10.10.18

Time To Wake Up: The Costs Don’t Lie

As-prepared for delivery

I am delighted to be joined today by Senator Jeanne Shaheen of New Hampshire.  Senator Shaheen has been a tireless advocate for clean energy, and is the Senate’s champion on energy efficiency, alongside Senator Portman. 

The UN’s Intergovernmental Panel on Climate Change released a major warning last week.  Ninety-one authors and editors from 40 countries reviewed more than 6,000 scientific papers to assess what it would take to hold global temperatures to 1.5 degrees Celsius above preindustrial levels.  The report says we will need to invest roughly five times what we do now in low-carbon energy and energy efficiency by 2050.

The Shaheen-Portman energy efficiency legislation would help move us toward that target.  The American Council for an Energy-Efficient Economy says the bill would reduce carbon dioxide emissions by about 650 million metric tons over a 15-year period.  The cumulative net savings from the bill would reach nearly $100 billion. 

My state of Rhode Island is a national leader in promoting energy efficiency, so we know how good programs like the Shaheen-Portman reforms are for consumers, for businesses, and for the environment.  Rhode Island has consistently ranked among the top states for energy efficiency; this year, we are in the top three on the “State Energy Efficiency Scorecard.” 

To keep global warming to 1.5°C, the IPCC tells us we need renewables to grow to about half the world’s energy mix by 2030 and perhaps 80 percent by mid-century.  Coal in the global electricity mix would need to be mostly phased out by 2050. 

The fossil fuel industry front groups tell us that this will raise costs on consumers.  But renewables are now beating fossil fuel power on cost, and renewable costs are still falling.  In a recent report on global energy trends, Deloitte notes, “Solar and wind power recently crossed a new threshold…. Already among the cheapest energy sources globally, solar and wind have much further to go.”

The Deloitte report shows the top solar states here in yellow, the top wind states in blue, and these two in green—California and Texas—are leaders in both.  In the top 20 U.S. solar and wind states, three quarters have electricity prices below the national average.  Clearly, renewables don’t hurt energy costs.  These states include some of the reddest politically, including Oklahoma, Kansas, Nebraska, North Dakota, Iowa, and even Texas.

This cost transition is showing up U.S. solar projects purchased-power agreements.  You can see in this chart from Greentech Media that solar generation has come down into line with new-build natural gas plants, in this shaded range.  This dot here on the right, for example, represents a new project by NextERA Energy to sell power to the southern Arizona utility Tucson Electric Power, from a 100-megawatt solar array with an accompanying 30-megawatt energy storage system, for $45 per MWh—right in line with new natural gas plants.  One industry analyst suggested the facility effectively took the place of a peak-demand gas plant.

Defenders of old, dirty energy sources paint renewables as unreliable and intermittent.  But Deloitte’s report finds that renewables have actually proven “to strengthen grid resilience and reliability.”  Integrating renewable capacity into the grid has gone well in practice, and FERC analyses predict increased renewable usage to improve grid security and resiliency.

The grid operator in Iowa, the most heavily wind-powered state, figured out a while ago the algorithms to treat wind across its grid as baseload.  When you pair wind or solar projects with battery storage, like the NextEra project did, individual renewable projects become baseload power sources. 

And batteries are booming.   Wood Mackenzie Power & Renewables projects worldwide storage capacity, currently around 6 gigawatt-hours, to grow tenfold, to at least 65 gigawatt-hours by 2022.  Costs are falling fast:  lithium-ion battery prices are down 80 percent, just from 2010 to 2017. 

Regulators are adapting.  The Federal Energy Regulatory Commission just finalized a new rule—a unanimous and bipartisan rule—for energy storage in America’s electric grids.  One study predicted the rule could spur 50 gigawatts of additional energy storage across the United States, enough to power roughly 35 million homes. 

Energy storage is coming to market already. The Colorado State Public Utility Commission just unanimously approved an Xcel Energy program to build $2.5 billion in renewable energy and battery storage, to retire 660 megawatts of coal-fired power.  The request for bids brought a flood of renewable energy proposals at costs that beat out existing coal and natural gas facilities.

Mr. President, the IPCC warning was particularly serious and specific about the urgent choices before us.  We too need to be serious about a new direction to avoid the most catastrophic effects of climate change.  Renewable energy and energy efficiency are our pathways in that direction; along with a new technology: trapping carbon emissions to use or store them, even pulling carbon dioxide straight from the air. 

These carbon capture technologies have been starved without revenue, because of a failure in energy market economics, which is that there is no revenue proposition for capturing carbon pollution.  When polluting is free, the flip side of polluting having no price is that preventing or cleaning up pollution has no revenue.  Which brings us to the Nobel Prize in Economics just won by William D. Nordhaus of Yale University. 

Nordhaus aligns with the well-established market economics that polluters should pay for damage to the environment and to public health.  Otherwise, the price signal at the heart of market economics is off, and subsidies result.  The market fails.  And when the International Monetary Fund estimates the fossil fuel subsidy at $700 billion per year, just in the United States.

Nordhaus recommends that we correct the enormous market failure which the fossil fuel industry now politically protects.  “There is basically no alternative to a market solution,” Nordhaus said in response to the award.  “The incentives are market prices—to raise the price of goods and services that are carbon intensive and lower the ones that are less carbon intensive.”

The science on this is firmly established, and the economics widely understood; it’s the politics that keep getting in the way. 

“This is the last frontier of climate change,” said Nordhaus.  “I think we understand the science.  I think we understand the economics of abatement.  We understand pretty much the damages.  But we don’t understand how to bring countries together.  That is where the real frontier work is going on today.”   America should be leading at this frontier, not lagging.  Lost in our fossil-fuel politics, we are failing in leadership. 

It is past time, Mr. President, for Congress to wake up.

I yield the floor.