NEWS

Roy Thilly: We need quick action on climate change

Roy Thilly
Advocate correspondent

Within the past few months, former Republican Secretary of the Treasury Henry Paulson and 16 former generals and admirals have issued stern warnings about the serious economic and national security risks America faces by failing to address climate change. These pleas come from hard-nosed business and military leaders, not normally associated with environmental issues.

Last December, The New York Times reported that the five largest oil companies, and many other major corporations, are assuming a carbon cost in their strategic planning. Business leaders recognize that climate change is happening and governmental action, while delayed, is likely. They are taking action now to lessen the risks they face.

These reports, and the Environmental Protection Agency’s recently proposed rules designed to reduce carbon emissions from new and existing power plants that are a major cause of climate change, raise important questions for Wisconsin. What actions are we taking to address our contribution to climate change and to reduce the risks Wisconsin faces from likely carbon regulation? Are our emissions rising or falling? How does our economic risk from carbon regulation compare to other states?

Nationally, about 32 percent of the emissions driving climate change come from electric generation, with the rest from transportation, buildings, agriculture and industry. More than 40 percent of Wisconsin’s emissions come from electric generation because we rely on coal, and that percentage is increasing. This means that placing a cost on carbon from power plants will affect Wisconsin to a greater degree than many other states. This is true whether regulation takes the form of the complex rules the EPA is proposing in the absence of responsible congressional action or if a simpler carbon tax or cap-and-trade system is adopted instead.

EIA data shows that Wisconsin’s carbon emissions in 2011 were down substantially from our high in 2005. In 2012, the news was even better. Our power plant emissions were 11 percent lower than in 2011 due primarily to low natural gas prices due to hydraulic fracturing (fracking). Burning gas produces about 50 percent of the carbon emissions of coal and power plants are run based on fuel costs. When gas is cheap, gas plants run more and coal plants run less.

Since then, the news has been bad. Our gains are quickly being reversed, leaving Wisconsin more at risk than other states.

In 2013, electricity produced from coal was up 5 percent nationally due mostly to a rise in gas prices. In Wisconsin, coal use was up over 24 percent. Rising gas prices shifted more of our electric output to coal than in states without much coal generation.

More important, in May 2013, the Kewaunee nuclear power plant was shut down due to low market energy prices, almost 20 years before its license was to expire. This was one-third of our nuclear fleet that runs around the clock, producing a great deal of carbon-free energy. That decision may have made sense for the plant’s Virginia owner, but it has hurt Wisconsin. Virtually all of Kewaunee’s energy has been replaced by coal generation. The result more than negates the emission reductions Wisconsin achieved through its 10 percent renewable energy requirement. Kewaunee was closed for only about half of 2013. This means that our carbon emissions are likely to rise dramatically again in 2014.

This situation demands an immediate strategic response. It also requires that we recognize the facts: Nuclear makes a big difference; relative fuel costs matter as shown by 2012’s low gas prices; and, renewable energy matters.

To mitigate risk, we need to lower our power plant emissions now to meet aggressive, realistic targets before federal regulation hits. The key components are obvious: a much more aggressive conservation and efficiency policy, targeted to reduce utility bills and help industry stay competitive; an annual increase in renewable energy production of at least 1 percent a year; imposition of a carbon emissions fee to fund efficiency programs and advance new technologies; and replacement of our oldest, dirtiest coal plants with highly efficient gas-fired power plants that, where feasible, also produce steam for industrial use or central district heating. And we should explore bringing Kewaunee back for its license life.

These actions, coupled with much better mass transit, will pay large dividends. A failure to act will leave us in very vulnerable economic position. Our moral responsibility to future generations and our economic self-interest coincide. The adverse impacts of climate change on our streams, lakes, forests and farmland affect us all. So will the economic peril of being far behind the curve when carbon regulation finally arrives.

Roy Thilly is the former chief executive of WPPI Energy, a member of the board of the North American Electric Reliability Corp., and recently appointed to the Electricity Advisory Committee to the Department of Energy by the secretary of energy.