Decarbonization Dilemma - 10 Possible COVID Impacts
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- May 20, 2020 10:30 pm GMT
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It has been hard to write this Blog Post. I kept saying to myself that "OK, now is the time" but then I would feel like there would quickly be more pandemic-related shoes to drop that would impact what I might say. So now I am surprised how long it has been since my last one. Is that a case of time flies, or is it a case of time having broken wings, and pretty much standing still?
At this point, I feel like my brain has gelled on a few of the impacts that COVID-19 will or could have on the energy efficiency, clean energy and climate spaces. And I guess I should disclose that this Post is a little longer than my usual ones. But it is of course segmented and if you are short on time, just read the ones that interest you. Or, if you can only read one or two, skip to #9 or #10.
1. States Find Themselves in a Budget Crunch and Look for Places to Cut
As they now face ballooning state deficits due to COVID, states are in trouble. Unlike the federal government, they cannot print money. In fact, 49 out of 50 States operate under balanced budget laws, meaning they can't just try to balance revenue and spending - they have to do that.
Unfortunately, in past situations where states ran into budget problems, things like energy efficiency have been seen as "optional" and money that was supposed to go to that was raided for the general fund.
That's not a good precedent for decarbonization. States need their own recovery bill from Congress, and all the better, write it so it uses EE, GridMod and clean energy as tools for addressing both unemployment and decarbonization.
And let's not forget what might happen to electricity rates. People are having trouble paying their bills and when it comes to energy, those bills may be higher because they are having to spend more time at home. Utility Commissions are going to be on watch for what they should do about that. Beyond basic electricity costs, however, the energy and environmental riders that are on some bills, which are an essential source of funds for clean energy and clean energy, could be also be threatened.
2. Congress Becomes Exhausted from Passing Recovery/Stimulus Bills
There are two types of exhaustion in Congress that I have observed over the years. One is the financial kind. That can happen when laws kick in that prevent any further opening of the federal spigot. Some of those exist now, and we may see others soon. (Although the idea of deficit exhaustion seems to suddenly not really be a "thing" anymore).
The other type might be called "personal" exhaustion. I know that many if not most people think that members of Congress do not work very hard. Sometimes that judgement is made based on the number of bills passed during one of its two-year Sessions. But based on my time on and around the Hill, the people who work there - Members and Staff - have very odd if not weird jobs. They actually put in a lot of physical, mental and emotional effort. When it comes down to it, they are still people and still can become exhausted like the rest of us. The result is that collectively, they may not have the required energy to keep doing recovery/stimulus bills, let alone things to win the war on climate.
And they will want to move on to other things. Take health care, for example.
I think if anything has had new light shed on it, and the inequalities, etc. embedded in it, it is health care. How much oxygen in the policymaking arena will that soak up? Will a major effort on climate be possible at the same time?
3. The Election Puts a Hold on Policy and Raises the Stakes for Decarbonization
There are many facets to this one. First is to say that we are headed towards perhaps the strangest Presidential election in American History. We don't even know exactly how it will be conducted and to what extent it will include the components of historical campaigns. What we do know is that Congress and state law-making bodies tend to "freeze up" as an election approaches and not get a lot done. Members focus on their own situations.
But climate will be on the ballot to some degree. Polling since March has showed Americans still consider climate a threat and clean energy a solution. (For more see #4 below) Absent COVID, many voters may have voted for a Presidential Candidate based on whether the US should stay in the Paris Climate Accord or drop out. But now, will climate be any kind of a swing issue?
If climate is not a voting issue, perhaps no other issue may be so affected in such a stark manner. When the present Administration came in, my main concern was that it would not pay attention to climate and that efforts to address it would be dormant for four years. I did not expect that instead of zero movement forward, we would actually have movement backwards. If you think we can afford another four years of that, you are not paying enough attention to the timetable for necessary emissions reductions. (see #'s 9 and 10 below)
4. The Staying Power of Climate Change and Clean Energy in Polls Is Ignored
Americans can walk and chew gum at the same time, at least when they are asked to rank a list of issues that are important to them, or that they are concerned about. As you will remember, prior to the pandemic, climate change was rising nicely in polling - among members of both political persuasions.
A new poll released by the Yale Program on Climate Communications (considered by many to be the best source on this topic) just this week shows that American public opinion about climate change has remained steady and, in some cases, reached all-time highs. According to Yale, "Americans' understanding that climate change is happening has tied the prior all-time high (73%) while only 10% of Americans believe global warming is not happening. Likewise, public understanding that global warming is human caused has also reached the all-time high (62%)".
Yale notes that these results are even more remarkable when you realize that Americans are hearing much less about global warming as COVID-19 and the economy dominate the news. For example, Yale notes that "last November, 35% of Americans said they heard about global warming in the media at least once a week. By April 2020, this had dropped 11 percentage points to 24%. This suggests that public opinion about climate change has not only increased in recent years, it has also solidified, so it is less affected by swings in media attention".
But the unfortunate thing is that few people can put together a personal algorithm to sort through issues when it comes to casting their ballot. Even though climate ranks high, the question of how many voters will use climate as their number one voting issue is open. It may not matter in the Presidential election, but it could be important in Senate and House races, and certainly will be in certain state races.
5. Slow Turnover of Vehicle Fleet Combined with More Driving
Among the current running jokes is for someone to talk about their car by boasting how many weeks per gallon they are getting. Turnover of the nation's vehicle fleet is important to energy efficiency and emission reductions, as even without the higher mileage standards that we could and should have, a new car is better than an old one when it comes to mph. But sales figures are bleak, including for EVs. Disposable income is tighter for many people. The EV revolution will surely come, but is it on the same timeline?
Now there is another side of the coin on this one. Long commutes could be diminished or vanish if more work-at-home takes hold, and that is good news in terms of emission. But what about public transit? People are clearly not liking the idea of getting on busses or subway cars without a new vaccine in place. What kind of a lasting impact are we likely to see? Speaking of the idea of densely packed train cars, let's quickly move to #6 below.
6. A Reverse Course on Density
Density is energy efficiency's friend. That is why trains and busses rank best on emissions per person transported. Moreover, densely populated areas lead to more pedestrian traffic and bike lanes. High-rises and apartment buildings are, all other things equal, more energy efficient than spaced-out, detached single-family dwellings. But much is being written at the moment about whether or not there is going to be a great sucking sound, with people looking for greener pastures (or just plain old pastures) and working from home becoming more widespread.
If density takes a hit because of COVID, energy efficiency could as well.
7. Delayed Maintenance of Buildings and Replacement of Appliances/Systems
As we all know, when something in or on the outside of a home or building needs to be replaced, it opens up an opportunity to think about making energy efficient choices. But are the economic impacts of the pandemic going to lead to delayed and deferred maintenance and replacement? Are those types of projects going to be seen as discretionary? Are the normal appliance and equipment lifetimes built into energy efficiency assumptions and forecasts going to be affected?
8. Relocation of Electricity Demand and New Peaking Patterns
As I have watched electricity consumption drop during the pandemic and seen load curves show entirely new types of peaking patterns, I have begun to think about not just the change in demand, but the relocation of it. By that I mean that some of the existing demand has apparently become residential demand, where it used to be commercial demand. There is a real-time debate going on as to whether companies are going to question and even abandon their office space (and the high rents that come with it). What does that mean for the electricity system?
Even before the advent of DER and Grid Modernization, the distribution grid was designed based on where the load was. What if it is not where we thought it would be anymore. Even with DER and grid-mod there has still been a locational factor that was embedded in planning and implementation.
And what about rate classes and revenues? A regulated utility, and a Commission regulating it, work very hard to come up with a fair and equitable distribution of costs among residential, commercial, institutional and industrial classes. How will that be affected if demand shifts from class to class?
Time-varying pricing has fought for decades against the stigma that it will mean bill increases for consumers. As I and others have argued for years, that has been widely and consistently been shown to not be the case. But the new normal of trying to keep prices low when people are hurting, will mean Time-Based Rates may have an even steeper hill to climb than before.
9. The Projected 2020 Reduction in Emissions Must Somehow Occur Every Year in the Next 10 Years in Order to Meet Climate Targets.
You must have seen some of the headlines in the past couple of months about how projected emissions of greenhouse gases for 2020 are going to be much reduced. The first estimate by experts was 5%. Then it was raised to 7%. Last week I saw a new number of 11% was possible. A study came out yesterday saying that it appears there was a 17% drop during the worst of the lockdown period.
In the words of a famous novelty song from the 1960's "That's good! No, That's bad!"
It's bad because look at how the emission reductions have been achieved - economic depression. Talk about a blunt weapon.
But guess what emission reductions have to be every year for the next 10 years in order to meet the target set forth in the Paris Accord, i.e. not going beyond a 1.5 degree temperature rise?
As in 7.5% per year - for 10 years.
If it takes shutting down the economy to get around 7% a year, how are we going to meet the 1.5 degree and other targets?
And it must be realized that any necessary reductions we would not make in one year would be added to the requirement the next. (This refers to the idea you may have heard of a fixed carbon budget that we get to "spend" before we get into trouble)
10. Falling Back into Timelines-as-Usual
I devoted an entire blog post to this back in December and statistically it was one of my more widely read pieces. So I won't belabor the point here.
Let's say that everything goes the right way in a recovery, and energy efficiency and clean energy and GridMod are used as tools for that recovery, and stemming climate change becomes a major guidepost for the efforts that emerge.
That's probably not good enough.
It will no longer be good enough to do the right things. It will be how fast we can do them and how fast those actions will result in specific avoided emissions. And will the timeline we complete them on be in synch with the timeline needed for emissions reduction.
Who knows what COVID will cost us in the fight to decarbonization and address climate change? But it is costing us something, if only delay, and delay is the last thing we can afford.
Hang in there,