Economics, not politics, must drive climate solutions

Monica Martinez, founder and CEO of Ruben Strategy Group LLC

By Monica Martinez

Michigan businesses and families are constantly faced with budget choices and investment decisions.   At the same time our nation, indeed the world, has a desire to recycle, be efficient, and practice “green” efforts.  But the reality is we have been and will always be motivated by another “green” – the almighty dollar.  And, frankly that’s the way it should be as we make decisions on how best to reduce greenhouse gas (GHG) emissions.

In 2008, then Gov. Jennifer Granholm convened a Climate Action Council (CAC) under the direction of the Michigan’s Department of Environmental Quality.  I had the privilege of serving on the CAC and was tasked with focusing on energy related GHG emissions.   As a result of the CAC report, a Gubernatorial Executive Directive adopted a goal of reducing Michigan’s 2005 GHG emissions 20 percent by 2020.  Fast forward to 2013, and we are still grappling with uncertainty as to how exactly the federal government is going to implement carbon dioxide emissions policy – we know rules on existing power plants are coming, but no one knows for certain what they will look like or when they will actually be implemented following anticipated legal challenges.

The CAC’s recommendations were two-fold: pursue engagement on a national climate strategy and the creation of a comprehensive list of policy recommendations to reduce GHG emissions in Michigan.  As the CAC report was being prepared, the Michigan Legislature acted on two recommendations – a Renewable Portfolio Standard (RPS) and an Energy Efficiency/Optimization (EO) requirement.  I’d note, however, that the two policies were on opposite extremes of the cost effectiveness of reducing emissions. The renewable portfolio standard was the second most costly option. Efficiency/optimization was the most cost effective.

In Michigan we have had success with implementing the state’s RPS, and anticipate meeting the state’s “10 percent by 2015” requirement.  Additionally, each year our utilities are either meeting or exceeding state energy efficiency requirements. In fact, Michigan is ranked as one of the most improved states for efficiency and has been ranked 12^th by the American Council for an Energy Efficient Economy in its’ 2012 state survey.  But the reality is that both of these state mandates are only a small part of the reason why our state’s energy related carbon dioxide emissions have lessened.   Our economic downturn and lower natural gas prices (thanks to the shale opportunity and innovation) have vastly contributed far more to the reductions than anything else.

If we are going to be realistic about reducing emissions, we need to focus on cost effectiveness.  This means we should be targeting our efforts on power plant replacement and repowering with a more carbon emission friendly fuel such as natural gas, and removing barriers and increasing incentives for combined heat and power (CHP) applications.  Both recommendations rank solidly in the top three for cost effectiveness.  Given our nation and state’s economic opportunity with today’s abundance of natural gas it seems like a no brainer.  New natural gas power plants and CHP applications minimize waste, enhance the grid’s reliability, and maximize efficiency –all economically – before we even consider that these choices reduce GHG emissions more cheaply than other technologies.

So let’s be smart – and dollar wise with our energy policies and greenhouse gas reduction strategies.  We need to move away from the notion that we have to choose costly policies to get the job done – let’s be thoughtful and all encompassing.  The good news is, we can choose solutions that are American made and American produced to help us get there.

Ms. Martinez is a former member of the Michigan Public Service Commission and president of Ruben Strategy Group, LLC.