Solar

Slicing up the energy pie

Friday, January 12, 2018

There’s a little-noticed and remarkable fact about American energy use that helps explain some of the bitter policy fights we’re seeing right now: The United States actually uses less electricity today than it did back in 2007, even as the population keeps growing.

There are a few reasons for that: American homes have gotten far more energy-efficient with the spread of LED light bulbs and energy-saving appliances. And industrial electricity use fell significantly after the financial crisis and hasn’t fully rebounded.

Why does this matter? If electricity consumption is flat, then all the different sources of energy we use — coal, natural gas, nuclear, solar, wind — are locked in zero-sum competition with one another. If a new natural gas plant or wind farm goes up, something else has to get pushed off the grid.

That’s exactly what we’ve seen. The rise of fracking has made natural gas incredibly cheap. Solar and wind, already subsidized by Congress, have seen their costs drop dramatically. As a result, coal and nuclear power are losing market share fast.

Last fall, Energy Secretary Rick Perry proposed to slow this trend by shielding some coal and nuclear plants from market forces in order to protect the “reliability and resiliency of our nation’s grid.”

His idea was fiercely opposed, partly because it was clumsy and legally dubious, but also because propping up coal plants would only hurt natural gas and renewable energy. Those industries made their displeasure known. (On Monday, federal regulators rejected Mr. Perry’s proposal.)

You see this zero-sum competition pop up everywhere. Some states have worried that letting their nuclear plants retire in favor of natural gas would increase greenhouse gas emissions. Many lawmakers have proposed subsidies to keep those reactors running. But in states like Pennsylvania, the gas industry has lobbied hard against this idea.

And some local utilities have fought policies that encourage homeowners to install solar panels on their roofs, not least because it would cut into their own already-stagnating sales.

Economists have long argued that there’s a simple solution to this mess: Let’s just price greenhouse gas emissions to account for the damage caused by global warming (say, with a carbon tax) and then let the market sort out the appropriate energy mix. But, of course, the United States doesn’t have a carbon tax — instead we have a complicated patchwork of energy policies that are endlessly tweaked and lobbied over. And now that electricity use has stopped growing quickly, everyone’s left fighting over crumbs.  



Tags: