8

Societal Transformation Pathways

This session of the workshop was aimed at addressing the human and societal elements of the deep decarbonization transition. Ben Wender (National Academies of Sciences, Engineering, and Medicine, moderator) opened the session by stating that the challenges and opportunities of deep decarbonization are as much societal as they are technical. He noted that societies will recreate themselves in new ways around decarbonization technologies, just as they did with automobiles and coal-fired electricity. Pathways to successful decarbonization will require changes to social practices, values, behaviors, relationships, and institutions, and there will be distributional changes, winners and losers of the energy transition. Deep decarbonization will have profound social and economic implications for diverse groups and communities, and the decarbonization transition will offer extensive opportunities for improving the human condition and addressing historical social inequities built into these systems.

Wender introduced the three speakers: Nancy Sutley (Los Angeles Department of Water and Power [LADWP]), Emily Schapira (Philadelphia Energy Authority), and Julia Haggerty (Montana State University).

LOS ANGELES DEPARTMENT OF WATER AND POWER PERSPECTIVE

Nancy Sutley, Los Angeles Department of Water and Power

Nancy Sutley opened by discussing the Los Angeles (LA) version of the Green New Deal, which was announced by Mayor Garcetti in

April 2019. Under the plan, Los Angeles would become carbon neutral by 2050, led by sector goals including zero carbon public transportation by 2030, zero carbon electricity by 2045, and zero carbon buildings by 2050. The city of Los Angeles owns much of the infrastructure and utilities in the city (e.g., water, electricity, sanitation, port, airport, public transit systems) giving the city government broad control to decarbonize.

Sutley pointed to recent successes of the LADWP, including the reduction of greenhouse gas emissions by 47 percent below 1990 levels and achieving 30 percent renewable energy generation (1,000 MW of wind and large-scale solar and greater than 350 MW of customer local solar) for CY 2017. Figure 8.1 shows the LADWP GHG emissions projections against the California state-wide targets. In addition, the city has committed to eliminating coal from their energy portfolio by 2025, and has installed nearly 3,000 EV chargers around the city. A challenge remains for decarbonizing the city’s electricity, as the mayor decided not to repower the ocean-cooled thermal units at Scattergood, Haynes and Harbor, requiring 1660 MW of in-basin power generation replacement by 2030. California Senate Bill 100 (2018) set a target of 100 percent carbon free electricity for the state by 2045, and LADWP will release their own 100 percent carbon free electricity pathway by the end of 2020. Sutley mentioned a few challenges presented by SB100 for the incumbent infrastructure owners, including over generation of renewable energy sources that will require new electricity markets, upgrading the transmission and distribution systems, maintaining reliable electricity supply, and sensitivity to rate impacts for consumers.

Sutley stated that deep decarbonization provides opportunities to address equity within the city by creating of 400,000 new jobs by 2050 in decarbonized technology sectors, targeting incentives to improve infrastructure and resources in disadvantaged communities, and improving resiliency to natural disasters and climate change with an enhanced distributed power generation system. In addition, decarbonization may help improve the air quality of the city as NOx, SOx, and particulate emissions are curtailed along with carbon emissions, preventing an estimated 1,650 premature deaths annually, 660 respiratory and cardiovascular hospital admissions annually, and saving $16 billion in healthcare costs.

Sutley concluded that to meet their goals, LA will need to ramp up EV adoption and promote electrification of buildings. In transportation, LA has partnered with California utilities to research EV charging infrastructure requirements, and has provided EV incentives to accelerate consumer adoption. In buildings, LADWP partnered with Southern California Edison and the Sacramento Municipal Utility to find that electrification can reduce GHG emissions in homes by up to 60 percent by 2020 and by up to 90 percent by 2050, and can provide hundreds of dollars of savings to rate payers annually.

DRIVING ENERGY EFFICIENCY AND CLEAN ENERGY IN PHILADELPHIA

Emily Schapira, Philadelphia Energy Authority

Emily Schapira introduced the Philadelphia Energy Authority (PEA), a municipal authority created in 2010 to support Philadelphia on issues related to energy affordability and sustainability. Because of their structure, PEA is allowed to hold long term contracts and float bonds, making public private partnerships easier to maintain. Schapira presented a few facts about the city of Philadelphia, which has been called the “poorest big city in America”:

1. The population is 1.6 million residents (6th largest city in the United States), with increases driven largely by immigrants and millennials moving to the city.
2. 26 percent of the population lives below the poverty line, including 1 in 3 children.
3. A real estate boom has led to a thriving downtown and inner ring neighborhoods.
4. The city has 4.6 percent total unemployment, but African American unemployment is typically two times the city average, with some neighborhoods at 50-60 percent unemployment.

Schapira turned the discussion to energy, stating that residents below 30 percent of the Area Median Income pay 23 percent of their income to utilities. In addition, greater than 50 percent of African-American households at any income level faced energy insecurity at least once in the last year, meaning that they either (1) had to forgo food or medicine to pay their utility bill, (2) received a utility shut-off notice, or (3) set the temperature in their home to an unsafe or unhealthy level to be able to afford their utility bill. Overall, greater than 40 percent of renters in Philadelphia faced energy insecurity last year, and typically, corner stores pay more for utilities than for rent.

Schapira stated her view that energy is a tool for impacting society, through which PEA can promote economic development, create jobs, alleviate poverty, and improve public health, as highlighted in Figure 8.2. In 2016, PEA launched the Philadelphia Energy Campaign, a $1 billion investment over 10 years in energy efficiency and clean energy projects, focused on municipal buildings, K-12 schools, affordable housing, and small businesses. Goals and outcomes of the campaign are shown in Figure 8.3. Schapira discussed a few recent city energy projects, including an energy performance contract with the Philadelphia Museum of Art (the largest city energy user) that should result in a 24 percent energy

use savings, as well as 8 percent water use savings. Future projects include implementing energy efficient LED street lighting (current lighting accounts for 9 percent of the cities carbon footprint). In addition, the mayor of Philadelphia has made two major climate commitments, including 100 percent renewable electricity by 2030 and 80 percent carbon emissions reduction by 2050.

Schapira highlighted the recent launch of plans for the largest municipal solar project in the country, a 70 MW solar array in Adams County that will cover about 22 percent of the city government’s electricity use. At a cost of approximately $6 million annually, the project is budget neutral. PEA works also with the city school district to deploy energy efficient building technologies to produce energy savings. Additionally, PEA’s Solarize Philly program is the largest in the United States, with 363 solar contracts signed, a total capacity of 1.6 MW, $5.8 million invested into Philly’s new clean energy sector, 4,237 households signed up, and 52 jobs created directly. In addition, the program was issued a DOE award (the Bright Solar Futures) that creates the nation’s first vocational training for high schoolers to become solar installers.

Schapira concluded by describing a multi-family affordable housing pilot, in which PEA supported the building owners of four apartment properties to reduce their energy consumption by investing in energy efficiency and smart grid technologies, resulting in 15-30 percent energy savings that benefitted the renters, funded primarily by utility rebates. In addition, PEA launched a water and sewer line protection program that provides a warranty on underground residential pipes for which homeowners in Philadelphia are responsible.

SOCIETAL AND POLICY ISSUES: DECARBONIZATION AND RESOURCE PERIPHERIES

Julia Haggerty, Montana State University

Julia Haggerty’s talk focused on the unique challenges that rural America will face due to the upcoming decarbonization transition. Rural America has traditionally hosted much of the country’s energy infrastructure, and may continue to do so. She noted that rural America has encountered significant economic and social well-being problems in recent years, and that these issues come into focus when we try to acquire siting for pipelines or look to pass climate change legislation. The economic and social outlook for rural areas is currently not good, as they have not benefited in a sustainable and flexible manner from past energy system development, and they will likely not benefit during the upcoming energy system transition unless we rethink the nature of the value proposition

of what it means to host large scale energy infrastructure in rural communities, she said.

Haggerty noted three transitions that must occur to enable productive transition pathways in rural areas that host energy infrastructure:

1. Consider major fiscal policy reform to address failings of current business models on the public revenue side of infrastructure.
2. Think about benefits of regional and multisectoral coordination to reinvent the urban-rural social contract on the provision of energy services.
3. Re-envision rural economic development through developing robust institutions, resilience, and useful infrastructure, rather than simply replacing old energy technologies with new ones.

Haggerty noted that the coal fleet is being retired at an accelerating pace, leaving counties across the country at risk for economic downturn. 90 percent of coal energy generation retirement occurs in urban areas, however rural mine closures account for 70 percent of the decrease in coal supply. Locations that host both coal mines and power plants are particularly vulnerable to economic downturn. Many rural towns exist because coal was found there, and the population grew around the mine. The towns tend to be remote and isolated, and for this reason have limited opportunities to diversify their economies. Because of their isolation, they struggle to participate in the modern economy puts a premium on access to metropolitan areas and the markets, capital and labor force they provide. Haggerty stated that the current energy policy environment reinforces the isolation of these peripheries, accelerating their downward spiral. Building out the nations coal electricity infrastructure required massive coordination between local, state, and federal governments, but that level of cooperation does not exist anymore. States and communities are left to negotiate the transition of coal closures, and only areas with high social and economic influence can meaningfully affect transition, not the rural communities which are most vulnerable.

Haggerty explicated on her three-prong intervention approach, starting with fiscal policy. She noted that replacing a coal power plant with a solar generation facility would drastically lower the property tax revenue coming in to the local government. A 100 MW solar plant would replace only 30 percent of the lost coal generation taxes, partially because incentives offered to the industry, but also because many state policies make it difficult for communities to do anything but lower property taxes. This type of poor fiscal policy may generate tax revenue shortages that force critical institutions in the community (e.g., school districts) to prefer coal generation. Haggerty mentioned recent research that found that timing

the incentives and tweaking the incentive structure can result in lower project costs and increase returns to local governments if these measures are paired with state fiscal policy reform that allows for raising property taxes.

In addition, regional coordination is important for building resilient communities. Communities face various local and external factors, and coal communities and states are outnumbered and outmatched by the challenges that face them. When these communities plan in isolation, they leave out the interests of their neighbors (e.g., nearby Native American populations) whose futures are also tied to coal, but who do not have a seat at the table. Regional coordination can help secure coordinated commitments from past and future energy developers to think about the overall well-being of the region in which they are situated, said Haggerty.

Haggerty pointed to the coordinated effort by Western and Pacific Northwest governors to responsibly create coal plant infrastructure by advocating for federal regulations and state fiscal regimes to standardize life cycle assessment of these technologies and ensure environmental responsibility. This project typified the urban-rural social contract that outlined the players and their role in running the region’s energy infrastructure in the 1970s. She believes we need to re-envision the modern definition of economic development in terms of the robustness and resilience of institutions, not new technologies. In our decarbonization efforts, we should emphasize the importance of people, communities, institutions, and regional coordination for these communities to be able to adapt and prosper through the energy sector transition and the associated challenges.

Haggerty concluded by asking the audience: who can make these changes happen? Industry can lead a comprehensive discussion about fiscal policy and its effects, the utilities sector can coordinate to think about transition impacts, and community volunteers can unite to help build strong local institutions to respond to challenges.

DISCUSSION

Wender opened the discussion by saying that energy policy is one of the most complex policy domains, even if you just consider technology and markets. How, then, do we make sure that the human and social dimensions remain in the forefront of our discussions. Schapira noted that politicians are usually not energy scientists, so it is hard to create informed energy policy even with input from informed executives and staffers. Constituents voice concern about issues that are more immediately relevant to their lives, and climate change still does not seem tangible for many. Schapira noted that she frames her discussions about climate

change around the adverse effects it will bring upon people. Sutley added that she sometimes even has difficulty working with engineers, as they often fail to analyze the human dimensions of the technologies they are implementing. Haggerty mentioned the groundswell of interest in the social dimensions of climate change from the student population as their energy literacy improves. She added that most rural elected officials are energy policy savvy because they need to know how the electricity system works, but they lack access to the extended network of creative ideas that diffuses slowly from the academic and policy communities.

A participant asked Haggerty about the fiscal examination of tax revenue differential for coal versus solar energy generation. She wondered if the equation changes if you take into account subsidies toward the operation of fossil fuel energy and other costs to society, such as decreased air quality that increases healthcare costs and lowers quality of life for communities with coal-fired power systems. Haggerty said that regarding the social cost and benefit accounting for different generation technologies, there have been a few national scale studies, but her own work is very focused on applied questions, like how to fund the school district in a small town the year after a coal plant closes. She concluded that you cannot currently in most western states replace the revenues associated with these large capital intensive fossil fuel facilities that also have a fuel tax, with new renewable facilities that do not have a fuel tax and that have high upfront rebates on their property tax value. Schapira added that until we start to rethink our tax system to include the collateral benefits to society from switching to clean energy, rural areas will not be able to afford this type of transition.

A participant asked the panel if their cities can use their public decarbonization goals to attract business to the area, citing Amazon’s recent search for a city committed to sustainability for their new headquarters. Sutley said that LA has long used its public ownership of infrastructure as a way to encourage economic development, as well as its natural environment and resources. Sutley noted that peak smog levels have dropped by 90 percent since the 1970s, even during a period of fast economic growth, so LA is proof that you can grow the economy and improve the environment at the same time.

The panel was asked if they have found effective convening organizations to discuss issues like LMI, demand charge rate structure, and other electricity sector business models. Sutley mentioned a few organizations like the C40 cities, who are trying to share best practices and look at models for energy efficiency projects. Schapira added that PEA follows other cities’ lead and receives guidance from DOE, as well as the National League of Cities.

A participant mentioned that decarbonization efforts seem to be more effective when disaggregated on a local or regional scale, rather than looking at the national perspective. He wondered, whose job is it to increase transparency to educate society and public to make more environmentally responsible choices. Haggerty said she does not know who should renegotiate the urban-rural climate contracts, but she sees a role for consumer councils, local government, and community leaders.

A participant asked the panel how the federal government laboratories and agencies can better incorporate equity analysis into their cost benefit estimations, including giving sociological experts a seat at the table. Sutley mentioned that the LA city council asked LADWP to consult the public and stakeholders in setting their decarbonization goals, and that their stakeholder advisory groups consists of many community-based organizations that regularly review the work. Additionally, LADWP has started an equity metric data initiative to help identity collateral social costs and benefits.

A participant wondered about the importance of water, and asked where do you see the cross connections between water and energy, and how can that help in our decarbonization efforts. Sutley mentioned that LADWP provides both water and power to the city, and that they have been considering the energy intensity and GHG intensity of different water sources as they plan out their water distribution strategy. As California water often needs to be pumped over mountains to reach consumers, they are considering recycled water, storm water capture, and ground water recovery efforts to save on energy costs. LADWP has concluded that local sources of water will help in decarbonization efforts, and they have set a goal of increasing local water supply from 15 percent to 50 percent of their total supply by 2030. Schapira added that water and power are interconnected in Philadelphia, and that the city has very old water infrastructure and offers incentives to users who implement Green Stormwater Infrastructure projects. In addition, PEA is building a small model hydroelectric generation facility. Haggerty mentioned that water rights are increasingly being considered part of the assets that potentially are the negotiated assets left with the community at the end of a coal transition project. She believes groups with coordinated expertise could look to this model for convolved economic opportunities in water and power.