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Baker Reports 7:16 An Energy Scorecard for the American States States ranked according to energy, economy and environment Charles Sims, PhD Faculty Fellow Howard H. Baker Jr. Center for Public Policy Jilleah G. Welch, PhD Research Associate Howard H. Baker Jr. Center for Public Policy November 2016

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Page 1: An Energy Scorecard for the American States A Profile of the …bakercenter.utk.edu/wp-content/uploads/2016/02/Sims... · 2016-12-07 · 3. diverse energy portfolio 4. affordability

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Project Report 2:14

A Profile of the Energy Sector in Tennessee

A Report to the Tennessee State General Assembly

i

Project Report 2:14

A Profile of the Energy Sector in Tennessee

ByMatthew N. Murray, Director

Howard H. Baker Jr. Center for Public Policy

Charles Sims, Baker Faculty FellowBruce Tonn, Baker FellowJean Peretz, Baker Fellow

Howard H. Baker Jr. Center for Public Policy

Jeff Wallace, Ryan Hansen, and Lew AlvaradoSparks Bureau of Business and Economic Research

University of Memphis

December 15, 2014

i

Project Report 2:14

A Report to the Tennessee State General Assembly

ByMatthew N. Murray, Director

Howard H. Baker Jr. Center for Public Policy

Charles Sims, Baker Faculty FellowBruce Tonn, Baker FellowJean Peretz, Baker Fellow

Howard H. Baker Jr. Center for Public Policy

Jeff Wallace, Ryan Hansen, and Lew AlvaradoSparks Bureau of Business and Economic Research

University of Memphis

December 15, 2014

i

A Profile of the Energy Sector in Tennessee

A Report to the Tennessee State General Assembly

ByMatthew N. Murray, Director

Howard H. Baker Jr. Center for Public Policy

Charles Sims, Baker Faculty FellowBruce Tonn, Baker FellowJean Peretz, Baker Fellow

Howard H. Baker Jr. Center for Public Policy

Jeff Wallace, Ryan Hansen, and Lew AlvaradoSparks Bureau of Business and Economic Research

University of Memphis

December 15, 2014

Baker Reports 7:16

An Energy Scorecard for the American StatesStates ranked according to energy,

economy and environment

Charles Sims, PhDFaculty Fellow

Howard H. Baker Jr. Center for Public Policy

Jilleah G. Welch, PhDResearch Associate

Howard H. Baker Jr. Center for Public Policy

November 2016

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ii

Baker Center BoardCynthia BakerMedia ConsultantWashington, DC

Sam M. Browder Retired, Harriman Oil

Patrick ButlerCEO, Assoc. Public Television StationsWashingtonk, DC

Sarah Keeton Campbell Special Assistant to the Solicitor General and the Attorney General, State of TennesseeNashville, TN

Jimmy G. CheekChancellor, The University of Tennessee, Knoxville

AB Culvahouse Jr.Attorney, O’Melveny & Myers, LLP Washington, DC

The Honorable Albert Gore Jr. Former Vice President of the United States Former United States SenatorNashville, TN

Thomas GriscomCommunications ConsultantFormer Editor, Chattanooga Times Free Press Chattanooga, TN

James Haslam IIChairman and Founder, Pilot Corporation The University of Tennessee Board of Trustees

Joseph E. JohnsonFormer President, University of Tennessee

Fred MarcumFormer Senior Adviser to Senator Baker Huntsville, TN

The Honorable George Cranwell Montgomery Former Ambassador to the Sultanate of Oman

Regina Murray Knoxville, Tennessee

Lee RiedingerVice Cancellor, The University of Tennessee, Knoxville

Don C. Stansberry Jr.The University of Tennessee Board of Trustees Huntsville, TN

The Honorable Don Sundquist Former Governor of Tennessee Townsend, TN

Baker Center Staff

Matt Murray, PhDDirector

Nissa Dahlin-Brown, EdD Associate Director

Charles Sims, PhDFaculty Fellow

Kristia Wiegand, PhDFaculty Fellow

Jilleah WelchResearch Associate

Jay CooleyBusiness Manager

Elizabeth Woody Office Manager

Kristin EnglandInformation Specialist

William Park, PhDDirector of Undergraduate Programs Professor, Agricultural and Resource Economics

About the Baker CenterThe Howard H. Baker Jr. Center for Public Policy is an education and research center that serves the University of Tennessee, Knoxville, and the public. The Baker Center is a nonpartisan institute devoted to education and public policy schol-arship focused on energy and the environment, global security, and leadership and governance.

Howard H. Baker Jr. Center for Public Policy1640 Cumberland Avenue Knoxville, TN 37996-3340

[email protected]

DisclaimerThis research was sponsored by the Oak Ridge National Laboratory. Findings and opinions conveyed herein are those of the author(s) only and do not necessarily represent an official position of the Howard H. Baker Jr., Center for Public Policy, the University of Tennessee, the US Department of Energy or Oak Ridge National Laboratory.

Baker Center Board

Cynthia BakerMedia ConsultantWashington, DC

Sam M. BrowderRetired, Harriman Oil

Patrick ButlerCEO, Association of Public Television StationsWashington, DC

Sarah Keeton CampbellAttorney, Special Assistant to the Solicitor General and the Attorney General, State of TennesseeNashville, TN

Jimmy G. CheekChancellor, The University of Tennessee, Knoxville

AB Culvahouse Jr.Attorney, O’Melveny & Myers, LLPWashington, DC

The Honorable Albert Gore Jr.Former Vice President of The United StatesFormer United States SenatorNashville, TN

Thomas GriscomCommunications ConsultantFormer Editor, Chattanooga Times Free PressChattanooga, TN

James Haslam IIChairman and Founder, Pilot CorporationThe University of Tennessee Board of Trustees

Joseph E. JohnsonFormer President, University of Tennessee

Fred MarcumFormer Senior Advisor to Senator BakerHuntsville, TN

The Honorable George Cranwell MontgomeryFormer Ambassador to the Sultanate of Oman

Regina MurrayKnoxville, TN

Lee RiedingerVice Chancellor, The University of Tennessee, Knoxville

Don C. Stansberry Jr.The University of Tennessee Board of TrusteesHuntsville, TN

The Honorable Don SundquistFormer Governor of TennesseeTownsend, TN

Baker Center Staff

Matt Murray, PhDDirector

Nissa Dahlin-Brown, EdDAssociate Director

Charles Sims, PhDFaculty Fellow

Krista Wiegand, PhDFaculty Fellow

Jilleah Welch, PhDResearch Associate

Jay CooleyBusiness Manager

Elizabeth WoodyOffice Manager

Kristin EnglandInformation Specialist

William Park, PhDDirector of Undergraduate ProgramsProfessor, Agricultural and Resource Economics

About the Baker CenterThe Howard H. Baker Jr. Center for Public Policy is an education and research center that serves the University of Tennessee, Knoxville, and the public. The Baker Center is a nonpartisan institute devoted to education and public policy scholarship focused on energy and the environment, global security, and leadership and governance.

Howard H. Baker Jr. Center for Public Policy1640 Cumberland AvenueKnoxville, TN 37996-3340

Additional publications available at http://bakercenter.utk.edu/publications/

[email protected]

DisclaimerThis research was funded by Oak Ridge National Laboratory (ORNL) and carried out by researchers at ORNL and the University of Tennessee’s Howard H. Baker, Jr. Center for Public Policy and Department of Civil and Environmental Engineering. The views expressed herein are those of the authors alone and do not necessarily represent the views of Oak Ridge National Laboratory, UT-Battelle or the U.S. Department of Energy.

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The Howard H. Baker Jr. Center for Public Policy3

An Energy Scorecard for the American StatesStates ranked according to energy, economy and environment

Executive Summary

Energy, economic performance, and environmental quality are fundamentally linked. Energy industries provide valuable jobs and tax revenues, but those same jobs can also harm our environmental quality through the process of resource extraction and the generation of electricity. States with large service sector economies avoid some energy-related impacts to the natural environment but also tend to put a greater energy burden on household finances. Lower energy burdens facilitate the attraction of business but also encourage more energy use and with it the potential for environmental degradation.

This 2nd annual Energy Scorecard for the American States, provides data and a ranking on five criteria that capture different facets of a state’s energy footprint.

1. energy assets and production 2. economy and energy spending 3. diverse energy portfolio 4. affordability for residents 5. ability to meet electricity needs 6. environment and carbon emissions

The top five states with the best ratings for these factors were Illinois, Washington, Colorado, Oregon, and California with Illinois ranked number one due to its diverse energy portfolio and service-based economy. The bottom five states were Alaska, Vermont, Kentucky, Mississippi, and Maine. Maine ranked 50 for lack of energy assets, inefficient energy use, an unbalanced portfolio and unaffordable energy. It is hoped that the states will use these rankings to assess and reflect on their own performance and identify ways to improve their natural environments and wellbeing of citizens.1

IntroductionThe recent Presidential election highlighted a vast divide among Americans on many issues including energy and climate policy. Diverse perspectives on topics such as energy independence, renewable energy, climate change, and domestic oil and gas development, suggest that consensus on federal energy and environmental policy may be elusive in the near future. Those federal energy and environmental policies that do emerge may be unpopular in many states and may be inconsistent with the preferences and goals of state legislatures. It is in this climate of divisiveness that state-level energy and environmental policy plays a key role. In the absence of action at the federal level, many state-level energy and environmental policies have emerged over the year. For example, twenty-nine states, Washington, D.C., and three territories have adopted a renewable portfolio standard, while eight states and one territory have defined non-binding renewable energy goals. Three states have adopted state-wide moratoriums on

1The Baker Center appreciates the financial support of the Tennessee Valley Authority. All views expressed here are those of the authors.

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The Howard H. Baker Jr. Center for Public Policy4

hydraulic fracking for natural gas (Vermont, New York, and Maryland) while two states (Texas and Oklahoma) have prevented local municipalities from banning fracking. Other states such as Pennsylvania have granted local government authority over hydraulic fracturing.

Understanding the variety of energy and environmental policy originating from state legislatures requires an understanding of a state’s unique relationships between energy, economic performance, and the environment. Six key features of the energy-economy-environment nexus are detailed in the following section. These metrics are used to characterize the relationships in each state. Difficult tradeoffs are commonplace with states performing well in some metrics and poorly in others. These metrics are then used to provide a comprehensive assessment of each state’s overall performance – an Energy Scorecard for the American States.

Data and Core Metrics

Primary data for the study are from the U.S Energy Information Administration (EIA) and its State Energy Data System (SEDS).2 An important benefit of using these data is that they are well documented, easily accessed, and widely used. SEDS provides state-level estimates of energy consumption, prices, expenditures and production from 1960 to 2014. Other data such as state personal income and gross domestic product (GDP) are from the Bureau of Economic Analysis (BEA) and the Federal Reserve Economic Data (FRED) of the Federal Reserve Bank of St. Louis, another widely-used source.3 The following six core metrics are used to rank all fifty states.4

1. Energy Assets: Measures how much energy the state produces and serves as a proxy for the amount of mineral resources and renewable (solar, wind, etc.) assets a state possesses. Energy production estimates (table PT2 in SEDS) provide energy production by source in trillions of Btu. This includes energy production from hydroelectric power, biomass, geothermal, solar/PV, wind energy, biofuels, and fossil fuel production (coal, natural gas and crude oil). Larger values for the total energy production metric represent states with robust and stable energy production capacity.

2. Economy: Energy’s role in the state economy is measured by the ratio of state GDP to total energy expenditures. Expenditure data can be found at Primary energy, electricity, and total energy price and expenditure estimates (table ET1 in SEDS) which is the same source as the affordability metric. Larger values for this metric reflect states that can produce more goods and services with the same energy expenditure.

3. Diverse Energy Portfolio: States that consume energy from a diversity of sources are better prepared to handle shocks than states that consume from only one source. For example, unexpected changes in fossil fuel prices and environmental variability that disrupts renewable energy generation can be damaging to state economies that rely on a single fossil fuel or renewable technology for energy needs. Primary energy consumption estimates (table CT2 in SEDS) provide energy consumption estimates by source in trillions of Btu. Diversity is defined as the percentage of a state’s energy consumption supplied from sources other than its primary source. For example, if 40 percent of a state’s energy consumption is supplied

2 The State Energy Data System can be found at http://www.eia.gov/state/seds/seds-data-complete.cfm?sid=US. Data from the EIA database but not from SEDS will be identified in footnotes.3 The BEA and FRED website can found at http://www.bea.gov/ and https://research.stlouisfed.org/fred2/4 The District of Columbia and Puerto Rico are excluded from our analysis.

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The Howard H. Baker Jr. Center for Public Policy The Howard H. Baker Jr. Center for Public Policy5

by coal and no other single source (natural gas, petroleum, hydro, nuclear and wind/solar) is responsible for a larger percentage, that state receives a diversity score of 60. Larger values of the diversity metric suggest more balanced energy consumption from a variety of sources.

4. Affordability: Affordability is defined by the ratio of a state’s total residential energy expenditures to total personal income.5 This metric is altered from the affordability measure in the inaugural energy scorecard which was defined by the ratio of personal income per capita to residential energy expenditures. Primary energy, electricity, and total energy price and expenditure estimates (table ET1 in SEDS) show the expenditure estimates by source of energy in dollars per million Btu.6 Personal income data are from the BEA. The updated metric measures the percent of a state’s personal income that is spent on residential energy. Smaller numbers imply more affordable energy since the cost of energy relative to a state’s wealth is smaller.

5. Electricity: Electricity is a measure of a state’s ability to generate its own power to meet the demands of residents and is defined by the ratio of net electricity generation to electricity retail sales. Retail sales of electricity by state by sector by provider shows amounts of retail electricity sold by each sector.7 Larger net electricity generation indicates a comparative electricity generation advantage while larger retail electricity sales represent larger average electricity consumption. A ratio greater than one indicates states that are net electricity exporters, i.e. they generate more electricity than they consume.

6. Environment: Each state’s environmental performance is measured by carbon intensity of the state economy, defined by the ratio of state GDP to total carbon dioxide emissions from fossil fuel consumption. Carbon dioxide emissions from fossil fuel consumption by fuel and sector8include total carbon dioxide emissions in metric tons as well as the source of the emissions by fuel type and sector. State GDP data are from FRED. This metric represents how much the state economy depends on industries which emit carbon dioxide. Higher values indicate states where economic growth generates relatively less carbon dioxide.

State Rankings

Method

Each state is ranked based on raw values calculated from the definition of each core metric:

• 1 means the best performing state

• 50 is the worst performing state

A state’s ranking under each core metric is then averaged to provide a comprehensive state ranking. This is the simplest and most intuitive way to rank the overall performance of each state.

5 Note that energy expenditure is the amount of energy consumed multiplied by the price.6 See http://www.eia.gov/state/seds/sep_prices/notes/pr_technotes.pdf for details of price and expenditure estimates.7 For details see http://www.eia.gov/electricity/data/eia861/index.html.8 For details see http://www.eia.gov/environment/emissions/state/.

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The Howard H. Baker Jr. Center for Public Policy6

Results

States’ overall ranking and ranking in each individual metric can be seen in Table 1. The icons in the last column signify the change in a state’s overall ranking from 2013 to 2014. A green upward arrow indicates a state moved up in the overall ranking while a red downward arrow signals a drop in ranking. A yellow rectangle specifies no change in a state’s overall ranking. Additionally, the top and bottom five states overall and for each metric are presented in Table 2.

The top five states are Illinois, Washington, Colorado, Oregon, and California. Illinois is ranked number one, as it was in 2013, and performs better than average on five out of the six metrics. Illinois performed well due to its extensive energy assets, service-based economy, and diverse energy portfolio. The second through fourth positions are occupied by Washington, Colorado, and Oregon, similar to last year’s rankings. All three states continue to rank high due to their energy-efficient economies and affordable energy. An additional dollar spent on energy in these states is associated with $14 to $16 in state GDP. Residents in these states spend on average 1.4% of their income on energy. Additionally, Colorado benefits from abundant energy assets while Washington and Oregon gain from low carbon economies. An additional metric ton of CO2 emitted in Washington and Oregon is associated with approximately $5,680 in output. California ranks fifth due to its energy-efficient and low carbon economy. California’s ranking increased from the previous year largely because the percentage of personal income spent on energy (1%) is lower than any other state. In spite of high electricity prices, residential energy expenditures are not substantial relative to the state’s total personal income.

The bottom five states are Alaska, Vermont, Kentucky, Mississippi, and Maine. While Alaska ranks high in terms of energy production, it is ranked 46th due to its less varied energy portfolio. Alaska also has a more carbon intensive economy and exhibits inefficient energy use compared to other states. Vermont has a low carbon economy, but it is ranked 47th due to its low energy production, lack of energy diversity, and the least affordable energy. Vermonters spent 3.4% of their personal incomes on energy in 2014. Kentucky and Mississippi continue to be in the bottom five, similar to 2013, with rankings of 48th and 49th, respectively. While Kentucky has large energy assets, both Kentucky and Mississippi perform poorly due to their inefficient energy use, carbon-intensive economies, and low energy affordability. An additional dollar spent on energy in these states is associated with $7.50 in state GDP and an additional metric ton of CO2 emitted means $1,500 in GDP. Lastly, Maine is ranked 50th due to its lack of energy assets, lack of diversity, low energy affordability, and inefficient energy use. Mainers spent 3.4% of their personal incomes on energy in 2014.

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The Howard H. Baker Jr. Center for Public Policy The Howard H. Baker Jr. Center for Public Policy7

Table 1. 2014 Overall Rankings

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The Howard H. Baker Jr. Center for Public Policy8

Table 2. Top and Bottom Ranked States for Each Metric

Overall Ranking

Energy Assets Economy Diversity Affordability Electricity Environment

Top Five1 IL TX NY IA CA WY NY2 WA WY CA SD WA WV MA3 CO PA MA OH CO MT CT4 OR WV DE IL UT ND CA5 CA OK WA WI NJ NH WA

Bottom Five46 AK VT WY VT MS VA KY47 VT NV ME ND RI DE LA48 KY HI ND HI NH ID ND49 MS RI MS WY ME MD WV50 ME DE LA WV VT MA WY

Frequency distributions and outliers

States’ overall rankings are generally similar to last year’s since many states at the top of the list remain at the top and likewise, states ranked at the bottom stay near the bottom. Depending on the frequency distributions and where a state lies in the distribution for a specific metric, it may be more or less difficult for a states’ ranking to change. Figure 1 visually demonstrates the frequency distributions for all six metrics, and Table 2 lists the top and bottom ranked states for each metric. For energy assets, it is clear that there are some outliers. Texas, Wyoming, and Pennsylvania’s total energy production is significantly higher compared to most states whose total energy production is less than 1,500 trillion Btu. New York has the most energy efficient economy as its ratio of output to energy expenditures is 20.5 whereas the average is closer to 11. In terms of diversity, states at the bottom, including West Virginia, Wyoming, and Hawaii have significantly less diverse energy portfolios while almost 50% of states have a diversity score above 60%. Other notable outliers include California and Washington, where residential energy expenditures are a small percentage of income whereas Vermont and Maine’s energy is a larger percentage of the states’ personal income and thus less affordable. For electricity, Wyoming, West Virginia, Montana, and North Dakota generate considerably more electricity than they consume while most states have a ratio of net electricity generation to retail sales that is closer to one.

Naturally, states that ranked high in multiple metrics performed well, and likewise, states that ranked low across many of the metrics performed poorly. For example, Washington, which was second overall, ranked among the top five states for the economy, affordability, and environment metrics (see Table 2). Likewise, Vermont, was among the bottom five states for energy assets, diversity, and affordability which lead to its overall ranking of 47th. However, some states ranked in the middle as they did extremely well in some metrics and very poorly in others. Wyoming and West Virginia are key examples, overall ranking 25th and 42nd, respectively. For five out of the six metrics, Wyoming ranked among the top or bottom five states. Wyoming, the largest coal-producing state, ranked extremely high for its energy assets and ratio of electricity generation to retail sales. Yet, Wyoming was in the bottom five for its lack of energy diversity, carbon-intensive economy, and inefficient energy use. Similarly, West Virginia, also a large coal-producing

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The Howard H. Baker Jr. Center for Public Policy The Howard H. Baker Jr. Center for Public Policy9

state, ranked very high for its energy assets and electricity exportation but at the cost of poor performance in the diversity and environment metrics.

Figure 1. Frequency Distributions for Metrics

Ranking changes due to updated affordability measure

In the 2013 energy scorecard, the affordability measure was defined as the ratio of a states’ personal income per capita to residential energy expenditures; however, in 2014, this metric was redefined as the ratio of a states’ residential energy expenditures to total personal income.

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The Howard H. Baker Jr. Center for Public Policy10

This definitional change affects several states’ ranking. For example, states such as California, Texas, Florida, and New Jersey have personal income per capita that is more comparable to other states, but their total personal income is substantially larger. Under the previous definition of the affordability measure, these states did not fare as well, but their ranking increased under the new affordability measure. Smaller states or less populated states such as Connecticut, New Hampshire, Rhode Island, Vermont, and Delaware have relatively high personal income per capita but a lower total personal income and thus did not perform as well under the updated affordability metric. Going forward, using the new affordability metric will provide a better measure of energy affordability. If two states exhibit high prices, energy may be relatively more or less affordable in those states depending on whether the states are generally wealthy or poor. The updated metric aims to estimate this by using the percent of a state’s personal income that is spent on residential energy, both of which would be distributed across a state’s population.

Individual metric ranking changes

States’ raw values and thus metrics change from one year to the next, but some states experienced large enough movements relative to other states such that their individual metric rankings changed. Within the electricity metric, Kentucky and Nebraska’s ranking increased as they exported more electricity on net than the previous year while Oklahoma and Wisconsin’s rankings dropped. Yet all of these states had a net electricity-to-sales ratio close to one, similar to a lot states. For the economy metric, Utah incurred a large enough increase in output per energy expenditure to increase its ranking while Wisconsin dropped in the list. Several states including Alabama, Georgia, Kansas, Missouri, Nevada, and Ohio saw movement in their diversity ranking especially as these states already had raw scores close to each other as well as other states near the mean. Ohio encountered the largest increase in ranking for energy assets. For the environment rankings, Wisconsin dropped by three and Georgia increased by three meaning these state economies became more and less carbon intensive, respectively.

Raw Values

A National View

A closer look at the six metrics across all states from 2002 to 2014 reveals several statistically significant relationships that characterize the connection between energy, economic performance, energy affordability, and the environment. These relationships are discussed below and can visually be seen in the following scatter plots.

1. ↑ Economy - ↑ Environment: States with more efficient energy usage also tend to be less carbon intensive. For example New York, California and Massachusetts score highest on the economy metric and are also in the top five based on the environment metric. Likewise, Louisiana, North Dakota, Wyoming, and Montana are ranked at the bottom for the economy metric as well as for the environment metric.

2. ↑ Environment - ↓ Electricity: States that generate more electricity than they consume tend to be more carbon intensive. For example, Wyoming, West Virginia, and North Dakota generate over two times more electricity than they consume but also produce the most CO2 per dollar of state GDP generated. States like New York and Connecticut produce far fewer

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The Howard H. Baker Jr. Center for Public Policy The Howard H. Baker Jr. Center for Public Policy11

tons of CO2 per dollar of GDP generated but also rely on interstate electricity markets to fulfill their electricity needs.

3. ↑ Electricity - ↓ Diversity: States that generate more electricity than they consume tend to consume energy from a limited number of sources. For example, Wyoming, West Virginia and North Dakota score high on the electricity metric but have the least diverse energy portfolios. Likewise, Massachusetts, Maryland, and Idaho score lowest on the electricity metric but are more diverse than the national average.

4. ↑ Economy - ↑ Affordability: States with more energy-efficient economies tend to have more affordable energy. This relationship is more moderate than the aforementioned ones, but states such as California, Washington, and Colorado that have more affordable energy also score high in the economy metric. Likewise states with less affordable energy relative to income, such as Maine, Mississippi, Vermont, and South Carolina, produce less output per dollar of energy expenditures.

Figure 2. Scatter Plots for Metric Relationships

Tennessee and Bordering States

Turning to Tennessee and its bordering states, Table 3 shows how states experienced a mix of increases and decreases in their energy metrics.

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The Howard H. Baker Jr. Center for Public Policy12

Energy assets: Regional total energy production decreased from 1039.7 trillion Btu in 2012 to 992.4 trillion Btu in 2014. Kentucky produced the most energy in all three years whereas Mississippi had the least energy assets in each year. The decreasing trend in the regional average over these years is limited to Kentucky, Alabama, Virginia, and Arkansas. All other states exhibit an increase in energy production over this time period.

Economy: States’ average output per dollar of energy expenditure increased from $9.5 to $10.1 from 2012 to 2014. As measured here, Virginia is the most efficient energy usage state in all years. Georgia and North Carolina are also ranked highly in the economy metric. Mississippi, on the other hand, is the least efficient state. Alabama and Kentucky also show less energy-efficient economies.

Diversity of energy sources: The region’s energy portfolios are becoming slightly more diverse. In 2012, an average of 36.5% of energy was supplied by a single source. In 2013, this metric had dropped to 35.3% and stayed at this level in 2014. Kentucky is the most dependent on a single energy source whereas Arkansas has the most balanced energy consumption.

Affordability: Residential energy for the region has become somewhat less affordable since energy’s percent of total personal income has increased. In 2012, residential energy expenditures were 2.02% of total personal income. This percentage grew to 2.20% in 2014. Energy was the most affordable relative to total income for Virginia while energy was the least affordable in Mississippi followed by Alabama. The decrease in affordability is due to energy expenditures growing faster than personal incomes. Similar trends can be observed throughout the U.S. But the decrease in affordability is more pronounced in the southeastern U.S.

Electricity: On average, this region generates more electricity than it consumes. This is especially true in Alabama and Arkansas. However, Tennessee, Virginia, North Carolina, and Georgia consume more electricity than they generate.

Environment: The region’s overall carbon intensity improved over the three years. On average, an additional metric ton of CO2 emitted is associated with $2,540 in state GDP in 2012, and this increased to $2,608 in 2014. In fact, all states’ environmental core metrics increased between 2012 and 2014 with the exception of Virginia. Although Virginia had the least carbon intensive economy, Kentucky had the most carbon intensive economy.

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Table 3. Core metric raw values for Tennessee and bordering states

YearEnergy Assets

(trillion Btu)

Economy($)

Diversity(%)

Affordability(%)

Electricity(MWh)

Environment(million $ / million

metric tons of CO2)2012 1433.4 7.8 64.0 2.36 1.77 1522.22013 1463.6 8.0 67.4 2.43 1.71 1599.52014 1353.7 8.3 66.7 2.49 1.65 1626.72012 1472.8 8.1 68.9 1.99 1.39 1693.62013 1432.1 8.3 69.4 2.15 1.29 1701.82014 1454.3 8.6 69.6 2.10 1.31 1739.62012 555.2 11.0 66.6 2.16 0.93 3199.02013 581.1 11.3 67.5 2.19 0.93 3354.82014 598.0 11.9 69.4 2.27 0.93 3390.72012 2391.1 7.9 51.3 2.01 1.01 1279.52013 2138.4 8.0 50.3 2.19 1.06 1307.12014 2055.1 8.4 48.4 2.29 1.15 1347.12012 390.2 6.6 56.3 2.23 1.13 1618.52013 410.3 6.5 62.2 2.40 1.08 1685.62014 402.8 6.6 61.9 2.57 1.12 1634.22012 560.9 12.2 68.3 1.94 0.91 3660.62013 606.4 12.2 67.2 2.08 0.97 3666.32014 595.7 12.9 67.4 2.12 0.96 3800.32012 468.8 9.7 67.5 1.87 0.81 2796.52013 544.9 9.9 67.8 1.95 0.82 2909.52014 499.5 10.0 68.2 2.07 0.79 2871.12012 1045.1 12.9 65.1 1.58 0.66 4548.52013 1023.0 13.2 66.1 1.66 0.70 4300.22014 979.8 13.6 66.3 1.69 0.69 4450.62012 1039.7 9.5 63.5 2.02 1.08 2539.82013 1025.0 9.7 64.7 2.13 1.07 2565.62014 992.4 10.1 64.7 2.20 1.07 2607.5

Tennessee

Virginia

Regional Average

Alabama

Arkansas

Georgia

Kentucky

Mississippi

North Carolina

Conclusion

States have adopted a wide range of energy and environmental policies. The data and rankings included in this annual report are intended to highlight the different incentives that shape energy and environmental policy at the state level as well as energy and environmental outcomes. While the report takes no stand on public policy, it does highlight fundamental tradeoffs and complementaries that shape state energy and environmental policy. Tracking energy and environmental outcomes across the American states will hopefully lead to improvements in our understanding of the complex relationships and competing incentives at play as America responds to tomorrow’s energy and environmental challenges.

View a visual representation of the scorecard at http://bakercenter.utk.edu/scorecard/