Clean Energy Goals Are A 'Steep Uphill Climb'01/23/2012
The Hawaii Clean Energy Initiative was inked four years ago, setting up the mandate for the state to achieve 70 percent clean electricity (40 percent renewable generation, 30 percent energy efficiency) by 2030. Since then, our total electricity usage has steadily declined, from 10,585 GWh in 2007 to 9,986 GWh in 2011. And thanks to a growing portfolio of renewable power, it’s taking less oil to generate each of those kilowatt hours. That’s the good news.
The bad news is the shallow slope of the trend suggests Hawaii will still be importing millions of barrels of oil in 2030 to make electricity. (As an aside, overall oil consumption in Hawaii has increased since 2008, corresponding to an increase in the use of transportation fuel—an area that demands much more attention.) And even if we reach our goal of 40 percent renewable generation — we’re currently at 10 percent — 60 percent of our electricity will still come from fossil fuel.
We simply will not reach our clean energy goals at the current rate of change. It’s a steep uphill climb, and the kind of change we implement must be transformative, not simply incremental. Such is the aim of Blue Planet’s priorities for 2012. The policy commitments fall into three categories: Enable transformative progress, remove obstacles to transformative progress, and ensure funding to achieve transformative progress.
Enabling transformative progress
- Renewable energy tax credit
Per capita, Hawaii is number one in the country for solar water heating and second in the nation for photovoltaic. While our latitude certainly helps Hawaii's rank, the state tax credit of 35 percent has catalyzed continual investment and adoption of these key technologies. The installation of solar water heaters, photovoltaic systems, and wind systems helps to plug the leak of billions of dollars out of the state’s economy to pay for foreign fuel. As the cost of PV systems decreases, more families across the state will be able to take control of their energy costs.
The state’s investment in the tax credit, which yields even more renewable energy today than in previous years due to decreasing technology costs, should not be viewed as a “loss” on the state's books. Investments in renewable technology — and the companies and jobs that provide it — pays dividends back to the state in the form of income tax, general excise tax, and outside investment, among other forms. Renewable business development also creates local jobs and provides steady revenue. Lawmakers should resist calls to dramatically alter the credits that have been enormously successful in promoting private investment in Hawaii’s clean energy future.
- Grid modernization and interconnection
Given Hawaii’s population distribution and the landscape of renewable energy potential, the islands cannot “go it alone” to achieve statewide energy independence. The state’s electrical grid system requires modernization to accommodate renewable power, and the islands must be interconnected to move green electrons between them. Maui, for example, has surplus wind energy at night, while Oahu has an expanding fleet of electric vehicles that could put that energy to work. Legislation to establish a regulatory framework for the implementation of an interisland cable system can provide more certainty, stability, and oversight in the development process. By providing structure for a statewide electrical grid we can get the most out of our state's abundant solar, wind, and geothermal energy resources.
- White tags
Hawaii has one of the most aggressive energy efficiency targets in the nation — about a 1.5 percent increase in overall efficiency annually. But achieving this target requires substantial capital investments that are frequently overlooked. A program to establish an energy efficiency credit-trading program would bring the power of the markets to foster investment in these low-risk investments. Such market-based mechanisms (dubbed “white tags” as an efficiency component to the renewable energy “green tags”) to promote the least-cost energy efficiency investments have been effectively established in other jurisdictions. The Legislature should direct the Public Utilities Commission (PUC) to develop such an innovative, market-based program for Hawaii.
Removing obstacles to transformational progress
- Hawaii Electricity Reliability Act (HERA)
A number of technical, operational, and regulatory issues concerning Hawaii's century-old electrical system are stifling the full potential of renewable energy production. Lawmakers can help clear the path by proposing a separate entity within the PUC to oversee grid interconnection and reliability. HERA would open the doors to greater integration of renewables while establishing formal, objective, and verifiable reliability and interconnection standards for Hawaii’s electricity grids. Clear regulatory oversight of the state's grids would ensure system reliability, resiliency, and accountability.
Funding transformational progress
- Barrel tax
Two years ago the Legislature boldly passed a $1 per barrel tax on most oil imported into Hawaii. The idea was to tax the source of our problem — oil — to fund solutions. More than half of the revenue from the oil tax, however, was diverted to fill a puka in the state budget. It's time for lawmakers to align the tax with the policy's original intent and dedicate the barrel tax to energy and food security programs. The state energy office, tasked with researching, planning, and implementing the transition to clean energy, was solely funded by federal stimulus dollars. As those dollars run out, a new source is needed.
According to three separate surveys commissioned by Blue Planet, more than two-thirds of Hawaii residents support paying an additional amount on their energy bills (approximately a $3 per barrel tax) if the revenue was dedicated to clean energy solutions. Our current energy challenges warrant increasing the barrel tax to $2 per barrel or more and expanding the tax to Hawaii's other fossil fuel source, coal. An equivalent carbon tax on coal would yield about $5 million in revenue for the critical efforts to promote energy and food security.
- PUC special fund
The PUC is charged with developing and enforcing policies that govern the lifeblood of Hawaii’s economy: electricity. While the Legislature realigns the barrel tax appropriation for its intended purpose, it should also make sure that the PUC special fund — monies collected from regulated utilities — fully funds the PUC. Millions of these dollars annually are redirected to the general fund. The PUC must have the resources to adequately investigate and develop the right policies for Hawaii’s 21st century electricity industry.
Without these clear policy commitments, the path to energy independence will remain a steep uphill climb, along which each step is a struggle. With electricity rates at an all-time high — and rising — and energy security as tenuous as ever, lawmakers should tend to Hawaii’s energy crisis with the urgency it warrants. Transformative change, by nature, requires making tough decisions. The right choices will result not only in stable energy prices and energy security; they will initiate progress beyond evolutionary change and enable the revolutionary change necessary to realize our sustainable energy future.
About the author: Jeff Mikulina is executive director of the Blue Planet Foundation.