pull back the lens and begin to tackle the bigger question: How should utilities work? What's the right way to provision and manage electricity in the 21st century?

There's very little public discussion of utilities or utility regulations, especially relative to sexier topics like fracking or electric cars. That's mainly because the subject is excruciatingly boring, a thicket of obscure institutions and processes, opaque jargon, and acronyms out the wazoo. Whether PURPA allows IOUs to customize RFPs for low-carbon QFs is actually quite important, but you, dear reader, don't know it, because you fell asleep halfway through this sentence. Utilities are shielded by a force field of tedium.

(now featuring cute animals!)
(Now featuring cute animals!)
It's is an unfortunate state of affairs, because this is going to be the century of electricity. Everything that can be electrified will be. (This point calls for its own post, but mark my words: transportation, heat, even lots of industrial work is going to shift to electricity.) So the question of how best to manage electricity is key to both economic competitiveness and ecological sustainability.

It's time to start talking about utilities. I, your courageous blogger and servant, am going to attempt to lay out, at a high level, how utilities work and why, the challenges facing them, and what a utility more suited to the 21st century might look like. It's a complicated problem, but I think the basics are approachable by ordinary citizens, who very much need to get involved and speak up on these issues. Occupy PUCs! (You'll get that joke after you read my next few posts.)


“If people aren’t pissed off, it ain’t working”: A chat with green billionaire Tom Steyer

Tom Steyer.
Fortune Live Media
Tom Steyer.

Tom Steyer spent years as a wildly successful hedge fund manager, a vigorous philanthropist, and a sought-after funder of Democratic politicians, but most of that activity took place beneath the public radar.

A few years ago, however, Steyer stepped into the spotlight. In January 2009, he and his wife Kat Taylor donated $40 million to found the Tomkat Center for Sustainable Energy within the Precourt Institute for Energy at Stanford, and another $7 million to found the Steyer-Taylor Center for Energy Policy and Finance, run by ex-Google energy guy Dan Reicher.

In August 2010, he and Taylor signed the Giving Pledge, vowing -- as with Bill and Melinda Gates and Warren Buffett -- to give away at least half their fortune, which in their case runs to $1.2 billion. Later that year, Steyer poured $5 million into a winning campaign against California's Prop 23, which would have rolled back the state's seminal global warming legislation. In November 2011, he cofounded the Advanced Energy Economy, a trade association of clean energy businesses. In October 2012, he resigned from his hedge fund to pursue social change full-time. Also in 2012, Steyer crafted, and spent $32 million to back, California's Prop 39 -- which voters approved in November, closing a tax loophole benefiting out-of-state corporations and directing half of the resulting revenue to clean-energy initiatives.

Most controversially, in March of this year, he dove headlong into electoral politics, pouring scorn and threatening to pour money into a Mass. Democratic senate primary campaign against Stephen Lynch, a supporter of the Keystone XL Pipeline. Lynch's opponent Ed Markey won, but Steyer's involvement drew fire. Markey himself disavowed the hardball tactics and political operatives everywhere clutched their pearls.

We met with Steyer when he came through Seattle, for a chat about climate, politics, and money. (This interview has been lightly edited for length and clarity.)

Q. What first engaged you on climate and energy in such a significant way? Was there a turning point or moment of clarity?

A. I don't think there was a big epiphany. But getting involved in the No on 23 campaign in 2010 was an incredible education for me in how human beings think about this, how they relate to it, and what moves them on it. It definitely corrected a bunch of my preconceptions as to who cared and why they cared. People's image of environmentalism is very different from the actual Americans who care about it. That Latinos care the most about environmental issues is not a popularly held view in the U.S., but it consistently polls that way.


Utilities vs. rooftop solar: What the fight is about

Solar panels house

The conflict between electric utilities and distributed energy -- mainly rooftop solar panels -- is heating up. It's heating up so much that people are writing about electric utility regulation, the most tedious, inscrutable subject this side of corporate tax law. The popular scrutiny is long overdue. So buckle up. We're getting into it.

I wrote about the fight a while back -- "solar panels could destroy U.S. utilities, according to U.S. utilities " -- but it's worth taking a closer look at what's under dispute. Some bits are unavoidably wonky and technical, but it's important to understand exactly what's happening. This is a pivotal issue, a trial run for many such struggles to come.

There's a short-term problem and a long-term problem. The former is about how electricity rates are structured, specifically how utilities compensate (or don't) customers who generate power with rooftop solar PV panels. The latter is about developing an entirely new business model for utilities, one that aligns their financial interests with the spread of distributed energy. The danger is that fighting over the former could delay solving the latter.

(now featuring cute animals!)
(Now featuring cute animals!)

Today, let's dig into the fight at hand. It's about utility rates, specifically "net metering," yet another nerdy green term no one understands. I will endeavor to make clear what it is and why the fight over it is so damn interesting and exciting. Exciting, I tell you! Wake up!