It seems you're using an old browser. In order to view this site correctly, we advise you to upgrade your browser, or try the free Mozilla Firefox.

Print Email

Business

Power in play

The struggle is on to shape Michigan’s electric future

SEE ALSO
More Environmental Stories

Majority rules (10/6/2010)
Makeup of state supremes could strengthen views on environmental laws

Glow job (8/25/2010)
Plan to ship radioactive materials on Detroit River raises concerns

How green is my campus? (8/25/2010)
Student dispatches from five area universities that gauge the new 'greening'

More from Curt Guyette

Pot shots (8/11/2010)
Legality of medical marijuana ordinances questioned

Block out (7/28/2010)
Dealing with a deepening foreclosure crisis

Crude awakening (7/14/2010)
Proposed pipeline would connect Canada and Texas; Detroit protesters say the issue is here too

 

Published 3/21/2007

Talk to the experts and this much quickly becomes clear: There is no status quo when it comes to Michigan and electricity. Things are changing, no matter what.

Gov. Jennifer Granholm talked about the issue in this year's state of the state address. The Michigan Legislature will soon debate the merits of at least two bills that would set minimum benchmarks for the amount of energy provided by renewable resources such as solar, biomass and wind energy.

And the group Environment Michigan recently released a provocative report that makes the case for pursuing an even more aggressive approach to mandating both the use of green power sources and conservation measures. The way activists see it, such a stepped-up approach makes sense on both environmental and economic grounds.

You probably don't give the whole issue much thought. Flip the switch and lights come on. That's what matters. That and the monthly reminder from the power company that there's a price to be paid for illuminating the night.

But that price is going to increase. For one thing, to address global warming, the amount of greenhouse gases produced by burning carbon-based fossil fuels must be reduced.

Consider this statement included in "A Call for Action," a recent report by the United States Climate Action Partnership:

In June 2005, the U.S. National Academy of Sciences joined with the scientific academies of other countries in stating that "the scientific understanding of climate change is now sufficiently clear to justify nations taking prompt actions." Each year we delay action to control emissions increases the risk of unavoidable consequences that could necessitate even steeper reductions in the future, at potentially greater economic cost and social disruption. Action sooner rather than later preserves valuable response options, narrows the uncertainties associated with changes to the climate, and should lower the costs of mitigation and adaptation. For these reasons we ... recommend the prompt enactment of national legislation in the United States to slow, stop and reverse the growth of greenhouse gas emissions over the shortest period of time reasonably achievable.

Now, before you go writing that off as typically alarmist rhetoric from Birkenstock-wearing environmentalists who are again promoting a green agenda regardless of the cost to America's economy, consider exactly who belongs to the coalition that's behind this report. For starters there's North Carolina-based Duke Energy, one of the largest electric power companies in the United States. Then there's California's PG&E, which supplies energy to about one in every 20 Americans. There's also oil giant BP, along with Alcoa and General Electric, DuPont and several companies that no one ever accused of being havens for granola-eaters. Granted, such groups as the Natural Resources Defense Council are also on board, but their presence only lends credibility to the call for action being made by these industrial giants.

At this point the issue isn't whether action needs to be taken; instead, the debate is focusing on the form that action should take. There is much talk of a carbon tax. That would be a straight-out penalty to make burning fossil fuels — be it the gasoline you pump into your car's tank or the coal being burned by your local utility — more expensive. Others are advocating a "cap and trade" system that provides financial rewards for those industries that do the best job in reducing greenhouse gas emissions and penalizes those that fall short.

A big question is whether the state and its electric utilities will cut emissions by relying primarily on updated versions of what's powered us in the past — that would be coal, or possibly a nuclear plant, filling the states future electricity needs.

Or will there be an increased reliance on renewable resources — solar, biomass and particularly wind energy to help us keep the lights on and factories humming? And where, exactly, does conservation figure into the mix?

But it goes even further than that. With the state's economy reeling and the auto industry shedding workers and closing plants, more than a few people are asking whether a commitment to green energy and conservation can be used as a catalyst for creating large numbers of new jobs and reviving Michigan's flagging fortunes.

'Behind the curve'

"We could become the alternative energy state," says Mark Beyer, spokesman for the Detroit nonprofit NextEnergy.

Founded in 2002 with a $30 million grant from the Michigan Economic Development Corporation, NextEnergy opened its 45,000-square-foot research-and-development complex near Wayne State University two years ago.

When the facility opened, with its 80-seat auditorium and offices and research labs, the goal, said CEO James Croce, was to position both Detroit and Michigan at the "focal point of the emerging alternative energy industry."

Much of NextEnergy's efforts are focused on working with the Big 3 automakers to develop alternative fuels such as biodiesel, hydrogen and ethanol. But it offers alternative energy companies of all stripes research facilities, office space and access to government funding sources and private venture capital.

Among its many areas of interest are generating electricity through renewable resources. And when it comes to the desire to lead the nation in that arena, Michigan has some competition.

"There are 49 other states that are making the same claim," says Barry Rabe.

A professor at the University of Michigan's Gerald R. Ford School of Public Policy, Rabe has paid close attention to work being done on the state level to address the problem of greenhouse gas emissions and climate change. In a report released by the Pew Center on Global Climate Change last year, Rabe investigated the implementation of what are known as "renewable portfolio standards," or RPS, in various states.

"The role of American state governments in developing policies to reduce greenhouse gases continues to expand at a steady clip, measured both in the sheer number of policies and their potential impact on emissions," wrote Rabe in the report "Race to the Top."

An RPS, he explained, is a policy mandating "that utilities operating within a state must provide a designated percentage of power from renewable sources as a portion of their overall provision of electricity."

It's not exactly a new idea. Iowa became the first state to enact an RPS in 1991. Currently, 23 states and the District of Columbia have such standards.

Michigan isn't one of them.

"We're behind the curve," says Martin Kushler, a utilities expert for the nonprofit American Council for an Energy Efficient Economy (ACEEE) and a former staff member of the Michigan Public Service Commission, the state regulatory agency that oversees public energy, communication and transportation services.

State Sen. Patty Birkholz, a Republican who represents portions of Allegan, Barry and Eaton counties, has introduced legislation that, if passed, would require that at least 10 percent of the power provided by Michigan utilities come from renewable resources by the year 2016.

That same standard was recommended in the "21st Century Energy Plan" drafted earlier this year by Michigan Public Service Commission Chairman J. Peter Lark. That plan has been embraced by Gov. Granholm.

As it is now, only 3 percent of Michigan's electricity comes from renewable resources.

"A required RPS is a win-win proposition," reported Lark. "It will encourage the creation of in-state jobs, reduce pollution and dependence on fossil fuels, diversify Michigan's fuel mix, and provide a measure of protection from potential expensive emissions regulations."

State Sen. Jim Barcia, a Democrat from Bay County in Michigan's thumb, is expected to introduce RPS legislation of his own soon — perhaps as early as this week. Details were still being finalized as this story went to press, but Barcia tells Metro Times that his bill will be more "ambitious" than the one authored by Birkholz. He anticipates seeking a standard of perhaps 20 percent renewable energy by 2020.

Barcia also signed onto Birkholz's legislation, and says it probably has the best chance of making it into law, but he says his bill is an attempt to push the issue forward.

The nonprofit group Environment Michigan, in its recently released report "Energizing Michigan's Economy," is calling for an even greater piece of Michigan's electricity to come from renewables. The group advocates setting a standard of at least 25 percent of the state's electricity coming from green sources by 2025.

It's the greenbacks

Although renewable portfolio standards promote green energy, U-M's Rabe found that environmental concerns aren't the primary force driving their creation.

"States are clearly drawn to the RPS concept for multiple reasons," he reported. "Economic development opportunities are paramount in all cases, as a growing set of states see significant job and investment opportunities in expanding their base of renewable energy. In turn, states envision advantages in creating a more reliable supply of electricity for coming years, a direct response to mounting concerns over both the price and availability of more conventional energy sources such as natural gas. Environmental factors, including reduction of conventional air emissions as well as greenhouse gases, figure differently in various cases but are clearly seen as a secondary driver in many states."

As the executive director of Environment Michigan, Mike Shriberg doesn't worry that economic issues are the primary force driving states to adopt renewable energy standards. In years past, he explains, environmentalists were often left to fight an uphill battle, trying to convince policymakers to go green based on factors that couldn't easily be quantified.

If mining operations happen to be blasting off mountain tops in West Virginia because that's the cheapest way to extract coal, well, a lot of politicians and captains of industry — and much of the public in general — apparently think that's an acceptable price to pay if it keeps factories cranking out product and household electric bills manageable.

As for the health consequences of breathing polluted air, the asthma attacks and lung cancers that result, or the developmental disabilities associated with eating fish contaminated with mercury spewed from smokestacks — well, proving cause and effect can be difficult, especially when you have well-funded special interests on the other side calling your claims into doubt.

But when you are able to use dollar signs as a weapon instead of something you have to protect yourself against, things get a lot easier.

And that's the position Shriberg says he now finds himself in.

The economic imperative for pushing the green energy envelope further than the state's policy makers appear willing to go — at least for the time being — are laid out in the recently released report "Energizing Michigan's Economy."

One number Shriberg would like you to consider is this: $18 billion.

That's how much money Michiganders sent to other states and countries in 2004 to pay for the coal, oil, natural gas and uranium imported to meet our energy needs, Environment Michigan reported.

By increasing reliance on renewable energy produced in state, we keep more of those dollars here.

But there's more to it than that.

Growing jobs

Shriberg works out of a warren of drab offices on the second floor of a nondescript brick building in downtown Ann Arbor, sharing space with his fellow Environment Michigan and Public Interest Research Group in Michigan (an affiliated nonprofit geared toward consumer protection). It's a long way aesthetically from the gleaming new digs enjoyed by the folks at Detroit's NextEnergy.

But they and others — including Gov. Granholm, the PSC's Lark and such legislators as Birkholz and Barcia — all seem to be reading from the same page when they talk about the need for Michigan to greatly expand its commitment to clean energy.

What they say is that an RPS doesn't just make sense from an environmental perspective, or that it helps keep more of our energy dollars in the state. Beyond those factors is the potential to spur new business here.

As an example, they point to Pennsylvania, another Rust Belt state that's seen more than its share of economic difficulties in the recent past.

The Keystone State enacted an RPS in 2004. Its target is to have 18 percent of its energy come from renewable resources by 2020, although its definition of renewable includes the incinerated municipal trash, waste coal and other sources that stir the wrath of environmentalists.

But even before the RPS was enacted, the state had begun generating some electricity through wind power, a commitment strengthened by its new energy policy.

That, combined with tax credits, helped convince Spain's Gamesa Corporación Tecnológica — the world's second largest manufacturer of wind energy turbines — to invest more than $100 million in Pennsylvania, building four factories there and creating nearly 800 jobs.

Contrast that scenario to one pointed out by Michigan legislator Barcia, who says that during the mid-1990s, he watched as a Bay County company that made high-tech wind-turbine blades was purchased by General Electric. The Michigan plant was shut down and operations moved to California.

Most of the turbines GE sells are used in California and Hawaii, Barcia explains. With no customers here, it only made sense to forgo shipping costs and move production to the West Coast.

A few hundred good-paying jobs were lost as a result.

Here's the real irony: Michigan is ranked as the 14th windiest state, while California is 17th. Even so, California has thousands of wind turbines while Michigan has exactly three.

On the other hand, if Michigan's potential for wind power were fully developed, more than 8,000 jobs would be generated in the state, according to a 2004 report by the Renewable Energy Policy Project, a Washington-based alternative energy advocacy group.

Not that wind power is without controversy. As U-M's Rabe reported in "Race to the Top," Boston-based Cape Wind Associates proposed installing a $770 million wind farm on the waters of Nantucket Sound. But largely negative local response — fueled by concerns about the appearance of the turbines and their potential affect on tourism, boating and property values — has stalled the project.

The Environment Michigan report envisions offshore wind farms as well. There are certainly no guarantees similar opposition wouldn't erupt here if attempts were made to put wind turbines on Lake Michigan.

There are other problems with wind as well. As DTE's Lauer points out, winds tend to die down on the hottest days — and those are the days when air conditioners crank up and electricity demands peak. That means wind-generated electricity would be least available when most needed.

On the other hand, the cost of wind-generated electricity has dropped dramatically — about 80 percent in the past 20 years — and is expected to fall even further as technological advances continue. And the price of fossil fuels, as was pointed out earlier, is almost certain to keep going up.

Moreover, no one is suggesting that the state's future energy needs should be derived from one source.

Mark Bauer is one person putting that philosophy into action.

Power points

Bauer, who lives near Grand Rapids, installs residential solar, wind and geothermal systems. In the business for about four years, he says that a year ago he was getting maybe five phone calls a month from potential customers. Now, it's more like 10 calls a day.

"People are starting to connect the dots," he says.

They see energy prices going up and are beginning to realize how renewable energy will pay off in the long run.

Bauer attends homes shows and industry conferences, such as one held recently in Lansing, to discuss the relationship between green energy options and Michigan's agriculture sector. That conference was attended by about 300 farmers, academics, state bureaucrats and vendors such as Bauer.

Interest in his services was high, he says.

"The thing about renewable energy, " he says, "is that it's infinite and nonpolluting. Why wouldn't you want to harness it?"

Then he answers his own question: "Because big business controls energy, and those businesses are fossil-fuel centric."

He talks about the ongoing difficulty he has navigating power-company red tape as he tries to get his customers connected to the electric "grid" so that they can sell excess power to utilities.

One of the things that concerns Bauer about the state establishing an RPS is that it wouldn't necessarily solve the access problem.

It's a legitimate concern, says Shriberg.

But, despite the problems, Bauer, like others interviewed for this article, sees Michigan's dormant potential.

It's not just the wind and the sun and the promise of power that they hold. It's also in the idled factories and the technically savvy workers who've been laid off and can't find jobs in this state.

It's the same potential — along with the brainpower and research capabilities contained at the state's world-class universities — seen by the activists at Environment Michigan and their more buttoned-down counterparts at Detroit's NextEnergy.

Creating alternative sources of energy, however, is only one aspect of Environment Michigan's policy recommendations. The other is reducing electricity use through conservation and energy efficiency programs.

Cut and save

As envisioned by Environment Michigan, the state can go a long way toward solving its energy needs by reducing demand. Because of setbacks engineered in the mid-1990s under the Engler administration, Michigan has a lot of easy options when it comes to cutting demand.

Under the plan being embraced by the Granholm administration, an investment of $68 million a year is being proposed. Environment Michigan would more than triple that, funding efficiency programs to the tune of $225 million annually.

It's a huge sum, but when spread out among the state's millions of utility customers, the bottom line works out to be an average increase of $1.50 to monthly bills.

As Mark Bauer says, "That's chump change."

And, if the plan were fully implemented, Environment Michigan contends, the state's electricity demands would level off and the cost of building at least one new power plant— which would be borne by ratepayers — could be forestalled.

The money would be used to subsidize improvements such as added insulation, upgraded windows and high-efficiency appliances.

DTE's Lauer cautions that there might be problems with this approach, saying that low-income households are the least likely to make such investments and could be hurt in the long run as a result if prices go up.

Shriberg disagrees, saying that in states where such programs have been initiated, households across income levels participate. Moreover, it's possible to provide higher levels of subsides to low-income households.

One problem that both agree exists is that, absent any structural changes, energy-efficiency programs cause utilities to take a financial hit; they don't make any money from electricity that's unsold. Both, however, say there are ways around that problem.

Shriberg says his organization is working on a package of legislation — one piece would upgrade the state's woefully inadequate building standards — and is talking with several legislators in an attempt to find someone to introduce the bills. That's expected to happen within the next few weeks.

The Detroit Regional Chamber of Commerce is pretty much guaranteed to oppose any legislation drafted by Environment Michigan. Melissa Trustman, senior director of government relations for the chamber, made a blog posting calling the position staked out in the group's report "madness."

As for the Birkholz legislation, Trustman offered a lighter touch, telling Metro Times that the chamber would prefer to see the free market determine the types of energy the state's consumers have access to, and that alternative sources need to be economically competitive. Meanwhile, DTE is working on a program that would allow customers to pay a premium for power generated by green sources.

As for the way the state's two major utilities — which carry considerable clout in Lansing — view RPS legislation, they may not want to shoot as high as Birkholz is aiming, and certainly wouldn't go for what Environment Michigan is proposing, but it doesn't appear as if they are going to be complete obstructionists either.

DTE's official position is that it would "support, as one component of a comprehensive state energy plan, a new law to establish a well designed mandatory Renewable Portfolio Standard obligating all Michigan retail electricity suppliers to include a percentage of renewable energy in their power portfolios.

"DTE Energy believes a well designed RPS would encourage investment in renewable energy in our state. We would support a RPS that enables the development of renewable energy in a meaningful manner within a reasonable time frame."

And the consensus among people interviewed by Metro Times is that the support for change isn't just lip service.

"For a number of reasons, the prospects for serious energy efficiency are better now than they have been for a decade," says Marty Kushler, the former Public Service Commission staffer who now works for the nonprofit ACEEE. "And there's pretty good consensus that we need more energy sources. I deal regularly with most of the key players, and I can see the dim outlines of a potential compromise not far off. A lot of things are coming into alignment that will lead to energy efficiency and renewables as part of Michigan's electric future."

If he's correct, then what remains to be decided will be how big a role that will be.

We're at a pivotal point. It's time to pay attention.

Curt Guyette is Metro Times news editor. Contact him at 313-202-8004 or cguyette@metrotimes.com.

blog comments powered by Disqus

> PLACE CLASSIFIED AD