A very important look at the policy of electrification

BY FREDA MIKLIN
GOVERNMENT REPORTER

On March 29, the Common Sense Institute hosted Evelyn Lim, its Mike A. Leprino Fellow for 2022, to talk about the interaction between energy policy and the U.S. economy. Ms. Lim is the director of policy and research at the Cornerstone Institute, having previously served as U.S. Department of Housing and Urban Development (HUD) administrator for the six states that comprise Region Eight. In March 2020, she was detailed to lead the COVID-19 relief efforts for the entire HUD department and support former HUD Secretary Dr. Ben Carson in his role on the Coronavirus Task Force. Prior to that, Ms. Lim was Deputy Chief of Staff at the Department of Homeland Security following a stint in the White House under President George W. Bush as Director of Transportation Security Policy. She holds a J.D. from DePaul University and clerked for a federal district court judge. 

Evelyn Lim, is the 2022 Mike A. Leprino Fellow of the Common Sense Institute, focused on the free enterprise system.

Ms. Lim framed her talk with a quote from U.S. Secretary of Energy Jennifer Granholm, “The future of energy security, the future of economic security, the future of national security, the future of climate security –– these are all inextricably bound together.” Her focus was on how the principles of free enterprise can be applied to Colorado’s energy sector to improve its effectiveness and efficiency. 

Looking through a worldwide prism, Lim pointed out that, “Cheap and reliable energy is the key to economic growth, security and general prosperity throughout the world. There are 7.5 billion people in the world and 1.1 billion do not have any access to energy, while 2.9 billion still use solid fuels, such as wood, charcoal, coal and even dung for cooking and heating.” She continued, “Just the particulate matter generated by the use of these solid fuels leads to two to five million deaths per year, mostly among women and children, because they do the cooking in these societies…Access to natural gas and propane would be life-changing for these societies.” 

Continuing with that analysis, she explained, “As countries around the world have increasingly adopted polices to reduce carbon emissions to protect the environment and address climate change, that goal has conflicted with the goal of providing cheap energy to the billions of people who have none.” Lim talked about Power Africa, a program launched by President Obama back in 2013. Its goal was to “double access to power in Sub-Saharan Africa,” where more than two-thirds of the population did not have electricity. Lim said, “The Center for Global Development estimated that more than 60 million more people would have gained access to electricity if they could have invested in natural gas, not just renewables.” 

This diagram shows the baseline of Colorado’s greenhouse gas emissions from 2005 on which reduction targets were based. Today, emissions from transporta- tion exceed those that emanate from electricity generation.

From a global perspective, Lim shared that in the 15 years leading up to 2020, worldwide carbon emissions increased 20%, with China accounting for 92% of that increase. Continuing down that path, in 2020, China built three times as many new coal plants than the rest of the world combined. They are still building infrastructure projects (and relationships) all around the world, which Lim explained, is “increasing their geopolitical influence, obviously,” apparently without concern that, “many of these projects are associated with greenhouse gas emissions that will hinder overall reductions of global emissions for decades.”

Lim brought the conversation around to political reality, noting that, while “climate change is a global challenge,” policies too often depend on politics. She pointed to the Paris Climate Agreement that President Obama entered into in 2015, President Trump withdrew from in 2017, and President Biden re-entered in 2021 as an example of how energy policy is “a swinging pendulum” that is unpredictable because of changing politics. 

In 2021, oil and gas prices were skyrocketing in Europe as nuclear and coal plants were being decommissioned to reduce emissions, Lim reported. There was a wind drought that lasted for months. Asia, recovering from COVID, was buying large amounts of natural gas at a premium. The result was, “The European race to renewables manifest in the perfect storm,” and the beneficiary was Russia. “Europe’s energy crisis of 2021 is really a cautionary tale about the race to decarbonization that does not adequately weigh contingencies.” When Putin invaded Ukraine on February 24, 2022, she said, Europe was in the position of importing over 40% of its gas from Russia and in the situation of consuming five times as much gas as it produces, whereas Russia produces quadruple the amount of natural gas that it consumes. 

Bringing the conversation back to energy policy in Colorado, Lim said that our state ranks 24th in emissions in the U.S. and, “If the state were to meet its emission goals, the reduction would amount to 2.1% of current U.S. emissions and 0.3% of global emissions.” Regardless, the goal in this state has long been to move to renewable energy and away from fossil fuels.

The Colorado general assembly passed HB19-1261 in 2019 that set goals of reducing carbon emissions by 26% by 2025, 50% by 2030 and 90% by 2050. “In addition, Governor Polis set a goal of 100% renewables by 2040,” Lim pointed out. To accomplish this, the governor’s plan was to “1) transition from coal to renewable energy; 2) reduce methane emissions from oil and gas development; 3) move toward electric cars and buses; 4) make changes to transportation planning and investment and land use planning to encourage alternatives to driving; 5) increase building efficiency and electrification; 6) reduce methane from landfills, wastewater and other sources.”

While those are positive goals, there are challenges to them that need to be acknowledged.  Although Governor Polis set a goal of 940,000 electric vehicles (EVs) on the road in our state by 2030, only 6% of new cars sales in the U.S. are electric vehicles today and in Colorado, that number is 3%. As consumers are well aware, EVs are expensive (average cost = $51,000). Drivers rightly have “range anxiety,” because the current maximum distance one can drive without charging one’s battery is 200 miles, “so you can’t drive from Denver to Grand Junction without recharging,” and there is some question about whether you’ll find a charging station enroute. 

She continued, explaining that installing a battery charger in one’s home costs an estimated $30,000 to $100,000. In addition, under present conditions, getting the minerals needed to create the batteries that power EVs increases our dependence on China, which is, “less safe, less ethical, and less environmentally conscious,” without even considering the present geopolitical situation. China presently “dominates the global advanced electric battery supply chain. As the U.S. pushes toward a green energy revolution and increases mandates for EVs, China has increased its mining and processing of the raw materials needed for solar and wind-powered generation systems and batteries. China is the leading supplier of rare-earth minerals, copper, lithium, cobalt, and nickel. These are all used to manufacture batteries. These minerals are extremely expensive, difficult to extract, and often done so in a way that’s horrible to the environment, utilizes substandard work conditions and often includes child labor.”

There is also the matter that, Lim said, “Overreliance on China to supply these critical materials creates a national security concern…The World Bank estimates that the growing need for these minerals, cobalt and nickel, as we race to electrification, will increase by 450% by 2050.” In short, the timing of electrification of the energy supply is tied to and dependent on sources outside the U.S. and thus outside our control.

On March 31, when President Biden was announcing the release of oil from U.S. strategic reserves to address high gas prices, he also said, “We will use the Defense Production Act to secure America’s supply chains for the critical materials that go into the batteries for EVs and the storage of renewable energy…We need to end our longtime reliance on China and other countries for inputs that will power the future…to ensure America’s security and tackle climate change.” He also talked about including nuclear energy in the conversation about the future. 

The trend to replace natural gas with electricity resulted in banning of the installation of natural gas in homes in some cities in the U.S., Lim reported. In Colorado, SB21-246, passed in June 2021, requires investor-owned utilities to file an electrification plan to July 2022 and every three years thereafter. In Denver, she reported, the city’s building code requires that new construction must be all-electric by 2030. 

From a free enterprise viewpoint, Lim points out that, “the government is overwhelmingly subsidizing the purchase and use of EVs for people who, overwhelmingly, don’t need it.” According to Lim, the infrastructure bill passed last year by the Congress included $5 billion for EV chargers across the country for long-range trips. Tesla, valued at $800 billion, and other multi-billion-dollar companies who manufacture EVs, can very likely afford to provide the charging stations necessary to make their cars marketable. Instead, said Lim, “the government is spending our tax dollars on charging stations throughout the U.S.” Research tell us, “80% of the people who claim the government subsidy for EVs that began in 2009, had incomes over $150,000, and half are from California.” It will not surprise many to know that the average Tesla owner earns $150,000.

Lim ended with the observation that the overall problem with Colorado’s beneficial electrification plan, from a free enterprise point of view, is that there is a general lack of demand and “the transition is being driven by government policy and regulation rather than a competitive market.” The availability and quality of all-electric appliances is questionable, there are high up-front costs, and they require a complete change in the workforce, including construction workers. Electric retrofits require infrastructure that may not be available in older homes. The instability of policy at both the federal and state level, due to ever-changing political leaders, “hinders growth and innovation,” and “undermines public trust, creating an uncertain environment.” Like President Biden, Lim suggested taking another look at nuclear energy. 

fmiklin.villager@gmail.com