Ari Rokeach, James Hinkle, Andrew Lager, Ben Mills 12/07/10

ESP 168a Term Paper Part 1: Revised

Policy Analysis of Electricity Generation in CaliforniaPart 1: Revised

Problem Definition

Climate change resulting from greenhouse gas emissions is among the most

daunting challenges facing the world today. The industrial system that thrives in the

United States is strongly reliant upon fossil energy, which produces massive quantities of

greenhouse gasses upon combustion. The effects of this system on the atmosphere are

evident. Atmospheric concentrations of Carbon Dioxide (CO2) have reached levels above

379ppm, greatly exceeding the natural range over the last 650,000 years. (IPCC 2) The

effects of these elevated levels are manifesting themselves in disturbing climactic trends.

Eleven of the last 12 years

have been the warmest since

1850. (IPCC 4)

Sea levels are rising. (IPCC

5)

Evidence of melting

glaciers, ice sheets. (IPCC

5)

More intense storms and

draughts. (IPCC 5)

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Scientists estimate that huge greenhouse gas reductions are needed in order to

stabilize the climate. In order to achieve this stabilization, concentrations of CO2

emissions must be reduced to between 50% and 80% below 1990 levels. (CEC 2) This is

the amount of reduction believed by many scientists as necessary to limit the temperature

increases to between 2Co and 3Co this century. (CEC 2) This stabilization is imperative,

as the following impacts to vital systems have been forecasted with 1 to 5 Co temperature

increases:

Water: draught, water stress (IPCC 12)

Ecosystems: extinction, coral loss (IPCC 12)

Food: productivity losses and changes (IPCC 12)

Coasts: flood and storm damage (IPCC 12)

Health: malnutrition, sickness (IPCC 12)

California’s Role

California already emits nearly 500 metric tons of greenhouse gasses. (CEC 7)

Transportation is responsible for the largest share of these emissions but electricity

generation is also a serious contributor, accounting for 28% of total emissions. (CEC 7)

This means that electricity generated for California results in the emission of 140 million

metric tons of CO2 annually. Electricity use is expected to grow at an annual rate of

1.25%, and with the current system of electricity generation CO2 emissions will grow as

well. (CEC 14)

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Underlying Causes

California is the most populous state in the United States, and is responsible for a

significant portion of national greenhouse gas emissions. The state’s current population

exceeds 37 million and is expected to grow to over 44 million by the year 2020. (CEC 5)

The bulk of this population growth is occurring in inland areas where hotter climates lead

to increased demand for air conditioning. (CEC 5) This increased population and

resulting increased energy demand will strain California’s already burdened energy

system.

The way that Americans live there lifestyle also contributes heavily to these

massive carbon emissions. The American dream has manifested itself to include owning

several cars and living in a large, single family home in the suburbs. Infrastructure

designed around this ideal makes it difficult not to emit large amounts of carbon in our

daily lives. Californians must drive virtually everywhere and the public transportation

system in the state is inadequate and rarely used. Also, the large detached homes we live

in require massive amounts of electricity to heat and cool. All of these lifestyle trends

contribute to the United States disproportanately large global CO2 emissions relative to

population.

Additionally, there are economic hurdles preventing California from shifting its

electricity generation away from fossil fuels. Fossil electricity is comparatively cheaper

than alternative electricity sources, the 33% renewable portfolio standards will likely

increase the average electricity prices by around 2% annually until 2020. (Bloom 2)

Many of these costs are associated with the fact that California’s current electricity grid

was designed for fossil fuels. Increasing the portion of electricity coming from solar and

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wind will require infrastructure and transmission improvements. Emitting carbon

certainly has economic impacts there is simply no method at present for factoring these

costs into the generation of electricity. Legislation that accounts for this impact on the

open market would make alternative sources of electricity more economically

competitive. Utilities also ultimately make money by selling electricity, a marketing

system which emphasizes efficiency through economic incentives would provide

greenhouse gas reductions.

Summary Definition

Greenhouse gas emissions, especially CO2 emissions present a serious problem in

the form of global warming and climate change. Electricity generation in California is

responsible for 140 million tons of CO2 emissions annually and demand is expected to

rise. Policies to reduce these emissions must be explored.

Past Efforts

California has taken positive steps to reduce greenhouse gas emissions resulting

from electricity generation in the past. Natural gas, though still a CO2 emitter, is a much

cleaner alternative to coal or petroleum as a fuel source. In the past twenty years

California has built power plants so that 40% of electricity generated comes from natural

gas. (CEC 13) Investments in natural gas, renewable energy, and energy efficiency have

enabled California to keep per capita energy use essentially constant while the rest of the

nation saw increases of almost 50%. (EDF 2) Energy efficiency measures, first adopted

by California in the 1970s have been the driving force behind this constant rate. And

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utility efficiency programs along with appliance and building standards have prevented

almost 35,000 GWh of electricity from being used over this period. (Roland-Holst 12)

The state allowed investor owned utilities to use ratepayer funds to administer efficiency

programs, like “flex your power” which lead to substancial use reductions. (Roland-Holst

18) The adoption of efficient appliances in California has also been rapid and sustained,

today the majority of major appliances (dishwashers, refridgerators, clothes washers) are

energy star certified. (Roland-Holst 18)

AB 32 is the latest environmental legislation in California. It continues these

efficiency measures but also calls upon greenhouse gas reductions from transportation,

land use, and by increasing the use of renewable sources in electricity generation. The

law aims to reduce greenhouse gas emissions to 1990 levels by 2020 and achieve an 80%

reduction from these levels by 2050. (Adams ES-2) This paper focuses on electricity

generation and one of AB 32’s requirements is to achieve a 33% renewable portfolio

standard by 2020. This portfolio may include, but is not limited to: wind, solar,

geothermal, biomass, small hydroelectric anaerobic digestion, and landfill gas. (Adams

44) This diversification of California’s electricity portfolio will both reduce greenhouse

gasses and dependence on foreign fossil fuel. The Air Resources Board estimates that the

electricity mix resulting from a 33% RPS will prevent 21.3 Million Metric Tons of

greenhouse gas by 2020. (Adams 46)

Political Background

AB 32 builds upon SB 107 which had previously required IOUs to increase the

share of renewables in their portfolios to 20%. (ARB 45) The California Senate

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Environmental Control Committee originally approved AB 32 in June 2006. (GOV 2) It

was sponsored by Assembly speaker Fabien Nunez and signed into law by Governor

Schwarzenegger in September 2006. This bill has enjoyed widespread support from the

legislature that passed it, the governor who signed it, and recent polls show that two

thirds of Californians support the bill. (PPIC)

There are several stakeholder groups who are affected by the 33% renewable

portfolio standard (RPS) in AB 32. One is the electricity suppliers. IOUs are required to

achieve this mix and it will mean increased costs to them initially and ultimately to

consumers. The public owned utilities (POU) are not legally bound to meet the RPS but

are encouraged to do so and have already begun to develop plans which would allow

them to. (Adams 45) There has not been strong opposition from utilities around this and

there has even been some support. Consumers will also be affected by the 33% RPS in

that rates will rise as a result. These increases are expected to be relatively modest and

the public recently upheld this law in the November elections by voting down proposition

23. The renewable energy industry, which is prevelant in California, must be estatic over

the RPS. Estimates show that funds will flow to them as a result and they should

experience signifigant job growth. (Roland-Holst 12)) There is also action to reduce the

complexity and cost faced by small renewable developers in contracting with utilities to

supply renewable generation included in AB 32. (46)

Not everybody is behind this bill though. It saw strong opposition from large

corporate interests that helped fund the placement of a proposition on the November 2010

ballot to suspend the requirements of AB 32. (Rizo) Proposition 23, which would

suspend AB 32 until California’s unemployment rate falls below 5.5% was defeated in

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the polls on November 2, 2010 by a 21% margin. Assemblyman Dan Logue was a key

sponsor of Proposition 23 along with Secretary and Treasurer of the State Building and

Construction Trades Council Jim Kellogg. (Rizo) Large petroleum corporations Valero

and Tesoro also provided funding for the promotion of Proposition 23. (Rizo)

There is contentious debate over whether AB 32 is good forward thinking

legislation or whether it is flawed and economically crippling. Those who support the bill

feel that it is absolutely necessary to curb the trend of climate change. They believe

scientists have predicted how much we need to reduce to accomplish this goal and AB 32

is a logical, implementable, and cost-effective way of doing so. They believe that it is

reasonable and necessary for the legislature to step in and pass regulation that targets

many aspects of greenhouse gas emissions in order to accomplish this mission. They

believe that carbon emissions do have environmental and economic impacts and that

these should be included in a true accounting of cost. Opposition to this law has focused

mainly on the economics of it. Not long ago groups like Valero and Tesoro would have

fought the idea of climate change from emissions as soft science but recently global

warming and climate change have become acknowledged by virtually all sectors. Instead

they fight it by saying it is too expensive for an economy in a recession. They

aknowledge that global warming is a pressing issue, just feel now is not the time to deal

with it. Prop 23 was written to suspend the bill until the economic situation changed.

They object to implementation and feel the upfront costs do not justify the potential long

term gains. They believe in a free market economy and see this bill as an affront to that

system. The true underlying difference is how much importance to attach to climate

change and what sort of timeline should be used to deal with it.

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Client Goals

AB 32 establishes the framework that many scientists believe necessary to avoid

serious consequences from climate change. The California Air Resources Board (CARB)

is interested in what electricity generating technologies are environmentally and

economically feasible to meet the energy emissions goals outlined in AB 32.

Alternatives

California’s approach to restructuring its energy system could have long lasting

financial pay offs, and could potentially result in improved environmental conditions.

The state should weight out its options for improvements to its existing renewable energy

resources, as well as consider new alternatives. Bellow is an outline of the main

alternatives that California can follow to produce 33% of its electricity from renewable

sources by 2020, with a goal in mind of reducing California’s greenhouse gas emissions.

Status Quo

The first option is a “no-action” alternative, which would be to maintain status

quo. Currently the majority of California’s elestricity supply comes from natural gas, and

another major portion is from imported foreign oil, as well as hydroelectric and two

nuclear plants still operating. California has a few renewable electricity generating plants,

and this alternative would not seek to improve or bolster upon these existing sources. No

action policy would not expand any of the several existing renewable electricity

generating plants like nuclear, solar, natural gas, and hydroelectric. In parts of

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California’s Mojave Desert there exists the world’s largest concentrating solar power

facility. This facility generates a large portion of electricity and choosing this alternative

would bring no expansion to this existing facility. A few other renewable electricity-

generating facilities also exist in California; there are approximately 400 hydro plants

throughout the state. This alternative would not require expansion or improvements to

these preexisting hydroelectric power-generating facilities. The state also imports hydro-

generated electricity from the Pacific Northwest. This no action alternative combined

with California’s growing population and increasing demand for energy, could lead to a

crisis in the near future as the supply of energy becomes short. California also uses the

wind to capture energy and make electricity, and this renewable source of capturing

electricity would not be bolstered or improved with a no action policy.

Renewable Energy

The second alternative that we would like to suggest includes improving upon

California’s existing renewable energy sources, so that by 2020 33% of the state’s

electricity will be generated from renewable sources. Improvements may target a

percentage of the existing renewable energy sources or even all of California’s renewable

energy sources. Expanding the state’s solar power generating facilities to encompass

more solar power plants in sunny regions like the Mojave Desert would increase the

available electricity being generated. There would also be an added environmental benefit

if the increased solar energy generation replaced existing fuel-combusting energy

generation, which is harmful to the environment and the people who live near these

power plants. The expansion of California’s hydroelectric plants could help improve the

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current conditions, so long as the new dams constructed do not harm or dramatically alter

the environment and the wild life species in the area. Another source of renewable energy

California currently uses is wind power. This alternative would strongly suggest the state

dramatically increase its investment in wind technology as well as solar, the two most

profitable, efficient, available and viable sources of alternative energy. Improving

California’s generation of renewable energy can satisfy the State’s growing demand for

energy and also help curb the harmful environmental impacts and costs associated with

nonrenewable energy-generation.

Nuclear Energy

The third alternative would be for California to consider expanding nuclear

generated electricity. California has had several nuclear power plants in its history and

the majority of them have been dismantled. Currently the state operates two nuclear

power plants, one in Diablo Canyon and the other in San Onofre. This alternative would

require that California expand upon its number of nuclear power plants. If California can

produce electricity through nuclear power at a cheaper cost to the environment than other

nonrenewable energy sources, then this alternative could be one to seriously consider.

The nuclear power-generating expansion would have to include a watchdog team that

should monitor the plants handling of nuclear cores as well as the waste. It would have to

be managed with the highest priority. Spent nuclear waste cannot be destroyed and

should be stored away securely until improvements in nuclear power-generation are made

which will allow spent nuclear material to be fuel re-processed. This alternative would

have to include a permanent long-term waste disposal site that is secure. Achieving all of

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these steps in this alternative could help California to reach its new goal of 33% of total

electricity generated from renewable sources by 2020.

Evaluation Criteria

Environmental Impact Assessment

The environmental impact is an important aspect to consider when regarding

energy resource strategies. Understanding the units of measure is increasingly difficult

when regarding the utility aspect one holds towards the environment. Personal utility

cannot be a useful unit of measure when regarding the environmental impact. To better

understand if a particular resource strategy is having a positive or negative impact on the

environment, we need to measure concrete data. The first unit of measure is overall

emissions, whether this is CO2, SO2 and NOx (billion tons). These measures would

provide a more accurate feedback about the positive or negative impacts of

implementation. The second unit of measure is plant and animal biodiversity. This could

include overall quality of crops before and after implementation or fish populations.

Another unit of measure that is considered is quality of water. Understanding the

environmental impact that air pollutants have on water supplies could be a useful

indicator when evaluating each alternative. Due to time and money constraints, it would

be best for our group to consider the measure of anthropogenic greenhouse gases in

metric tons emitted/year (billions).

Cost/Benefit Analysis

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Using the cost/benefits analysis is another useful tool of measure, but holds some

limitations. As stated previously, identifying certain benefits when regarding alternative

energy sources can be increasingly difficult. The beneficial aspect of cost/ benefit

analysis is the ability to quantify all benefits and costs of a particular project for all

member associated. This can lead to economic efficiency because it ensures that all

resources are being put to their most valuable use. The most accurate unit of measure will

be money saved through implementation vs. money spent on implementing. For example,

we can examine the money saved from implementing renewable energy to a whole

community vs. the upfront costs and maintenance costs of implementation. The

advantage of using cost/benefit analysis, when regarding renewable energy, is the ability

to view and measure the costs and benefits over a long period of time. Thus using

cost/benefit can be an accurate tool for measuring the short and long-term benefits of the

alternative energy sources. The only limitation to this form of analysis is the prediction of

inputs and second-order effects of implementation. Due to the vast amount of uncertainty,

it would be best to measure the short and long-term costs (in dollars) vs. the overall

energy savings (in dollars).

Cost Effectiveness Analysis

Cost effectiveness is another useful tool that looks at the overall costs of each

energy source alternatives. With many of our alternatives, the costs of implementation are

clear, but the benefits are not readily available and it is often difficult to compare to the

costs. This gives us the ability to measure the costs (in dollars) of each alternative and

implement the alternative energy source with the lowest cost.

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Health Impact

The overall health impact of each energy resource alternative is another important

measure that can be taken into account. Again, this is another unit of measure that is

difficult to quantify because of the different variables that affect a person’s health.

Genetics, physical activity, smoking and diet are all variables that can contribute to

someone’s life expectancy. For the most accurate data, it would be best to select areas

existing and/or in close proximity to high areas of air, water and waste pollution. Life

expectancy, birth rate and risk assessment data can be collected before and after the

implementation of each alternative to determine the overall success or failure. Although

there are some ethical issues when regarding data collection, the overall goal is to

improve the health of person’s in “high risk” areas. The limitations due to life expectancy

variables, ethical issues and time duration for the collection of concrete data are certainly

difficult to overcome, but if successful, the data could be a very effective tool to evaluate

each energy source strategy.

Systems Analysis

In identifying and connecting system variables throughout our system diagram

with our evaluation criteria and alternatives, two variables emerged as being the most

important, that is, having the most relationships with other variables. These two centrally

important variables are investment in renewables and investment in nuclear systems.

From these two central variables, we were able to trace the effects of our alternatives

through all the other variables to our evaluation criteria. Our systems diagram is split up

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into three different diagrams one for each alternative; renewable, nuclear and status quo.

The three diagrams share similar variables, ones associated with cost, ones associated

with environmental impact, and ones associated with human health risk. The variables for

cost are; investment in nuclear systems, investment in renewables, cost of switching

systems, cost of building new plants, cost of maintaining plants, cost of future

environmental clean-up, amount of available energy, number of jobs created, cost of

importing foreign fossil fuel, cost of nuclear waste storage, and cost of health care. The

central variable associated with environmental impact is amount of carbon dioxide

emission reduction. Other associated variables are amount of environmental degradation,

amount of visible air pollution, amount of land designated for new plants and air quality.

The central variable associated with health risk is number of hospital visits for air

pollution related diseases. The other variable is life expectancy.

Cause-Effect Relationship

In our renewables system diagram, investment in renewables is the central

variable. If you increase investment in renewables, you increase total money spent

switching systems, total money spent building new plants and maintaining plants.

Furthermore, cost of decommissioning plants increases as you move away from oil

refineries and increase investment in renewables. All these variables increase costs if

investment in renewables increases. Amount of available energy and the number of jobs

created increase as more renewable plants are built, as renewable technology receives

more attention, and funds for research and development companies increase. As more

companies start up, more jobs will be created. Additionally, renewable energy pulls from

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an endless supply, meaning the energy resource will not become scarcer and prices will

not go up as a result. As we increase investment in renewable technologies, the cost of

importing foreign fossil fuels as a function of demand goes down as cheaper alternatives

arise. both of which are benefits that decrease costs. Investing in renewable electricity

sources decreases money spent importing foreign fossil fuel. As we import less fossil

fuel, our carbon footprint improves, and future environmental clean-up costs decrease.

More investment in renewable energy sources will not only have economic effects, but

also will affect health and the environment.

The more renewable energy we use, the less dirty fossil fuel energy we need and

use, leading to less carbon concentration in the atmosphere. If carbon emissions are

reduced, air quality improves, and air pollution declines. Environmental degradation

declines and so does visible air pollution. Additionally, investment in renewable

technology today to reduce carbon concentration now will reduce the cost to future

generations of potential environmental clean-up. People are happier because there is less

smog, and are healthier because they are breathing higher quality air. As a result, life

expectancy increases and the number of hospital visits because of air pollution related

illnesses go down. The less sick people are, the less health care costs are incurred.

The second major system variable is investment in nuclear systems. Similar to

renewable energy, the more money we spend investing in nuclear technology, the more

costs we incur. Cost of switching systems, cost of building new plants, and cost of

maintaining plants all increase. More jobs will be available in the nuclear industry as

more plants sprout up and producers enter the nuclear profession for its potential gains,

decreasing costs. As we increase the number of nuclear plants, we increase cost of

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decommissioning current plants and the cost of importing foreign oil as we switch

sources. As a result, we avoid future cots of environmental damage. One additional cost

that also increases is cost of nuclear waste storage. Similar to renewables, nuclear energy

has environmental benefits.

As we increase the amount of carbon emission reduction through nuclear energy,

air quality improves and as a result health improves. And as we build new plants, amount

of land designated for new plants increases. However there are several potential negative

environmental and health affects associated with increased use of nuclear power.

Increasing the number of nuclear power plants will increase the frequency of nuclear

meltdowns, a huge negative side effect when considering proximity to people of a plant.

Also, more nuclear energy means more nuclear waste and the issues of disposal and

transportation have health and environmental risks. If nuclear waste spills during

transportation through a populated area, the consequences could be devastating. But as

nuclear technology evolves, it becomes a much safer and viable option. As investment in

nuclear technology increases, plant efficiency and safety improve. Depending on the

effectiveness and safety of new nuclear plants, investing in nuclear energy has potential

financial gains but equally significant health risks.

In continuing with the status quo, many of the relationships between the variables

change. Continuing with our current fossil fuel-based energy system would see fossil fuel

prices continue to rise, number of jobs continue to decline, and amount of available

energy continue to diminish. Energy costs increase as fossil fuel extraction becomes

harder and more costly. As the supply of fossil fuel diminishes, the cost of importing

foreign fossil fuels increases as it becomes more in demand. Additionally, if we continue

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to destroy our environment in the current fashion, the costs to fix it in the future rise. As a

result costs today increase, and future costs of environmental clean up increase.

Furthermore, there will be no reduction in carbon emissions, and environmental

degradation will increase along with visible air pollution. All this raises costs of

environmental clean up to future generations. Air quality will decline, causing number of

hospital visits for air pollution related diseases to increase, and life expectancy to decline,

increasing the costs of health care.

A note about renewable and nuclear energy. The more efficient we become at

developing and producing that energy, the cheaper almost all costs become over time.

Money spent investing in renewable technology leads to more efficient use of natural

resources as sources of energy. The more efficient the technology is, the cheaper and

easier it becomes to produce that energy, as a result costs go down. Improved renewable

technology will reduce the maintenance costs of renewable energy systems, costs of

building new renewable energy plants, and costs for companies to switch their existing

systems to renewable ones.

Consequences of Alternatives

Seeing how all these variables interact with each other shows how the evaluation

criteria are affected when we introduce alternatives into the system. If we introduce

legislation that mandates a percentage of California’s energy to come from renewable

sources, we can see how that would affect the entire energy system. As new plants are

built, the total cost of building those plants go up, the cost of maintaining those plants

increases, and the total cost of switching current systems to renewable ones also rises.

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The total amount of investment in renewables dramatically increases. And as a result, the

number of available jobs in the industry greatly increases. Switching part of production to

renewable sources also increases the total amount of energy available for use, since

renewable energy draws from infinite sources (wind, solar, etc.). The increase of

renewable energy production decreases the use of damaging existing conventional energy

production, and as a result, various environmental attributes are affected for the better,

reducing costs to future generations of environmental clean-up. As the amount of carbon

emissions are reduced, air quality improves, and air pollution decreases. Furthermore, the

environment is restoring itself, as we are no longer actively working to degrade it.

Because we begin to address the environmental issue now by mandating renewable

energy use, rather than putting it off on to future generations, we save potential future

costs associated with environmental clean-up resulting from human activity. There is

various positive health affects associated with improved air quality. As the air we breathe

becomes healthier, people require fewer visits to the hospital for air pollution related

diseases such as asthma, and life expectancy increases. As a result of people being

healthier, total health care costs decrease.

In contrast, if we introduce legislation that mandates California to switch a

percentage of its energy production to nuclear power, we can also trace the effects on our

evaluation criteria through our variables. First, investment in nuclear systems rises as new

nuclear plants are built. The more nuclear plants put into production, the greater total cost

of building those plants and maintaining those plants. Also for companies who chose to

modify their existing systems, they incur some cost. There are also long-term costs

associated with the transportation and disposal of nuclear waste. Again, with the new

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plants, new jobs are created throughout the industry. And this increased nuclear energy

activity raises the overall level of energy available. The more nuclear energy we create

here to use, the less foreign fossil fuels we have to import, reducing our total import

costs. However, the less fossil fuel we use to supply our energy needs, the more existing

fossil fuels structures we need to decommission, incurring costs. Although switching

some part of production to nuclear energy has some environmental gains such as carbon

emission reduction and improving air quality, which in turn improve health risk, nuclear

energy also has side effects that have potential negative environmental and health

impacts. For one, the switching production to nuclear energy requires new power plants

to be built. Nuclear power plants provide numerous health risks associated for those who

live near one. Nuclear power plants can have a meltdown, having more plants increases

these risks. Since waste must be transported to storage sites there is a risk of a spill. In the

long run these risks may diminish as the system becomes more efficient and safer.

However, they never go away completely. All these variables could potentially increase

health risk and environmental impact.

And finally, if we continue with our current energy system, we continue to invest

in fossil fuels. As a result cost of importing fossil fuels increases as the domestic supply

runs out and easily extracted oil becomes non-existent. As energy becomes more and

more scarce, the industry continues to decline and as plants close due do increasing costs

of oil, jobs continue to be lost. Since there will be no reduction in carbon emission,

environmental degradation will continue in the current fashion, dramatically increasing

costs to reverse the damage to future generations. As air quality continues to decline,

health risk declines as well, and health care costs increase.

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Policy Analysis of Electricity Generation in CaliforniaPart 2

Benefit-Cost Analysis

Accounting Stance

Our analysis aims to valuate the costs and benefits associated with requiring 33%

renewable electricity generation or nuclear electricity generation versus the status quo in

California over the next 10 years. Currently, 12% of California’s electricity comes from

renewable sources. (Adams 44).

Benefits

There are many benefits associated with renewable energy that can be quantified,

and assigned a dollar value to perform a cost benefit analysis. The first benefit we can

measure is the reduction of carbon emissions over time resulting from increasing

renewable electricity generation in California to 33%. Over the next 10 years this will

reduce 21.3 million metric tons (MMT) of CO2 (Adams 46). Out of this comes another

benefit; money saved on future environmental clean up. As we reduce the strain we put

on the environment, we allow it to heal on its own, saving us future clean up costs.

Studies regarding the effects of a 33% renewable portfolio standard in California have

found a net savings of $55/ton greenhouse gas reduced (Adams 84). Other benefits

include new jobs created by increasing renewable production, and can be assigned a

dollar value. Researchers estimate that under a national scenario, increasing the

electricity portfolio to include 33% renewable would create 140,000 jobs in California.

Since the scope of this project deals strictly with California adopting the standard, less

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significant job creation is expected. Another benefit resulting from these standards is

increased energy security and diversity. Expanding the mix of technologies used to

generate California’s electricity diversifies its energy portfolio, and reduces reliance on

fossil fuel imports. The benefits for the nuclear alternative are similar to the ones listed

above for renewable, since the nuclear alternative achieves a similar reduction in carbon

emission to that of the renewable alternative. The only benefits associated with the status

quo are the short-term early action item costs avoided.

Costs

The costs associated with increasing renewable electricity production in

California from 12% (status quo) to 33% are made up of the following. First, we measure

the start up costs of building new renewable plants to meet the required 33%. Then we

measure the costs of maintaining these plants over time. The greenhouse gasses that are

emitted by sticking with the status quo versus implementing an alternative also have

associated costs. The costs we measure in our analysis for the nuclear alternative are

identical to those for the renewable alternative, but should also include disposal and

storage costs of radioactive wastes. Research on levelized costs for various sources of

electricity has produced the following values. These costs are based on a merchant

electricity supply: wind 11.91₵/KWh, Solar 30.20₵/KWh, and nuclear 34.24₵/KWh (Staff

18). Under an investor owned utility electricity supply the costs are: wind 11.44₵/KWh,

Solar 29.21₵/KWh, and nuclear 27.31₵/KWh. (Staff 18) Finally, we can measure the costs

of continuing with the current (status quo) energy system. The status quo would allow

for environmental degradation to continue, increasing costs in the future. The costs of the

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fossil fuels necessary to run the status quo electricity system should also be examined

over time.

Items Not to be Included

All three of our alternatives were included in our cost benefit analysis; renewable,

nuclear and status quo. However, in quantifying some of the costs and benefits for these

alternatives, some items had to be left out. First, in valuating the costs of the nuclear

alternative, we left out the costs of the potential health risks associated with the volatility

of nuclear electricity (meltdown, spill, etc.) These were not included because of their high

uncertainty and difficulty to quantify in terms of dollars. Second, we left out of our

analysis the potential health benefits of greenhouse gas reduction. This is because the

negative health impacts from greenhouse gasses result primarily from NOx and PM2.5

which are associated heavily with transportation emissions in California, not electricity

generation. CO2 is the primary gas emitted in electricity generation, and at ambient levels

it has no direct public health consequences (Adams 86). A Finally, we will not include

the cost of (or the benefits of improving) local environmental degradation because carbon

emissions have little effect on the local environment in which they are emitted (Adams

86). Rather, carbon emissions mainly affect the overall level of carbon concentration in

the atmosphere, which is more closely related to global warming and climate change. The

amount of Carbon emitted in California has the same impacts on these variables as

Carbon emitted anywhere else in the world.

Uncertainty and Risk

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Sources of Uncertainty

The major sources of uncertainty in our analysis differ for each alternative. For

the renewable alternative, our major source of uncertainty is how much the average cost

of electricity to the consumer ($/kw/hr) will decrease over the 10 years. As we increase

production of renewable electricity, technology improves, systems become more

efficient, and marginal costs decrease. These costs result from a range of possible high

and low values. These values are necessarily based on a set of assumptions regarding

plant cost, finance, and tax benefits. (Staff 30) Although actual prices of electricity are

expected to vary these averages provide a good starting point for a more complete

analysis that includes a fuller range of reasonably expected values (Staff 30). The actual

amount of jobs created by switching to 33% renewable electricity would also vary.

Estimates used are based on how many jobs the state would gain if the nation adopted the

standards. California would likely achieve less employment growth than predicted and

actual numbers would vary.

Furthermore, as the increase in renewables brings about major carbon emission

reduction, another source of uncertainty arises: How much environmental benefit will be

provided by reducing greenhouse gasses? There is widespread consensus in the scientific

community that these emissions are accelerating climate change, but the ultimate

environmental impacts of a certain quantity of greenhouse gas emissions are uncertain.

For this study we use the best available value, $55 net savings/ton reduced through the

33% renewable portfolio standard (Adams 84). The ultimate benefit from greenhouse gas

reduction should remain flexible to change as more data becomes available. Also, the

ultimate environmental and monetary costs from disposal of high level radioactive wastes

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resulting from nuclear electricity generation are uncertain. This analysis includes them

simply as a negative impact, but does not attempt to quantify them.

The exact weight (MMT) of CO2 reduced by a portfolio including 33%

renewable electricity is also uncertain. It depends on what source of current electricity is

being replaced. If renewable electricity replaces imported electricity from southwest

states that rely heavily on coal reductions could be more substantial, if it replaces

electricity generated from natural gas only they could be more modest.

For the nuclear alternative, the major source of uncertainty is the potential health

risks associated with the volatility of nuclear plants. First, we are unsure about where

these additional nuclear plants will be placed as they cannot be built in California.

Second, there is no secure method of nuclear waste disposal, so the byproducts of nuclear

electricity generation are a major source of uncertainty. Third, there is a risk associated

with the transportation of nuclear waste. Transportation of this waste brings about the risk

of nuclear spill during transportation. If this were to occur in a populated area, there

could be devastating consequences. Therefore there are major sources of uncertainty

regarding how and where to transport nuclear waste.

And finally, if California were to continue with the status quo, the major source of

uncertainty for this alternative is how much natural gas prices would increase over the

next 10 years. Changes in timeframe also change the results of this study. Renewable

electricity sources, especially solar, have exhibited rapid cost reductions in recent years

(Staff 20). As technological advancements occur both renewable and nuclear electricity

could become more competitive with traditional sources. As far as the status quo option

is concerned, fossil fuel prices could greatly alter the future costs of electricity

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generation. Since the majority of California’s electricity currently comes from natural

gas, natural gas prices are the most significant variable.

Risk

Our alternatives change the level of risk experience by humans and non-human

organisms alike. The renewable alternative would decrease the health risk of adverse

environmental effect to humans and non-human organisms. The reduction in carbon

emissions achieved by the renewable alternative would decrease the risks posed by global

warming. Today, we are at the beginning of an environmental crisis. In short, due to the

massive use of fossil fuels for energy since the Industrial Revolution, we have drastically

changed the composition of our atmosphere, adding far more carbon dioxide than has

ever been present. This increased carbon dioxide concentration traps more of the sun's

light, heat, and energy in the atmosphere that the seas would normally reflect off into

space. This in effect raises the surface and atmospheric temperature of the earth and is, in

two words, global warming. There are many issues with global warming, such as loss of

bio diversity, increased disease, raised sea levels, changes in weather patterns, melting ice

caps, more extreme weather events, and changes in agricultural yield.

All these scientific changes have economic implications that will affect every

country. The environment is a public good that is burdened with many negative

externalities. It belongs to nobody yet affects everyone. However, due to the nature of the

planet, global warming with have distributional effects. Temperatures will rise most

around the equator, and least around the poles. The economic distribution of countries

around the globe follows a similar trend. Developed countries, the United States, Russia,

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China, Japan, all of the European Union all lie above the equator, far enough away from

most extreme environmental effects of global warming. Some countries might even

benefit from slight global warming, like Russia, as more land could be cultivated. While

these countries make steps to combat global warming, the countries that are at most risk

are at a gridlock.

Because less developed countries are often concentrated around the equator, they

will experience the most extreme environmental changes. And since most of these

societies rely on cash crops to fuel their economies and are made up of farmers

supporting their families, they will experience the greatest changes in agricultural yield.

What they are able to grow now, they may not be able to grow in ten years. Add this with

the fact that population will increase most in less developed countries which are mostly

concentrated around the equator. In developed countries the birth rate is often equal to the

replacement rate. But in poorer countries, more kids means more family income so

families are much larger. Population growth is essentially stopped in developed countries,

but still increasing in less developed countries. More people means more pollution, more

use of resources, more mouths to feed, more deforestation. Since these equatorial, less

developed countries will experience the greatest population growth and the most dramatic

of the earth’s environmental changes, they stand to benefit the most from the decreased

health risk that the renewable alternative offers.

In less developed countries and developed countries, poverty is the environment's

biggest threat. Simply put, it is expensive to be concerned and deal with the environment.

The cheaper alternative today is often to pollute. This is especially true for poor

families in less developed countries. They are unconcerned with the status of the

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environment because they have to make ends meet before anything else. If you can’t look

past providing for survival then the environmental issue is irrelevant to you. You do

whatever you can to survive, which is often the dirtier alternative.

The poor are at greatest risk when it comes to global warming and also stand to

benefit the most from a reduction in carbon emission that the renewable alternative

achieves. Continuing with the status quo would have the opposite effects and increase

environmental and health risks posed by global warming. The nuclear alternative would

reduce environmental and health risks to humans and non-humans as a result of carbon

emission reduction similar to the renewable alternative. However, it would increase

health risk to those nearest to nuclear plants and those who live along nuclear waste

transportation lines. The risk of nuclear spill or meltdown is low but the consequences are

devastating. Additional there is a risk posed by nuclear waste disposal and storage as

there is no safe method for either.

Multi-Attribute Analysis Of The Alternatives

Above is a comparison of our two likeliest alternatives that we would recommend

for a policy strategy. A multi-attribute analysis was used and a few of the major impacts

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FAPolitical Feasibility

B-AHealth Risk

AAEmissions

B-BCost $

Alternative 2 (Nuclear)

Alternative 1 (Renewable)

were looked at and given a qualitative grade for the two policy options that were

compared. Improving California’s renewable electricity generating sources was the first

alternative in this analysis, which was compared to our second alternative, bolstering

California’s nuclear generated electricity.

The first major impact we researched and compared is the costs associated with

the two action alternatives. Both alternatives would roughly cost about the same upfront

to expand the state’s existing renewable and nuclear sites. The nuclear alternative was

given a slightly lower grade, because of the costs associated with monitoring and

carefully storing/transporting nuclear material and waste. Nuclear materials and waste are

extremely hazardous and the state would have to invest money in a watchdog team to

monitor the handling of nuclear materials. Second, we studied and compared emissions

impacts from implementing either alternative. Both alternatives generate zero harmful

emissions, so both received high equal marks.

Our third impact we compared was the various health risks associated with either

alternative. The renewable electricity alternative again received a perfect grade for this

category, because the electricity generated from renewable sources like solar, hydro, and

wind have zero health impacts associated with their operation. On the other hand, our

nuclear alternative received a much lower grade due to the volatile nature of nuclear

materials, a key component to generating electricity from nuclear sources. Nuclear

materials and waste are extremely hazardous and dangerous to handle, and there is

always concern from the public regarding nuclear meltdown nightmare scenarios.

Because of this may residents take a “not in my backyard” stance to interest in expanding

nuclear plants, which can have a serious health impacts to those unfortunate enough to be

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near these facilities. Lastly, we compared the political feasibility of these two

alternatives. This impact had the most influence on which policy choice we would

suggest as a result of comparing all these qualitative impact grades. Expanding

California’s renewable energy sources is very feasible politically, as it has several

benefits, which include; creating green jobs, stimulating the economy, and creating a

more environmentally responsible state image for California. We choose to give this

impact a high grade, because we feel that all of these benefits help make this alternative

very politically feasible. The political feasibility of expanding California’s nuclear

electrical plants received a damaging failing grade, as state lawmakers imposed a

moratorium on building new nuclear power plants, in 1976. This was the “coup de grâce”

blow to the nuclear alternative’s shot at as the best alternative choice. Due to the

moratorium, there is absolutely no way California can choose this alternative and expand

its nuclear sites to reach its 2020 goal of 33% renewable electricity generation. In

conclusion of this analysis, we strongly feel that alternative 1, which encompasses

expanding existing renewable electricity sources like wind, solar and hydroelectric, is the

best choice alternative.

Further Research

1) Environmental Impacts from Climate Change:

A) Droughts: longer dry periods have been observed throughout the globe and dry

regions are subject to further moister loss/desertification. Rainfall data could be obtained

from dry areas such as: the Sahel, Mediterranean, South Africa and Southern Asia. The

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rainfall data obtained could be then correlated to historic rainfall patterns and could then

be assigned levels of significance.

B) Extreme Weather Events: global warming is thought to be related to the

significant number of record high temperatures, frequency of hurricanes/storms and the

diminishing numbers of record low temperatures. Frequency of record high temperatures

and record low temperatures could be recorded and graphed over time to determine any

noticeable/significant patterns. This method could also be used to monitor the frequency

of hurricanes and above average stroms.

C) Anthropogenic Greenhouse Gases Emissions: In addition to CO2,

anthropogenic greenhouse gases such as; water vapor, methane, nitrous oxide, ozone and

chlorofluorocarbons could be monitored through the IPCC assessment reports. The data

could then be correlated to determine levels of significance that could determine if

abnormal levels are naturally occurring.

D) Deep Ocean Currents: large quantities of fresh water being dumped into the

ocean has thought to change the dynamic properties of oceanic currents. This could have

major consequences on coastal areas where fish communities depend on upwelling.

Oceanic currents could be monitored through the use of robots and/or the use of existing

data to be compared with historic data to develop levels of significance.

E) Natural Processes: biomass and biological communities are being found

outside their natural ecosystem. For example, mosquitoes are being found at higher and

higher elevations and have impacted communities due to the spread of malaria. Mosquito

migrations could be monitored to determine if climate change has affected their

migratory habits.

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F) Sea Level: climate change has a positive correlation with sea level rise. A high

sea level could have major implications populated coastal areas. Data could be collected

through IPCC assessment reports or visual accounts to determine above average shifts in

sea levels.

G) Global/Water Temperature: data from the IPCC assessment reports could

correlate any significant relationship between emissions and global/water temperatures.

These temperatures could be compared to historical data from ice cores to determine

levels of significance.

H) Ice Sheets: global warming is positively correlated with the melting of ice

sheets. Data could be analyzed visually through satellite images and compared to

historical images to determine levels of significance

I) Ocean Acidification: the NOAA determines that carbon dioxide is absorbed by

the ocean and influences acidity. Data collection from the NOAA could determine

correlations between anthropogenic CO2 emissions and ocean acidity to determine levels

of significance.

2) California Inefficient Energy Uses:

A) Building Standards: the California Energy Commission standards are too low

and contribute to the heat island effect. Data could be collected from large buildings

(above 15 stories) to examine energy uses. Further data could be analyzed to compare

older buildings vs. new buildings. The data could be a useful indicator for what factors

contribute to high or low energy consumption from building to building. These indicators

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could be used to address current building standards and develop more appropriate, energy

friendly standards.

B) Incentives: there are limited incentives for reducing energy consumption at

corporate and residential levels. The LEED program provides some level of incentive to

limit energy consumption, but in most cases, the costs outweigh the benefits of

implementation. In addition, energy is relatively cheap and the upstart costs of

implementing energy saving materials at the household level are relatively high.

Household and Commercial data could be obtained through the use of surveys to identify

if more or less incentives would persuade or deter them to invest in energy saving

materials.

C) Dependability on Foreign Energy: Data could be collected from the California

Energy Commission to estimate how much foreign energy would be needed for

California’s population over time.

3) Effects of Renewable/ Nuclear energy:

A) Petroleum Based Jobs: the implementation of renewable and/or nuclear energy

could have a series effects on petroleum based jobs. Jobs and industrial sites that

specialize in petroleum manufacturing, refining and trading would not be able to compete

with renewable and/ or nuclear energy prices if implemented at a large scale. To

understand the implications, a model could be constructed to determine the estimated

negative effects on specialized petroleum jobs and how the loss of these areas of

specialization would impact California.

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B) Environment: a model could be constructed to estimate various environmental

effects for the implementation of clean air energy. The model could examine how the

environment would respond to the reduction of anthropogenic greenhouse gases at

different percentages and could be a useful tool for policy makers when setting emissions

standards. The information could be obtained through rough estimations that would show

correlations between our variables (crop yield, fresh water levels, etc)

4) Health Analysis (CBA):

Although providing a monetary value to the loss of a human life is reasonably

questionable from a moral standpoint, incorporating this value in the cost/benefit analysis

cannot be overlooked. Being able to incorporate the benefit and/ or the cost of a human

life could have a dramatic influence on the when, where and how of each alternative. To

determine the worth of a human life, information could be obtained from the international

standard that most private and government-run health insurance company’s use. In

addition to the worth of human life, the insurance standard could also incorporate human

health. This could include lung diseases, heart illnesses, types of cancer and other

illnesses associated with either nuclear sites or the status quo. Incorporating these

costs/benefits into the analysis would help strengthen the argument for the

implementation of clean air energy technology.

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Works Cited

California Energy Commission, Arnold Schwarzenegger Governor. Integrated Energy Policy Report 2007. <http://www.energy.ca.gov/2007publications/CEC-100-2007-008/CEC- 100-2007-008-CMF-ES.PDF>

Environmental Defense Fund. "CA Legislature Moves On Global Warming - Environmental Defense Fund." Environmental Defense Fund - Finding the Ways That Work. Nov. 2010. <http://www.edf.org/pressrelease.cfm?ContentID=5308>.

Intergovernmental Panel for Climate Change. Climate Change 2007: The Physical Science Basis. Geneva, Switzerland. 2007. < http://www.pnud.cl/recientes/IPCC-Report.pdf>

Office of the Governor, Assembly Speaker Fabian Nunez (D-Los, California's landmark bill that establishes a first-in-the-world comprehensive program of regulatory, quantifiable, and cost-effective reductions of greenhouse gases.. "Gov. Schwarzenegger Signs Landmark Legislation to Reduce Greenhouse Gas Emissions." Governor Arnold Schwarzenegger | State of California. <http://gov.ca.gov/index.php?/press-release/4111/>.

"PPIC Poll Indicates Strong Majority of Californians Support AB 32; Guv Wants Prop 23 Defeated | California Propositions." Welcome! | California Propositions. <http://www.californiapropositions.org/node/393>.

Rizo, Chris. "LegalNewsline.com | state attorney general news, state supreme court news." LegalNewsline.com | state attorney general news, state supreme court news.. <http://www.legalnewsline.com/spotlight/226957-referendum-on-calif.-greenhouse-law-appears-headed-for-voters>.

Taylor, Mac. "AB 32 Impact Analysis." LAO. March 2010. <www.jobs2010ca.com/wp-content/uploads/LAO-Analysis-Impact-of-AB-32.pdf>.

"Understanding California's Electricity Prices." BloomEnergy. N.p., n.d. Web. 2 Dec. 2010.<c0688662.cdn.cloudfiles.rackspacecloud.com/downloads_pdf_White_Paper_Calif_Elec_Prices.pdf>.

Roland-Holst, David. (Oct 2008) “Energy Efficiency, Innovation, and Job Creation in California.” Center for Energy Resources and Economic Stability. Berkely, CA

Staff. (Aug 2008) “Comparative costs of California Central Station Electricity Generation.” California Energy Comission.

Adams, Linda et al. (Dec 2008) “Climate Change Scoping Plan.” California Air Resources Board.

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