A New Energy Deal
This post is a piece Brendan Haley and I have been working on for some time:
A New Energy Deal
This month, as settlement payments for the 2010 Gulf of Mexico oil spill reach $1 billion, part of the financial aftermath of the worst offshore oil spill in U.S. history, a ship powers ahead through the black sheen, on its way from northern Colombia to Halifax, Nova Scotia. The ship is laden with coal from the infamous Carrejon mine, which destroyed a traditional farming community to get to the cleaner burning coal.
It’s another day in the carbon economy.
As successive state, provincial and federal governments trumpet their latest sustainable prosperity plans, overall Canadian progress on renewable energy is slow to stagnant. Renewables require a massive transition of infrastructure, and that’s too expensive for a power-hungry continent. Politicians foolish enough to talk of initiatives that could result in energy-price increases (paging Stéphane Dion) risk their careers and their parties’ aspirations for political power.
That’s a shame, because moving quickly to 100% renewables is not only achievable, it’s a natural policy fit for centre-left political parties.
Or, it would be, if they paid attention to the legitimate concerns voters have about energy costs. While many environmentalists write off these concerns as irrational and shortsighted, the thousands forced to choose heat over healthy food each winter would disagree. As Yvonne Carvery, a senior with a disability, said in her 2007 testimony to the Nova Scotia Utility and Review Board, “I live very economically and often do without luxuries like fresh fruit and vegetables…in order to make sure that my electricity bill is paid on time.”
It’s not only low-income Canadians who are concerned that renewables will make their energy needs inaccessible. It was the middle class who, worried that his complex carbon-pricing scheme would hit their pocket books hard, cost Stéphane Dion his Prime Ministerial aspirations.
So how can renewable energy policies possibly fit into any political party’s election-speak? Centre-left politicians – and the bureaucrats who work for them – have to appeal to our bleeding liberal hearts, the way Roosevelt once did with his New Deal.
A viable New Energy Deal would include three key components:
1) Energy conservation options that everyone, from all income brackets, would access.
2) It would democratize energy production opportunities, so that many more individuals and communities could be energy producers and benefit from higher energy prices.
3) And an effective New Energy Deal would have to include an energy safety net for those in need.
Fragments of such a plan exist in relatively progressive jurisdictions. There are examples throughout North America that show it is possible to get beyond the energy price vs. environment dichotomy. The trick is scaling those local examples into a national program.
1) Universal Energy Conservation
Regardless of the technology, we need to curb our energy demand to avoid catastrophic climate change. Mass energy efficiency entails a new infrastructure for households and businesses, including energy audits, information and financing options, and available skilled labour.
The late Blair Hamilton, one of North America’s leading experts and speakers on energy efficiency, used to implore his audiences, “Imagine if improving your energy efficiency was as easy as filling up your car or turning up the heat.” He wasn’t just being rhetorical. Hamilton used to run the Vermont Energy Investment Corporation, one of the leading efficiency programs in North America, and one of the most accessible for all income levels.
Here in Nova Scotia, we now see Efficiency Nova Scotia doing as well as Vermont in involving low-income households in their programming – but because of the corporation’s good will, not because of any targets or laws.
When Hamilton asked his audience to imagine such a world, he was saying that we’ll know the change in energy cost politics has come when citizens demand these energy efficiency services rather than price reductions. Only a few cutting-edge energy agencies and utilities have tapped into the growing demand for efficiency, mostly in the United States. Nova Scotia has just set down this path with the establishment of Efficiency Nova Scotia.
No province in Canada should be without a one-stop-shop efficiency agency where people can get individualized information on how to save money by conserving energy. The most stable energy efficiency programs, such as those run by Efficiency Vermont and the Oregon Energy Trust, have been funded via a surcharge on energy bills. Dedicated revenue from energy surcharges are used to build an efficiency infrastructure. These agencies have created equity targets to ensure that all sectors benefit from efficiency savings - everyone from low-income households to small businesses to large industrial consumers. These targets ensure that a minimum percentage of their energy savings happen in low-income households.
Canadians living in energy poverty, who have an unmanageable combination of low incomes and high-energy costs, are frequently left out. These households are most in need of energy efficiency improvements, but they can’t afford any of the upfront costs required. To achieve energy savings in these households, upgrades must be provided at no cost. The energy efficiency programs run by provinces or utilities for low-income households tend to offer shallow measures, easy and inexpensive improvements that have correspondingly small impacts, like replacing light bulbs. Efficiency NS, however, is now doing free, deep retrofits.
Nationwide, we need deeper measures, full retrofits including full insulation and efficient lighting, appliance and heating systems, to bring low-income households out of energy poverty. Meg Power, President of Economic Opportunity Studies in Washington DC, simulated that a 40% efficiency improvement amongst low-income households in the US could bring half the people living in energy poverty out of it.
2) Democratizing Energy Production
Compared to carbon-based and nuclear energy, renewable projects tend to be smaller in scale, and are more workable when delivered by smaller organizations directly serving communities they know well. As a result, the increased per unit energy costs associated with renewables can actually benefit those communities. “In Ontario,” explains Kristopher Stevens, director of the Ontario Sustainable Energy Association, “with the opportunities provided by the Green Energy Act, everybody is becoming a conserver, a generator, and an entrepreneur.”
In Nova Scotia we have the Community Feed-in Tariff Program, which according to the NS Department of Energy, “is designed for locally-based renewable electricity projects. To be eligible, the projects must be community-owned and connected at the distribution level (i.e., typically under 6 MW).”
Germany and Denmark have become renewable leaders using “feed-in tariffs,” guaranteed prices that guarantee cost recovery and realization of a reasonable profit for renewable energy producers. Their citizens pay far a premium for renewable energy, yet they do not suffer the energy poverty many Canadians and Americans know. This lack of energy poverty is partially the result of mass ownership. About half the population of Denmark has an ownership share in a renewable energy project, meaning they benefit from high-energy prices.
As a result of feed-in tariffs in Ontario, Stevens expects “a mixture of individuals producing their own renewable energy at home, energy co-ops run by farmers and First Nations Band Councils, and local communities producing their own energy supported by private investors.”
As more citizens establish interest in being energy generators, and not just consumers, voters will no longer demand rock bottom energy prices. However, not everyone will be a power producer. Therefore, universal energy conservation and support for those facing unreasonable energy costs remain crucial components of an effective New Energy Deal.
3) Energy Safety Net
An energy safety net is essential for those living in energy poverty. The Low Income Energy Network, an Ontario-based NGO dedicated to universal access to adequate affordable energy, assesses the extent of energy poverty by an individual’s “energy burden,” which is measured by the percentage of household income paid for power. Households have an unsustainable energy burden if they pay more than 6% of income for the energy they need.
According to Green Communities Canada, in 2003 the average household spent 4% of pre-tax income on fuel and electricity, while those in the lowest income quintile spent 13% of their income.
Energy poverty advocates in Ontario, Nova Scotia and many states have proposed Universal Service Programs before their utility boards. The fundamental component of all these proposals is a credit on monthly energy bills to bring low-income households back under an energy burden threshold. Households spending 12% of annual income on energy would receive a credit to reduce energy costs to 6% of income.
Utilities that have implemented energy cost assistance programs have saved money because there is less need to track down customers who default on their bill payments. But a Canada-wide energy safety net has never made any federal party’s election platform. Politicians and utility boards still focus on energy price, not energy security.
Even Ontario’s Green Energy Act, arguably the nation’s most progressive piece of energy legislation, went no further than introducing emergency energy funds for people with crippling back-payments due to the local utility. When renewables inevitably increase energy prices in Ontario the poor will be left behind with no safety net. Fear will abound and renewable energy will be blamed.
A New Energy Deal
The current energy paradigm tries to give energy security by protecting passive consumers from monopolistic energy utilities. In this system, the lowest energy price is the law. Enter the hippies and social entrepreneurs with their schemes to jack up energy costs with new-fangled green technologies, and you have instant conflict.
A New Energy Deal that focuses on renewable energy security, with a plan for universal energy conservation, access to renewable production opportunities for communities and entrepreneurs, and an energy safety net for the poor, would make energy cost politics work for the environment and citizens.