Thursday, May 29, 2014

Policy: Electrify transportation for climate change, prosperity backed by utilities

Burning oil for transportation as we all do for our cars, trucks, buses and trains, is an expensive habit. Most of us live in regions like Chicagoland or Illinois that don't have any oil, so we have to import it. That reduces our wealth, leaving less to go around for everything else. And to get that oil out of the ground in the first place, whether from under the sands of the Middle East or under the water in the Gulf of Mexico, is very expensive. Thus, oil costs more than $100 a barrel this week and gasoline costs more that $3.50 a gallon. Those prices are likely to rise.

Even worse, burning that oil pollutes the atmosphere and contributes to climate change, which is a very expensive habit. Extreme weather and coastal flooding (Hurricane Sandy in NYC and New Jersey as one of the most expensive examples) is, to put it mildly, not cheap.

To quit polluting so much and reduce climate change, we need to largely stop burning coal and natural gas for electricity and switch to solar and wind. That's the push for clean energy.

But we can't use any renewable energy like solar or wind for any of our vehicles that run on gasoline. They only run on oil.

That means we need to electrify our transportation network and run electric-powered cars, trucks, buses and trains in order to use non-polluting energy.

That isn't widely appreciated, even among leaders who are pushing to stop climate change. There's a policy gap. Most of the environmentalists (for lack of a better term) push for changing the existing electrical distribution mix from fossil fuels to renewables (phasing out coal in favor of solar). They are right to do it.

But we need to also expand the reach of electrical distribution to those sectors that use oil (like transportation). Otherwise we could have a 100% solar and wind powered electric grid and be burning oil for all our cars and trucks -- clearly, not good enough to hold us back from the tipping point of global warming.

The natural political power in this policy campaign would be the electrical companies that would benefit from new customers. Our utilities are among the most influential entities in politics. It would be ideal to harness their power for such an innovative improvement to our economy and our environment. We do make electricity here, so substituting domestically-produced electricity for imported oil would generate more prosperity. Shrinking imports is the same as expanding exports -- and the latter is a clear policy objective.

One big gap in our knowledge: what is the actual economic impact for substituting an imported barrel of oil for domestically-created renewable power? Is there a multiplier of some sort? I would imagine so, but we don't know that. The first step would likely be a gathering of economists and policy makers to review the state of the literature and identify what we need to learn in order to adequately and concisely explain the job-creating impact of electrifying transportation. We should hire some economists to come up with that number.

Policy changes to implement electrification would include changing tax laws to favor electric cars, requiring licensed gas stations to install fast chargers, buying electric instead of diesel buses for transit agencies and running electric wires over railroads (like the Metra Electric in Chicago or the Acela on the Northeast Corridor) to phase out diesel-powered trains.

I hope some far-sighted utility executives see the light on a campaign to electrify transportation.

No comments: