On October 30, the National Geographic Channel will broadcast the first episode of the second season of a series entitled Years of Living Dangerously. The series explores the dangers of global warming and associated climate change. The first episode, A Race Against Time, focuses two compelling stories: the promise of solar energy in India and the political obstacles to wider use of solar energy in the U. S.
(Truth in packaging alert – my daughter, Ivy Meeropol, is the producer of the US segment of that broadcast. A good friend from Swarthmore College, David Gelber, is one of the creators of the series.)
I am focusing on the US story in this commentary. Florida and Nevada, the two states profiled in this episode, should be ideal for the widespread adoption of solar energy to generate electricity. Florida is actually called the sunshine state, and Nevada has the second largest number of clear days per year (second to Arizona) in the continental US with the sun hitting the earth (at least in the city of Reno) 79% of the daylight hours. [For details with a representative city from every state see: https://www.currentresults.com/Weather/US/average-annual-state-sunshine.php.]
Rooftop solar collectors to generate electricity seem a no-brainer for Florida and Nevada. And they make great sense economically and environmentally. Rooftop solar collectors can provide electricity to homeowners and businesses. It they could sell the excess electricity back to the grid at market rates, they could find their bills netting out to zero. Those who do not install rooftop solar collectors will also see their rates drop (or at least not rise) as utilities do not have to expand capacity. This would reduce those significant capital charges that inflate electric bills. A win-win situation for electricity customers and the environment.
But the October 30 episode tells a different and disturbing story. In Florida and Nevada, the electric utilities are succeeding in their effort to impose extra burdens on homeowners and businesses that wish to install rooftop solar arrays. This at a time, when a long run understanding of the necessity of switching energy sources from fossil fuels to sustainables like wind and solar are planet-saving necessities.
A policy that subsidizes the use by homeowners of rooftop solar is a wonderful example of the appropriate role for government in our economy. In an unfettered market, the imaginary world taught in introductory economics courses which have few real world examples, competitive prices accurately reflect the benefit to the purchaser. Even if we assume that the price of utility-generated electric power is close enough to what would be charged in a perfectly competitive market (due to the rate setting by regulatory commissions), it still remains true that a homeowner or business owner who installs solar collectors is not merely purchasing electricity but also reducing the dangers of global warming. This is an example of what economists call spillover benefits.
The homeowner or business makes the decision on whether to install solar collectors on the roof based on the price. Society, however, using government subsidies, values the replacement of fossil-fuel generated electricity with rooftop solar more than the benefit to the individual decision-maker. If the vast majority of electricity generated in the country came to be generated not by burning fossil fuels but by solar power, the long term benefit – capping the rise in global temperatures at two degrees Celsius --- thereby avoiding catastrophes that might even destroy civilization as we know it – would in effect be infinite. (Please do not be put off by the hyperbole. As I mentioned in a commentary earlier this year, if world temperature increases shoot past 2 degrees Celsius, potential catastrophes are almost unimaginable. See, for example Global Warming Our Future A degree by degree explanation of what will happen when the earth warms October 27, 12016 available at http://globalwarming.berrens.nl/globalwarming.htm. I quite moved by a fictionalized account of how modern western civilization came to be destroyed between the years 2010 and 2093. See Naomi Oreskes and Erik Conway, The Collapse of Western Civilization, A View from the Future. Technically, no benefit or cost is really “infinite” but I use the term to indicate that there is no cost too high that would preclude taking action to avert the kinds of catastrophes the climate scientists tell us are in store for our grandchildren’s generation if we do not rein in global temperature increases at 2 degrees.)
More immediately, in the short run, the replacement of fossil fuel generated electricity with rooftop solar will create many jobs within the US. For details on how a transformation of the economy to one of sustainable “green” technologies will create many more jobs than are lost in the declining industries, see Robert Pollin Greening the Global Economy (Cambridge, MA: MIT Press, 2015)
The October 30 show informs us that the utilities that profit from selling their electricity are faced with a major problem – solar is very popular. In response, they have developed an unfortunately effective tactic. They sponsor referenda that seem to be supporting solar energy but in fact introduce significant financial disincentives for homeowners who wish to install rooftop solar.
This successful bait and switch tactic is exactly what is happening in Florida. Voters in Florida face a ballot measure that appears to be a referendum in support of solar energy but one that actually puts controls on ways rooftop solar can be made affordable to homeowners. There is even a clip in the show where two ordinary citizens are confronted with the wording of the bait and switch ballot and admit it seems to them to be in support of solar energy.
[For details see Mary Ellen Klass “Insider Reveals deceptive strategy behind Florida’s solar amendment,” Miami Herald, October 18, 2016 available at http://www.miamiherald.com/news/politics-government/election/article109017387.html]
Meanwhile, in Nevada, the Public Utilities Commission has approved a cut in the amount homeowners get for selling their excess electricity to the utilities and also raised the fees for connection to the grid. The result is that profitable solar installation companies have been virtually driven out of business.
[For details, see Daniel Rothberg “Are brighter days ahead for Nevada solar customers?” Las Vegas Sun, March 28, 2016, available at http://lasvegassun.com/news/2016/mar/28/are-brighter-days-ahead-for-solar-customers/ and Jacques Leslie “Nevada’s Solar Bait-and-Switch” New York Times, February 1, 2016, available at http://www.nytimes.com/2016/02/01/opinion/nevadas-solar-bait-and-switch.html?_r=1 The show also reveals the ties between Nevada Governor Brian Sandoval and the electric utilities lobbying groups. The Governor has appointed the members of the Public Utilities Commission who approved these changes. In an unfortunate example of a “hero” being revealed to have feet of clay, one of the major investors in the utilities and therefore a supporter of the bait and switch tactic is none other than Warren Buffet through his company Berkshire Hathaway.]
Rules such as those enacted in Nevada and referenda such as those on the ballot in Florida are the brainchildren of an organization known as ALEC – the American Legislative Exchange Council, a business oriented lobbying group that writes laws to be rubber stamped by Republican controlled state legislatures. They are doing the bidding of the Koch brothers and everyone else who does not want to see serious climate change policies enacted – policies that just might cut into profits in the many fossil fuel industries that they control.
[For details see “ALEC exposed” by the Center for Media and Democracy at http://www.alecexposed.org/wiki/ALEC_Exposed]
Watch this program on October 30 or catch it streamed after that from the National Geographic Channel. Learn about what’s happening ---- and get angry.
Michael Meeropol is professor emeritus of Economics at Western New England University. He is the author (with Howard Sherman) of Principles of Macroeconomics: Activist vs. Austerity Policies.
The views expressed by commentators are solely those of the authors. They do not necessarily reflect the views of this station or its management.
