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Tuesday, October 6, 2009

Pass ACESA VII: Cost-Benefit Analysis

50 cents a day, to save America and the planet? Heck, sign me up for a buck-fifty a day; I'll pay Pat and Bob's share as well.

[The seventh and final (!) part of a series based on my conversation with Matt McGovern, Matt McLarty, and Rick Hauffe about America's energy future.]

Assessing the cost of H.R. 2454, the American Clean Energy and Security Act, is not easy. We're talking about the future impact of evolving legislation. As Dr. Lincoln Moses said, "There are no facts about the future." If you want hard-core cost analysis, read the Congressional Research Office's hefty evaluation.

If you want quick numbers on ACESA, the Congressional Budget Office appears to offer a reasonable assessment. Politifact rates CBO's oft-quoted "postage stamp a day" per-household cost as true, while giving a "Pants on Fire" rating to GOP claims of costs seventeen times that amount.

Of course, rate increases are not a unique disadvantage of ACESA. Even if Congress calls it quits and passes nothing this year, electric rates are still on the way up. The City of Madison is facing increases. Black Hills Power wants to jack rates 26.6%. ACESA may cause energy rates to go up a tick in the short term, but according to Repower South Dakota's Matt McGovern, the net increase over twenty years may be only 3 or 4 percentage points more than the rate increases we'll see under the status quo.

So suppose you see ACESA take $15 out of your pocket. What do you get in return?

From a South Dakota perspective, lots. Our state alone could gain 5000 clean energy jobs. And these jobs are bussing tables and hustling for tips. These are manufacturing jobs that will be hard hard to export. These are wind tech jobs like the ones for which Mitchell Tech is training students, jobs that Matt McGovern says can pay six-figure salaries after five years. These are the jobs Knight & Carver in Howard is ready to double or triple given the economic boost that would come from government action like ACESA. And don't forget Howard's other new-energy employer, Energy Maintenance Service, which could probably put more folks to work under ACESA as well.

South Dakota landowners also stand to benefit: all those windmills have to go somewhere. Farmers and ranchers, strike a deal with the wind developers, and you can make thousands of dollars a year from leases and operating fees and still raise corn and cows. South Dakota landowners can also participate in the new carbon credits market.

And why not think big: pass ACESA, boost wind energy, and South Dakota could get to the point where our easily available energy could attract manufacturers who will build their factories right next to our big wind farms. Imagine a rural renaissance, towns doubling and tripling in size all through that big open space between Sioux Falls and Rapid City. Imagine our best and brightest staying in South Dakota because they can find good-paying jobs that make their hometowns better. Would folks in Wessington Springs and Highmore be willing to pay $15 a month to see economic growth like that? I might (and I'm a cheapskate).

You can extrapolate these economic benefits to the whole country. Any net economic cost should be minimal. Despite some hysterical claims from Sarah Palin and Pat Powers, analysis from someone other than a moose hunter indicates ACESA might knock 1% off the gross domestic product... by 2040. With or without ACESA, America's wealth will triple over the next three decades (and I don't know what I'll do with a second couch, let alone a third). Meanwhile, ACESA will help more people get a chunk of that growing national wealth thanks to more job creation in alternative energy than we could get from equivalent investment in fossil fuels.

ACESA's smart-grid provisions also lay the groundwork for a stronger, more efficient power distribution network that will support more economic growth. Right now some portions of our old grid lose 50% of the energy running through the wires. You could compare current electrical transmission to trying to conduct interstate commerce via county roads. Upgrading the power system will be like building an Eisenhower Interstate Highway System for electricity: we'll be able to move more power more efficiently.

I've written seven posts in this series. That's still far too stripped down. Serious energy policy is serious work. It's complicated... which is maybe why we've meandered along since the 1970s, through oil shocks and recessions, without crafting a coherent national energy strategy. The American Clean Energy and Security Act is our closest approach to such a coherent strategy.

It's easy for opponents to beat the drum on a single issue and stoke fears about increased electric bills or some nefarious cabal of evil scientists conspiring to drive us back to the Dark Ages (seriously, Bob?). But look at the big picture. ACESA is a policy that works. It applies a tested market mechanism for reducing pollution. It strengthens our national security by challenging those pesky Chinese in the key manufacturing sector of the 21st century. It promotes competition and invention and seizes a historic moment to boost the production of sustainable domestic energy production. It even embraces conservative ideals by helping us conserve energy resources.

ACESA isn't perfect. No legislation is. But it does a lot of good for America. It does a lot of good for our great-great-grandkids. And if I need to pay 50 cents a day to make that good happen, well, sign me up.


  1. "Black Hills Power wants to jack rates 26.6%."

    You got that right. They want it to pay for a brand new coal-fired power plant!

    I wonder if they'll try to pin the blame on President Obama?

  2. ['unhandy' to post here, without seeeing the article]
    "50 cents a day, to save America and the planet?..." To save the planet from what?
    "Global Warning"? Most readers probably don't have a clue that here we're are talking 0.8 C degree rise in past 100+ years, half of which occured before 1940. [Within the bounds of natural climate change.]
    See Real scientist explain Al Gore's hoax of the 'climate hockey stick' here:

    'As Dr. Lincoln Moses said, "There are no facts about the future."'
    BINGO...these computer models give no facts about future climate, garbage in, garbage out.
    And the future of our grandkids?
    In our bankrupt country, national debt now about $40,000 per person.
    Want to add trillions more?
    Dr. Richard Lindzen of MIT, served on IPCC: “"One of the things the scientific community is pretty agreed on is those things [carbon caps] will have virtually no impact on climate no matter what the models say. So the question is do you spend trillions of dollars to have no impact? And that seems like a no brainer.”
    Got Brain?
    Here, the Alfred P. Sloan Professor of Meteorology at MIT, gives a clear summary of the problem: http://www.heartland.org/events/newyork09/pdfs/lindzen.pdf


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