Houston — Former Colorado Governor John Hickenlooper, a Democratic presidential candidate polling at no more than 1%, has released a climate action plan that steers a more moderate course than the "Green New Deal" advocated by more liberal Democrats, which drew mixed reviews from power industry observers Friday.
Released on Thursday, the former geologist's climate action plan includes the following proposals:
- A carbon tax "returned directly to American taxpayers, more than offsetting any increase in energy costs."
- A carbon border adjustment system to ensure US companies' global competitiveness.
- Reinstatement of the Obama administration's Social Cost of Carbon metric assigning a dollar value to each ton of harmful emissions.
- Methane regulations Hickenlooper established in Colorado adapted nationwide.
- $200 billion "to revolutionize" the US transportation system, plus $150 billion "to make America's electric grid more reliable, secure, efficient and resilient.
- Public-private partnerships to "address current market failures and break down barriers to innovation" as part of a plan to create millions of "green jobs."
The plan describes Hickenlooper as "a pragmatist and optimist" who "has criticized the Senate version of the Green New Deal that includes a federal job guarantee for every American, because it would lead to needless tax increases, expansion of the federal government, and reduced chances of enactment."
Carey King, University of Texas Energy Institute assistant director, said Friday he thinks this climate action plan would affect US power markets "not much at all."
GREEN RESOURCES' MARKET IMPLICATIONS
"He is pretty much calling for change that is consistent with how electricity markets are changing," King said. "The question is one of pace, and he did not state how fast he wants change, so he could probably take credit for investments in wind, solar and batteries that will happen regardless."
An energy market consultant who asked to remain unidentified out of concern for his clients noted the US power industry has been reducing its CO2 emissions for years.
"This is not that economically difficult for our industry," the consultant said Friday.
Compared with the Trump administration's approach, Hickenlooper's plan "is better, in the next few years, for the US electric industry because it would induce diversification and add many more jobs than the status quo," the consultant said.
"It could also be a lever in fair trade that would be an advantage for the US," the consultant said. "Without something like this, the US will cede trading power to the EU and China."
Larry Kellerman, managing partner of Twenty First Century Utilities, also noted the transition to renewables favored by Hickenlooper "is already well under way as a result of fundamental economics combined with a range of state and regional efforts," but the transition does have power market ramifications.
"When, over time, the ballast of generation in any marketplace is characterized by resources that exhibit zero marginal cost, today's energy dispatch and pricing systems that are driven by the concept of locational marginal cost/price will clearly lose their economic and operational logic," Kellerman said in an email Friday. "Re-imagined and reconfigured regional operating, dispatch and load-resource management constructs, perhaps analogous in certain ways to the longstanding operating regimens in hydroelectric-rich regions such as the US Pacific Northwest, will be needed to replace, or at minimum supplement, the existing organized market rules."
Carbon taxes in Australia, Canada and France have proven unpopular, resulting in political reverses for their advocates. Any Democrat who supports carbon taxes likely could get the nomination, UT's King said, "but there is a 50% change it would doom the Democrat nominee in the general election."
"If the Democrat nominee favors a carbon tax, then they need to get all of the large businesses that have already stated they support a carbon tax to support their campaign (via ads or town halls, etc.) in the general election campaign," King said in an email. "That would be a way to minimize backlash from the carbon tax by making the US citizens realize there are some large companies 'for' a carbon tax (at least they state that officially)."
In contrast, Matthew Cordaro, a former Midcontinent Independent System Operator president and CEO who now resides in New York, said, in effect, that climate change's lower public profile in recent months limits the potential political cost of carbon tax advocacy.
"With all the other major issues of public concern, climate change has moved to a lower priority on the minds of voters," Cordaro said in an email Friday. "As a consequence, advocating a carbon tax would not doom any candidate in the 2020 presidential election."
However, Cordaro noted that nuclear power, "by far the most abundant, and proven, way to generate carbon-free electricity," is "conspicuously absent" from Hickenlooper's plan. "It ... should have a vital role in addressing climate change," Cordaro said.
-- Mark Watson, email@example.com
-- Edited by Brandon Evans, firstname.lastname@example.org