Saturday, January 23, 2016

Renewable Energy and Alaska's Economy

Today many Alaskans are thinking about the long term future (20 to 30 years from now) and considering a range of divergent, plausible futures to stabilize our economy at a sustainable level. Bringing our natural gas to market by building a gas line from the North Slope is currently the scenario gaining the greatest attention. Another possibility is to bring Alaska's oil tax policy more closely in line with national and international norms, so we can keep a greater portion of our wealth[i]. A third scenario is to bring energy costs down and diversify the economic base of the state through a more focused development and integration of renewable energy sources.

Looking at the first two, have we accounted for changes to tax and energy policies that could affect the gas line? The global energy picture may look different once we understand the full effect on the market of domestic as well as international carbon pricing instruments. With large sums of money riding on a gas line[ii], how closely do we want to remain tied to the boom and bust cycle of a fossil fuel industry in long term decline? It's a reasonable question, and one many Alaskans are asking.

So let's examine the third scenario more closely, which at least one study suggests is not only technically feasible, but could offer several economic benefits. Many Alaskans are already aware that we have a goal to obtain 50% of our electricity generation from renewable sources by 2025[iii]. Today we generate about 28% of our electricity this way[iv], so we're already over halfway there. This is not an overly ambitious goal, and should be within reach. But to realize the full economic benefits of renewable energy we need to look at a study published this year by Jacobson and Delucchi[v],[vi] that proposes fully transitioning all sectors (electricity, transportation, heating/cooling, and industry) to 100% renewable energy (100% RE). The study compared this scenario with business as usual (BAU), in which we continue to use a conventional mix of nonrenewable energy sources.

According to their study, developing an energy mix for Alaska that includes wind, water (river,[vii],[viii] tidal, and wave), solar, and geothermal to meet the total projected end use energy load by 2050 translates into 14,662 construction jobs and 15,099 operation jobs, each representing an employment period of 40 consecutive years.

Other benefits include an annual estimated state savings of $900 million in avoided health costs (including 84 fewer premature deaths). The total savings, compared to BAU, mean that the plan could pay for itself in as little as 4.2 years, and with a feed-in tariff policy, homeowners could financially benefit from their own renewable energy systems as well.

Encouraged by similar projections of economic benefits, 144 countries have renewable energy policy targets.[ix] Even Finland, at a similar latitude as Alaska, has a plan for 100% RE. [x],[xi],[xii] And as a result, these places are seeing their role in the global industry of next generation clean technology expand through the research and technical experience they are gaining by creating and implementing their plans. Iceland, for example, has already built a knowledge export economy around geothermal energy.[xiii]

This is a direction in which Alaska is well positioned to move. In 2007, Kodiak began a multi-phased, step by step approach that by 2014 culminated in their electric grid receiving 99.7% of it's power from renewable energy sources. That reduced customer rates and stabilized them 3.6 percent below the year 2000 level, saving the community millions of dollars in annual fuel costs. Residents are now beginning to switch from oil to electric heat pumps to heat their homes.[xiv],[xv] In Kotzebue, wind power is already providing 20 percent of average electricity demand, saving the community $900,000 last year alone.[xvi] Between 2007 and 2014 Alaska saw a 20 fold statewide increase in wind power generation.[xvii] There are many more success stories, and they can't be repeated often enough.

Alaska has nothing to lose. Our world class fishing and forest products industries are directly impacted by climate change. Our mining industry will continue to be needed to supply the raw materials to build a clean energy economy, whenever recovering these from our waste stream is not possible. And a 100% RE Alaska, by itself, would not represent a threat to our oil and gas export industry, as the market for that resource is predominately influenced by factors beyond our control. Even Norway, which is currently 98% RE, remains one of the world's largest oil exporters. Have we adequately explored the potential to leverage our renewable capital for a strategic role in the global economy?

Guest blog by Eric Schaetzle, Fairbanks, Alaska



















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