Debates about federal carbon control regulations and a solar-energy-induced "death spiral" for electric utilities have been heating up, but along separate tracks. Those two debates have now effectively collided. In retrospect, this might mark a decisive turning point from a high-carbon, fossil-fuel-based power sector toward a carbon-controlled, renewable-based system — that is, if public sentiments remain influential.
On the carbon control side, disputes about climate science are taking a back seat to those about the Environmental Protection Agency's (EPA) authority to regulate CO2 emissions under the Clean Air Act without new congressional action. The Supreme Court settled that issue in the EPA's favor, but how to implement that authority remained an open question. Intense scrutiny of any agency action nearly guarantees that opponents will try to slow, if not altogether stop, momentum.
The EPA's announced goal of reducing CO2 emissions from power plants (which contribute almost half of targeted emissions) by 30 percent of 2005 levels by 2030 marks a substantial first step and sends a strong political signal of intent, both domestically and internationally. The emphasis on federal-state partnership leaves it to states to decide exactly how to achieve the goal, using a variety of energy efficiency, renewable energy and emissions-capping programs. Analysts consider the targets realistic, and some states are already on track.
International reaction was swift and positive. Barely a day after the EPA announcement, China announced its own plans to cut carbon emissions, disarming arguments about the U.S. acting alone and leading foreign policy observers to hope for a new dynamic in global climate negotiations. Hundreds of investors sent letters to government officials supporting the new rules as critical for reducing risks to global finance, including pension funds.
Beyond a lack of public outcry against the EPA's announced course of action, there is some suggestion of bipartisan relief. A majority of Americans now view climate change as a serious problem, and more than half are willing to pay higher energy costs to combat it. Public fears are intensifying along with freakish weather patterns. Public attitudes have long favored renewable energy over coal, and many consumers are choosing aggressive solar and wind-based electricity options when they are feasible and available. Rooftop solar systems are the fastest-growing source of new energy in the United States, with a new system installed somewhere every four minutes.
Electric utilities and other affected parties, like the coal industry, began pushing back on the new EPA regulations before they were even announced, warning that coal-fired power plants would shut down and electricity rates would go up. Policymakers warned of job losses. Notably, these arguments have not seized center stage despite some high-octane delivery.
For all intents and purposes, public consensus has formed around the idea that climate change is "real" and a problem in need of a solution that requires some sort of government action.
Increasingly, people talk to me about a trade-off between a relatively manageable inconvenience of a trial-and-error energy transition now and the possibility of uncontrollable climate chaos in the future. From seniors to young people approaching adulthood, worry about the future and a sense of helplessness run far and deep. The greatest public concern about these regulations appears to be ensuring that they work.
Given this context, concerns about a "war on coal" seem unlikely to get traction beyond limited constituencies. Strenuous warnings that carbon control rules could displace coal as the dominant energy source may be interpreted by many as good news. Arguments that a sprint toward a low-carbon, renewable energy future undermines the public interest are being viewed as less than credible. Counterarguments regularly point out that job losses might be more than balanced by new jobs and that states with carbon controls are benefitting economically. Advocates of small government and free-market capitalism argue that making electricity on one's own rooftop is a right. Unusual coalitions of environmentalists and Tea Partyers agree that reliance on renewable, low-carbon energy is both good business and good stewardship.
This brings us to the utility "death spiral" debate. Solar panel installations have been going viral in certain parts of the United States, with New Jersey improbably running neck and neck with Arizona and California. Commercial powerhouses like Intel, IKEA and Wal-Mart have installed solar panels for energy security, cost savings and smart business development. The increasingly familiar sight of wind turbines and photovoltaic (solar) panels reinforces a public perception that renewable energy is ready for prime time and a viable part of a climate solution.
Advocates view this trend with optimism, but some industry insiders characterize distributed or rooftop solar as a mortal threat to utilities' economic viability. The convergence of carbon standards and still-accelerating interest in renewable energy puts utilities under enormous pressure to innovate while — at the same time — encouraging new policy and market entrepreneurs to step up their game. How utilities adapt (or not) to this high-pressure situation has huge implications for where the turning point might go and how bumpy the path might be getting there.
Graffy is professor of practice at the Consortium for Science, Policy and Outcomes at Arizona State University and co-director of energy policy, law and governance for ASU-LightWorks. She previously served in federal, city and state government posts and in both domestic and international nongovernmental organizations.