State of the states: 4 reasons that red plus blue makes green economics
The following is a contributed article by Malcolm Woolf, managing director of MW Energy Advisors and former chair of the National Association of State Energy Officials.
Washington, D.C. is abuzz with the Green New Deal, but my bet is that the most pivotal energy legislation enacted this year comes from red and blue state houses across the nation.
Roughly half of the nation's governors pro-actively included energy and/or its alter-ego, climate change, in their recent "State of the State" addresses. Perhaps more surprising is that Republican governors were just as likely as Democratic governors to raise energy and/or climate issues. One clear take-away: the transformation of the energy sector is now a top-tier political issue in a growing number of states. The new economic competitiveness of natural gas and renewables, combined with heightened concerns about climate change, have vaulted energy issues into a prominence not seen for decades.
Four themes emerge from my review of State of the State addresses and the early actions taken by governors so far this year:
First, renewable energy is maturing as a major driver of economic growth and job creation. The U.S. Energy Information Administration expects two-thirds of new electricity generation capacity this year to be from renewables for a simple reason: the non-subsidized cost of utility-scale solar and land-based wind projects are competitive and, in many cases, less expensive than even natural gas. As a result, the 2019 US Energy and Employment Report recently confirmed that renewables, combined with other advanced energy technologies such as efficiency and storage, now support over three million U.S. jobs.
Governors are quick to respond to these changing economic realities in their states. For example, Governor Phil Murphy, D, of New Jersey touted the potential of offshore wind to return almost double the economic benefit for each dollar invested. Governor Brad Little, R, highlighted Idaho's "affordable and sustainable energy supplies," which includes a mix of hydroelectric, wind and solar, as making "Idaho competitive in attracting new industries." West Virginia Governor Jim Justice, R, proposed developing four lakes for new hydropower. These governors understand that renewable energy is now a mainstream driver of new job creation and don't want their states left behind.
Second, the state level debate has moved beyond climate science and is now focused on community-driven pragmatic solutions. Unlike the President, twenty-three governors, including three Republicans, have joined the Climate Alliance, a bipartisan coalition committed to reducing greenhouse gas emissions consistent with the goals of the Paris Agreement.
New York Governor Andrew Cuomo, D, also proposed funds to assist communities transitioning away from coal. California Governor Gavin Newsom, D, explained PG&E's bankruptcy in the context of climate change and urged longer-term strategies to "ensure that the cost of climate change doesn't fall on those least able to afford it." Taking a different approach, Wyoming Governor Mark Gordon, R, called for "innovative solutions that support coal, address climate change and grow our economy," and followed up with a supplemental budget request to fund a carbon sequestration pilot project at a local coal plant.
Third, governors and their constituents are excited about electric vehicles. A number of governors, including Tony Evers, D, of Wisconsin and Janet Mills, D, of Maine, are proposing new EV infrastructure projects and incentives. Others, like Michigan Governor Gretchen Whitmer, D, have pledged to create an Office of Autonomous Vehicles. Massachusetts Governor Charlie Baker, R, championed a regional "cap and investment program for transport that mirrors our successful model for energy." Whether it's electric airplanes in Maui or electric ferries in Washington state, bipartisan support for transportation electrification is strong.
Finally, local and regional energy issues drive economic development. When Governors Doug Burgum, R, (North Dakota) or Kristi Noem, R, (South Dakota) talk about energy issues, they often are referring to the Keystone XL Pipeline or pipeline integrity concerns. In South Carolina, Governor Henry McMaster, R, discusses the need to pay off the debt from the now-canceled nuclear plants. Nevada Governor Steve Sisolak, D, is concerned about plutonium shipments into his state, whereas Texas Governor Greg Abbott, R, touts LNG exports as "helping emerging economies across the globe wean themselves off of coal."
The governors' State of the State addresses and early actions highlight that they are increasingly engaged on energy issues, largely from the lens of economic development. While the Green New Deal proposal has sparked an important national conversation, the next wave of innovative energy legislation will likely come from red and blue state capitols.