Five Percent: Conserve Energy

Climate Change Is Important: Energy Conservation is the First Step

June 22, 2012

My City is Smart: Yes ROI, Yes Energy Efficiency Saves

Category: Climate Change,Conservation,Policy – Tom Harrison – 10:08 am

Our excellent Mayor of Newton, MA, Setti Warren cares about our city. The way he cares most is by saving money. One way he saved money was through energy efficiency programs.

These programs are for the city itself, businesses, and residents

…our Energy Smart Newton program and the additional costs-savings and efficiencies we found by becoming the first community in Massachusetts to procure 100% of municipal electricity from green/renewable sources, through the purchase of renewable energy credits (REC’s) to offset the usage of an estimated 70 million kilowatt hours of electricity over the next three years, as well as our receipt of a prestigious Climate Protection Award from the United States Conference of Mayors.

Sounds expensive. But it’s not: it will save $300,000 over the next three years, even after the purchase of RECs.

REC’s will always be controversial because they are indirect — most of our electricity will still come from coal burning plants. But the RECs we pay for are bought at an auction, sold by producers of green energy, thereby lowering their cost and making sustainable energy sources more cost-competitive. This strategy is the basis of the RGGI initiative that Massachusetts is part of (and New Jersey notoriously backed out of, recently), and shares the incentive-shifting properties of either cap and trade, or carbon tax proposals.

Newton also was one of the top five small cities to be recognized for local climate efforts.

While it is quite certain that I see this as an effort that on it’s own will do little, perhaps it’s biggest impact will be that the city is saving money without firing city employees. At some level, one has to think every city and town in the country could get on board with this kind of plan.


  1. I still can’t get around the fact that you can in one go convert all your ‘dirty’ polluting energy into ‘green’ energy by buying RECs.


    Comment by mad.madrasi — November 13, 2012 @ 2:31 am

  2. You’re right: REC’s don’t “convert” dirty energy to clean.

    When you burn a pound of coal, much more than 2 pounds of CO2 is released — the act of converting the carbon in coal to heat energy (“burning”) causes each carbon atom to bond with two oxygen molecules. Coal isn’t pure carbon — depending on the type, it has all sorts of other nasties in it. “Clean coal” is clean in the sense that more of the other bad stuff generally also released into the air is trapped. But in the end, the chemistry is the same, and the same amount of CO2 is released. CO2 is now classified as a pollutant in this context, so clean or dirty, it’s polluting. Natural gas is less dirty, but still dirty.

    Solar and wind aren’t the result of burning anything (at least not when the power is being produced) so at the source they are effectively zero carbon emissions.

    So, if you burn it, it’s dirty in the sense that it releases CO2, more or less depending on what you burn, and coal is the dirtiest.

    So what’s the deal with REC’s?

    Like any new technology, solar, wind and others are still more expensive per unit of energy produced. Their higher cost is a result of the comparatively small demand for them … which is because they are more costly.

    Like computers, digital cameras and other modern technologies, the cost drops dramatically as steady increases in demand make it profitable to find ways of improving that technology. Heck, the same is true with oil — shale and tar oil is now economically feasible. In short, it’s worth it economically. Here’s a short and clear explanation of how solar panels have followed a similar pattern over time.

    (Of course just having solar panels that are more efficient or cost competitive is not enough — we need some rather significant infrastructure changes to make them work at scale. But reaching the point where it’s clearly cheaper for a person is a huge milestone that would be expected to force the infrastructure changes).

    So why not just wait? In short, because it’s too expensive to wait. Consider the impacts of the recent storm Sandy or Katerina (and on, and on, and on) all of which are the kinds of extreme events predicted by climate change models. Investment in protection is less costly than fixing the damage. And, um, we have already waited. I started writing this blog in 2005, and in seven years we have made progress, but not nearly enough.

    REC’s are intended to jump-start that technology improvement process. If solar or wind had slightly lower cost as coal or natural gas today (all things considered), then the economic choice would be easier. Greater demand would make it a better business to be in, so more companies would invest. More investment and competition would result in better, cheaper, more efficient products. This isn’t fancy economics — it’s the simple kind that works every single day: supply and demand is what I learned in the first month of the first course I took in my economics major in college.

    So RECs, in effect, make clean energy more cost-competitive sooner by setting up a system where at the very least, clean energy sources get credits to offset their costs. In some cases those credits (money) come from people who voluntarily sign up to to “offset” their emissions. The real problem with consumer financed RECs is that generally people don’t like to give money that provides no immediate benefit. My city, Newton, MA takes the longer view that it will be worth it, eventually.

    In other cases, RECs come from regulations that calculate in the cost of “dirtiness” and charge dirty producers — they pay the credits. As you might expect, people voluntarily giving money isn’t anywhere near as effective as establishing rules. Call it what you will, but those “rules” boil down to a tax on carbon producers.

    So no, you don’t “convert” dirty polluting by offsetting. RECs change the game a little in favor of new, much cleaner technology.

    Comment by Tom Harrison — November 13, 2012 @ 9:16 am

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