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Michigan alternative electrical generation – Henry Ford is not a good analogy

5 Oct 2015

utility workA recent op ed in Crains Detroit Business argued that legislation pending in Lansing regarding Michigan’s electrical system is wrongheaded. The authors focus on the proposed elimination of the renewable portfolio standard (RPS requiring 10% of Michigan’s electricity be generated by renewables by this year) by the legislation and argue that the legislation will cost Michigan energy jobs. They argue that  Henry Ford wouldn’t have built his automobiles here if there wasn’t a legislative infrastructure to support buyers of his cars.  I think I agree with the authors that we should retain the RPS, but their argument doesn’t persuade me. I believe that the future will include a greater mix of sources of electricity. It will not be simply large power coal-fired plants owned by large utilities providing us electricity.

However, without any historical discussion, they suggest that Henry Ford located his operations in Michigan because somehow the regulatory climate supported buyers of his cars, because in their words Lansing didn’t “kowtow” to the horse and buggy industry and paved streets and put up traffic lights. That’s simply not true.  Detroit’s mayor Hazen Pingree began a push to pave streets in the 1890’s and Ford didn’t begin production of his Model T until 1908 (making over 10,000 of them in 1909).  The traffic light wasn’t patented until 1918 and reportedly the first one was installed in Detroit in 1920 – again, well after Mr. Ford had begun his operations (in 1920, Ford reportedly manufactured 1 Million cars worldwide).

As most students of Detroit history know, the automobile industry focused on Detroit because Henry Ford was from here, there was a history of manufacturing, and there was easy access to raw materials. There was no amazing roadway system which led Ford to conclude “this is the place to build the automobile.”  In short, it was an accident of luck, history, geography and economics. I think a better analogy is the railroads, which required a dedicated infrastructure as Congress wanted to open the western United States to commerce and did so by granting rights, privileges and land so that the railroads could establish their “grid” at a lower cost.

The authors of the op ed pay short shrift to the discussion of the legislation’s other major change – elimination of net metering, but it appears that they view this as problematic also. Net metering is the current system whereby individuals and small businesses that generate their own electricity can sell it back to the grid.  The net metering issue is not over whether individual electricity generators can or should sell power back to the grid – rather, it’s what should be the price of that sale. Currently, individual generators can sell power back to the grid at the retail price of electricity charged by the utilities. This has been a boon for encouraging individuals and others to put up wind turbines and solar cells. The ability to sell excess electricity at the same price that the utility charges certainly means a faster payback which means more people will invest in it.

Utilities argue that this is a subsidy and they’re right.  Individual generators do not have to meet regulatory requirements relating to the power that they generate, nor do they have the costs of ensuring long-term reliability or the overhead costs of delivering power to consumers.  If you took your home-grown tomatoes to Kroger or Meijer, would you expect the law to require the store to buy them from you and at the same price the store sells tomatoes? Of course not.  In my view, the question is not whether there should be an incentive for individuals to create distributed power but, rather, how much of an incentive is fair to incentivize distributed power generation and fair to those who will continue to depend on the existing grid that will need upkeep.

We have an infrastructure in place that requires maintenance and upgrading for the 21st-century.  This is not a problem with a simple one-size-fits all-solution. The Legislature needs a more nuanced approach than simply blowing up the current system, but let’s get the arguments right.

What will be the top stories of 2015?

23 Jan 2015

edit_calendar_ssk_47433454Happy new year!  I know it’s almost February but as this is my first blog post of the year, I thought (particularly after hearing the State of the Union and the State of the State speeches)  I’d predict the big stories of 2015 in no particular order:

  • Wetland Rules – the EPA and the Army Corps of Engineers finally proposed rules in 2014  to address the fallout of the Rapanos case.  The proposal was met with a firestorm of disapproval, particularly from the farming world.  Will they ever finalize them?
  • Brownfield TIF Legislation – after all that work last year, will the Legislature take up streamlining this program and expanding it to allow Michigan to be even more competitive in redeveloping brownfields?
  • EPA Greenhouse Gas Rules vs. Congress – in September, 2013, EPA issued a proposal for carbon pollution from new power plants; in June  2014, EPA issued a proposal to cut carbon pollution from existing power plants – the GOP and coal and oil interests in Congress have fought this for some time.  Will the rules be adopted and enforced?  Will there be enough time for electricity generators to get alternative plans in place before being forced to shutter their oldest, least efficient and most polluting plants?
  • Keystone Pipeline - President Obama and Congress have been locked in a politically charged dispute over the Keystone XL pipeline for almost 3 years now – he seemed to indicate in the State of the Union that he’d veto legislation – will he?
  • Energy Policy - Governor Snyder has pushed for an energy policy, legislation is expected this year and the Governor recently mentioned an intention to develop a new energy agency that would make Michigan more competitive for business.  What that will entail in light of the likely changes due to federal regulations will be interesting to see – will Michigan upgrade or discard its renewable portfolio standard? Can Michigan reduce electrical cost while improving both reliability and environmental performance?
  • Water Policy – the Governor’s long-awaited great lakes policy is expected this year.
  • Pipelines – in addition to the Keystone pipeline, there has been a lot of interest in pipelines in, under and around the Great Lakes – could there be federal and state changes there?
  • Detroit’s Water Authority – it is supposed to morph into a regional authority – as I said previously, the easy part was getting to the agreement last year – will the hard work succeed or will it fail, causing major shockwaves for roughly half of the State’s population?

Gas taxes, electrics and hybrids – is Michigan paying attention?

17 Dec 2014


A sharp, environmentally friendly car, but also a “free rider”?

Everyone agrees that Michigan’s roads are in awful shape.  Everyone seems to agree on the amount of money to get them into good shape and keep them there (an additional $1.2 Billion a year – although MDOT argues that it may be closer to $2 Billion/year).  What no one seems to be able to agree on is how to pay for that.  With a week left to go this year (and I wonder why they aren’t working through the 31st on this), the House has passed two bills and the Senate has passed another.

Michigan, desperate to fund much-needed road repairs, appears unwilling to take on this issue

The first House bill would amend the General Sales Tax Act to eliminate, over 6 years, the sales tax on motor fuels. The proposed exemption would first reduce the portion of the sales tax that existed before the approval of Proposal A on March 15, 1994. After January 1, 2021, eligible fuel would be exempt from the sales tax. The Legislature’s own financial analysis shows reductions in State and local revenue by approximately $1.1 billion by fiscal year 2021-2022.  The second bill would amend the Motor Fuel Tax Act to replace the current excise taxes on gasoline and diesel fuel with a single excise tax that would be adjusted annually.  The current gasoline fuel tax is 19 cents per gallon and under the bill, the tax rate could go up every year but could not exceed 32.5 cents.

the number of miles driven is a good proxy for wear and tear on the roads but I wonder if there should be some weighting based on, well, vehicle weight


Detroit’s Carbon Footprint – now what?

18 Nov 2014

Not a carbon footprint

Not a carbon footprint

A couple of years ago, my son was watching a cartoon where one character discussed his villainous carbon foot print (a giant foot).  This showed me both how widespread the use of the term “carbon footprint” had become and how little anyone seems to know what to do with or about that information.  A group at the University of Michigan recently released findings calculating the City of Detroit’s cumulative carbon footprint and presented their report to Mayor Duggan’s office.

Not surprisingly, the study reported that some 66% of the City’s emissions come from stationary sources including residential and commercial buildings and another 30% result from transportation. Those are known to be large sources of emissions.

What I found interesting is that 41% of the city’s total emissions are produced in just 4 of the City’s 33 ZIP codes – primarily from the City’s southwest, midtown and downtown areas. Citywide, greenhouse gas emissions totaled 10.6 million metric tons of CO2 equivalents in 2011 and 2012. According to the report, if you drove from Detroit to Ann Arbor 60 times, your car would emit roughly one metric ton of CO2.  Also interesting is that, on a per capita basis, Detroit’s 2012 emissions are below average when compared to data previously collected from 13 other U.S. and Canadian cities. Detroit’s per capita emissions ranked 9th-lowest among that group—below Cleveland, Denver, Pittsburgh, Ann Arbor and Washington, D.C.  Per capita emissions were lower in Baltimore, Boston, Minneapolis, Chicago, Philadelphia, Toronto, Seattle and New York City. That one always surprises, but New York with its many tall buildings is surprisingly efficient on a per-capita basis. The report shows that electricity use contributed 45% to 2012 citywide emissions, in large part because of DTE Energy’s fuel mix, which includes 76% coal.

Now that we know where the City’s “low hanging fruit” of CO2 emissions can be found, the City may be able to work on assisting its property owners and businesses to reduce those emissions, which typically go hand-in-hand with cost savings.  That’s often the best way to sell such changes – not based on an environmental change, but based on an economic one.  One more thing for Mayor Duggan’s team to work on.

Bees, pesticides and winter…. not a good combination.

28 May 2014

honey-beeEarlier this month a new report came out which heavily indicts certain commonly sold neonicotinoids pesticides in the collapse of bee colonies. Neonicotinoids are the first new class of insecticides in roughly 50 years and are different than most past pesticides because they are taken up through a plants’ roots or leaves and move through the plant like water and nutrients do.  Neonicotinoids are fairly safe for use around people and animals.

Since 2006, discussions and speculations about honeybee Colony Collapse Disorder have been rampant. There have been reports that the disorder wiped out roughly half of the commercial hives used to pollinate farm fields.  This is an environmental problem with huge commercial ramifications.

There are many species of fruits and nuts that cannot easily reproduce without the honeybee including such Michigan crops as apples, asparagus, cherries and blueberries (per the Michigan State University Extension).  Speculation as to what is causing the disorder has included high fructose corn syrup (see the attached article in the Smithsonian by fed to bees, these newer pesticides, and other causes.

Last year, the USDA and EPA released a report summarizing the “state of the art” knowledge of the situation and ultimately concluding that the disorder results from a confluence of causes focusing largely on a type of mite and acknowledging that  additional research was needed to determine risks from pesticides.

In the last year, I have seen many websites calling upon major home improvement chains to stop selling neonicotinoid insecticides. Here is one such on-line petition.  While I generally tend to discount on-line furor (think the anti-vaccination fringe), in this case, it appears that the petitioners may have a solid point here.  The new study reports that bees treated with a less than lethal dose of neonicotinoids vanished from their hives during the winter months and that those that survived failed to rear their young. While the mechanism by which the insecticide appears to cause these results is not understood, one fact came through, the colder the winter, the worse the effects.  Given the winter that we just came through, this is very troubling and recent reports seem to confirm serious losses.


Climate change and infrastructure

27 May 2014

bumperstickerAfter that 100 year winter we just came out of, and the potholes it left behind, everyone seems to be talking about infrastructure.  Even the Michigan Legislature and Chamber of Commerce are supporting tax increases to support road and bridge repairs.  While potholes are annoying, sinkholes and bridge failures can be some pretty serious stuff, as has been recently reported.   President Obama has also spoken recently about infrastructure investment as he asks Congress to appropriate additional highway funds.

There has also been a slew of recent news about climate change including a national assessment report and reports of major antarctic melting.  Given all this news, our investments in infrastructure should take climate change into account. We all know about freeze-thaw and the havoc it can wreak on our roads and bridges. With weather becoming less predictable and more extreme, as we rebuild our infrastructure, we certainly need to think about doing it right the first time including:

  • Designing tougher, more resilient, lower maintenance roadways, bridges, facilities and roadsides;
  • Incorporating materials which will perform more consistently in weather extremes;
  • Better controls of runoff including pavement redesign and strengthening drain, river and stream banks and ditches to prevent erosion;
  • Stronger and lower maintenance bridge design;
  • Changes in roadside vegetation to ensure survival and water uptake during floods as well as drought and erosion resiliency;
  • Larger capacity pumps/pump stations to prevent freeway flooding; and
  • Better sewer and water lines to prevent failures as we experience more freeze-thaw, deeper frosts and drought conditions.

While the east and west coasts are expected to take the biggest climate-based hit (think Katrina, Sandy and California droughts and wildfires) drought, higher temperatures and stronger storm events threaten roads and we have already seen Great Lakes levels impact shipping and commerce.  A recent government report discussed the likely impacts on energy infrastructure including:

  • increased demands for electricity;
  • greater stress on the grid as we experience stronger storms; and
  • power plants’ vulnerability to water shortages.

From roads to utility lines, water lines and sewers, we are on the cusp of a brave new world.  I, for one, think that if we are about to invest billions in putting Michigan back together after many decades of neglect, we ought to do it with our eyes on the future and do it right the first time.  If that costs more, it will be worth it in failures and crises avoided down the road and will provide a base from which Michigan’s economy can grow.

Climate change adaptation; don’t put all your bananas in one basket

28 Apr 2014

Perhaps a thing of the past?

Perhaps a thing of the past?

Climate change seems to be in the press pretty much all the time these days.  There are stories about the UN reports on climate change (see also here); the President has a two-pronged plan (attack causes of climate change and harden systems against climate events) and, recently, the President requested $1 Billion in the 2015 Budget to support developing climate-resilient infrastructure.

A couple of years ago, a report prepared for the United Nations suggested that as the climate changed, three of the world’s biggest staple crops — corn, rice and wheat — would decrease in many developing countries, and the potato, which grows best in cooler climates, could also be affected by warmer temperatures and changing weather patterns.  The report suggested that bananas could replace potatoes in a warming world as a critical food source.

Unfortunately, now there are reports that the Cavendish banana that most of us buy at the grocery store is under threat of a seemingly unstoppable fungus.   You might say that this is alarmist non-sense and an entire fruit couldn’t be wiped out.  However, you’d be wrong – it happened with an earlier variety of banana called the Gros Michel which virtually no American under the age of 50 has ever eaten.  These bananas were reportedly in every way superior to the ones we eat today but were largely wiped out by a fungus similar to the one that is now ravaging the Cavendish variety.  This is an example of the risk of  cultivating only one type of fruit or vegetable – the same sort of mass production technique that led to the potato blight and famine in Ireland.

Of course, the best method to adapt and become resilient to climate change (although not the most economical) is to diversify – something we Americans have become less inclined to do when it comes to our desire for predictable and consistent groceries.  Will the fruit companies win the fight against the fungus? Will we replace the Cavendish with a new single type of banana (there are still hundreds of varieties mostly unknown to the United States)?  Will we find something else to grow instead of corn, wheat, rice and potatoes? Perhaps the much touted but less well known superfoods of quinoa, freekeh, or teff?  Time will tell, but one thing seems certain, greater diversity leads to greater resilience.  This is something that no environmental law or regulation is likely to fully address.