Sunday, March 05, 2017

Electrification, Electric Utilities and the System Working

When it comes to social change, I tend to prefer working within the system rather than seeking its radical overhaul. This isn't due to any particular love for the system we have. Rather, it's for the more prosaic reason that widescale systematic change is really hard, and so if you can achieve your ends through the system that's already in place you might as well go for it. I also have a belief -- perhaps naive, perhaps not -- that the modern liberal state and society presents such a variegated slate of interests, motives, and desires that the creative reformer should be able to concoct a cocktail where it is in the interest of system-level players to spit out the social good you want.

On that note, I found very interesting this article by David Roberts on the potential synergy between large-scale electrical utilities and environmentalists seeking decarbonization. The first part of the argument is the observation that, if you want to decarbonize our economy, you want as much of it running on electricity (as opposed to, say, petroleum) as possible. Instead of gasoline-powered cars, electric cars. Instead of oil heaters, electric heaters. Instead of gas stoves, electric stoves. And so on. Electricity isn't always renewably produced, but it can be -- through wind, solar, hydro, or nuclear. So the more we switch over to running things on electricity, the more opportunities there are to replace carbon-intensive fossil fuels with zero-emission sources.

The second part of the argument asks what large-scale utilities -- big legacy corporations that are more or less the definition of "the system" -- want. And the answer is, intuitively enough, more electricity demand. Over the last few decades, electricity demand has begun to flatten -- a large problem for utilities who generally make their money not on the sale of electricity (they only recover marginal costs) but on returns on capital investments (e.g., building a new power plant). If there is no increase in electricity demand, there's no need for new plants, and so there's no new capital investments to make a return on.

Putting two and two together: Utilities want a world in which they need to build more power plants. Environmentalists want a world in which more of our energy comes from electricity -- specifically, zero-emission electricity. It seems like a deal can be struck: environmentalists support electrification on the condition that the new electricity produced be primarily zero-carbon.

In short, there's a massive and influential player inside the system with a vested incentive to promote environmental reform. Leveraging that may not be as fun as seeking to blow up the system of large corporations who profit on energy sales, but it is far more likely to actually happen.

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