A recent Bloomberg New Energy Finance article made a splash saying that fossil fuels “just lost the race against renewables.” It included a striking chart, depicting changes in power capacity additions with very clear diverging trends.
Although this would be a delightful turn of events, we should be wary of putting the cart before the horse.
What may be lost on many readers is the fact that Bloomberg bases its story on power capacity, rather than actual power generation. Read More
Originally posted on EDF’s Energy Exchange.
Last week, Environmental Defense Fund (EDF) co-hosted a successful forum on residential time-variant electricity pricing – which allows customers to pay different prices for electricity depending on when it is used – within the context of New York’s ‘Reforming the Energy Vision’ (REV) proceeding.’
Co-hosted with the New York Department of Public Service and New York University’s Institute for Policy Integrity, the full-day forum, “On the REV Agenda: The Role of Time-Variant Pricing,” brought together more than 150 regulators, utility executives, academics, and other stakeholders to explore how residential time-variant pricing works, what it can accomplish, and how best to implement it. Below is a recap of some of the high-level takeaways from the forum.
How time-variant pricing (TVP) works
One of EDF’s objectives has been to improve the efficiency of the electricity industry by pursuing a market-based approach to electricity pricing. In most well-functioning markets, the cost of making a product and its relative scarcity is reflected in the price. For example, a door is more expensive than the wood with which it is made in order to reflect the labor costs involved. Similarly, strawberries are more expensive during the winter because they are less abundant during that time. Customers understand that prices vary with production costs and over time, yet neither of these elements gets reflected in how residential customers currently pay for electricity.
Editor’s note: The following is excerpted from Climate Shock (2015) by Gernot Wagner, Lead Senior Economist, Environmental Defense Fund, and Martin L. Weitzman, Professor of Economics, Harvard University. Published here with permission from Princeton University Press.
Two quick questions:
Do you think climate change is an urgent problem?
Do you think getting the world off fossil fuels is difficult?
If you answered “Yes” to both of these questions, welcome. You’ll nod along, occasionally even cheer, while reading on. You’ll feel reaffirmed.
You are also in the minority. The vast majority of people answer “Yes” to one or the other question, but not both.
If you answered “Yes” only to the first question, you probably think of yourself as a committed environmentalist. You may think climate change is the issue facing society. It’s bad. It’s worse than most of us think. It’s hitting home already, and it will strike us with full force. We should be pulling out all the stops: solar panels, bike lanes, the whole lot.
You’re right, in part. Climate change is an urgent problem. But you’re fooling yourself if you think getting off fossil fuels will be simple. It will be one of the most difficult challenges modern civilization has ever faced, and it will require the most sustained, well-managed, globally cooperative effort the human species has ever mounted.
If you answered “Yes” only to the second question, chances are you don’t think climate change is the defining problem of our generation. That doesn’t necessarily mean you’re a “skeptic” or “denier” of the underlying scientific evidence; you may still think global warming is worthy of our attention. But realism dictates that we can’t stop life as we know it to mitigate a problem that’ll take decades or centuries to show its full force. Look, some people are suffering right now because of lack of energy. And whatever the United States, Europe or other high emitters do to rein in their energy consumption will be nullified by China, India and the rest catching up with the rich world’s standard of living. You know there are trade-offs. You also know that solar panels and bike lanes alone won’t do.
You, too, are right, but none of that makes climate change any less of a problem. The long lead time for solutions and the complex global web of players are precisely why we must act decisively, today. Read More
Co-authored by Kristina Mohlin, Economist
Smart meters, which provide detailed electricity use data throughout the day, are a critical piece of a smarter, more resilient 21st century energy system. But they are not a cure-all for modernizing our antiquated power grid.
In Matthew Wald’s recent New York Times article, entitled “Power Savings of Smart Meters Prove Slow to Materialize,” he argues that smart meters have failed to produce measurable savings. And we agree – but not because smart meters themselves have failed. Rather, most customers with smart meters don’t have access to people-powered, or time-variant, electricity pricing, which creates opportunities to save money. This is a missed opportunity for customers, utilities, and the environment.
Time-variant pricing better reflects electricity costs
Throughout most of the country, the price paid for residential electricity is the same regardless of the time of day when it’s consumed. This arrangement is a byproduct of an earlier era, one in which electricity information was difficult to convey and the actions of individual customers was impossible to gauge in real time. In practice, electricity is actually dirtier and more expensive to produce and transmit at certain times of the day, particularly when everybody wants it – for example, at 6pm during a heat wave when customers are cooling their homes. Also, during this high-demand time, energy prices spike and electric utilities flip on expensive and dirty fossil fuel “peaker” power plants to meet energy demand. From an economic point of view, it would be more efficient for electricity used at these peak demand times to have a higher price. Read More
This post was co-authored with Sara Snider and Stacy Small-Lorenz.
Join us in Washington, DC on December 8 for a pre-ACES Conference workshop- “Getting Better Biodiversity Outcomes from Coordinated Environmental Markets.” We welcome anyone interested in exploring the space where environmental markets, including habitat markets, interact with each other and conservation programs. Come investigate with us how biodiversity can benefit from the optimal design and coordination of markets.
Getting Better Biodiversity Outcomes from Coordinated Environmental Markets is a free pre-conference workshop for ACES Conference attendees.
Monday, December 8, 2014
1:00-4:30pm
Washington, DC
Register here for the ACES Conference and sign-up for this workshop!
Aligning Incentives to Maximize Environmental Benefits
Environmental markets have the potential to enhance and conserve key elements of ecosystems; however, this requires coordinated and informed decision-making. During the workshop, we will explore the evolution of habitat markets and how such markets should be designed to achieve the greatest net benefit, covering both biological and regulatory considerations of habitat market design. We will also discuss scenarios in which it could be appropriate to combine habitat markets with other markets (e.g. water and air quality) to create added-value incentives. We will emphasize topics such as the interface of markets with federal conservation programs, the challenge of establishing baselines for landowners enrolling in habitat markets, as well as the economic and legal challenges of stacking.
Engage with Environmental Market Experts around Case Studies
Environmental markets experts will lead us through an engaging discussion of the challenges and opportunities for biodiversity markets and stacking in moderated panel and breakout discussion format. Confirmed panelists include:
Workshop participants will have the chance to discuss basic and complex questions around these topics by working through real-life scenarios. We will touch upon potential pitfalls, such as double-dipping, legal inconsistency, and market incompatibility, as well as the challenge of establishing baselines for landowners. As environmental markets move forward to incentivize better biodiversity outcomes, we must be ready to collaborate and coordinate with fellow ecosystem service professionals to achieve real success. Let’s get started at the ACES Conference!
Enter the Conversation
EDF has a long history of creating innovative market-based solutions to our environmental challenges, including the historical trading program in the 1990s that dramatically decreased acid rain and reduced exposure to harmful pollutants. Now, we continue to develop multiple markets in order to maximize environmental benefits, such as habitat restoration and carbon sequestration. A Community on Ecosystem Services’ (ACES) Conference this December provides an in-depth forum for exploring these topics with representatives from government, academia, conservation NGO’s and the private sector.
Via EDF Voices. This first appeared online in an article posted at ensia.com.
Gross Domestic Product (GDP) is broken. Robert F. Kennedy said as much in his first major presidential campaign speech. Simon Kuznets, the father of GDP, acknowledged its shortcomings. GDP is an imperfect indicator of human well-being at best, and outright misleading at worst.
Still, we shouldn’t scrap GDP and start over.
Up to a point, GDP does tell us important facts about people’s lives, livelihoods and aspirations. Living on a dollar a day is miserable no matter how you look at it.
Choking on economic growth, of course, is equally bad. There are a few simple, well-established steps we ought to take to bring GDP closer to where we should be. That, by the way, isn’t “Green GDP” or “green accounting.” It’s honest accounting.
Start with accounting for the true value of natural assets still in the ground. We don’t “produce” coal. We extract it. And the fact that the ton of coal extracted today is no longer there for the taking tomorrow should show up in our national income accounts. A ton of West Virginian coal adds about $30 to GDP. Honest bookkeeping would decrease that amount to $15. The same holds for oil, trees, water and all the other valuable natural assets that fuel our economy but are largely treated as free in our GDP accounting.
Then quickly move on to pollution. Every ton of coal, every barrel of oil causes more in external damages than it adds value to GDP. Properly measured GDP ought to reflect that fact.
In the end, policy makers should expand their horizon and look at a dashboard of indicators to get a fuller picture of the true state of the economy, society and the planet. Yet when it comes to GDP itself, the name of the game is fixing it rather than scrapping it. We know how to do that. The U.S. Bureau of Economic Analysis is at the ready. Let’s have a go at it.
See the original post on ensia.com for a perspective from Sir Partha Dasgupta, Frank Ramsey Professor Emeritus of Economics at the University of Cambridge.
