This is the point in the presidential election cycle when candidates make their first forays into the policy world. They talk about things they know little about and rely heavily on bundlers and other contributors and staffers to produce the new ideas. Their main goal is to woo and especially not to frighten primary voters. Not surprisingly, poorly thought out notions, and concepts that are most attractive to the backer, rather than the country, make it into these remarks.
Clinton’s recent first foray into climate policy was typical of the genre. A few potentially interesting ideas—hedged with killer qualifications; a sprinkling of potential goodies for her supporters; some simply incredible omissions; and the traditional combination of lofty rhetoric, important-sounding targets, and abuse of her opponents.
Let’s start with the positives.
She suggests a prize for communities that cut red tape holding back investment . . . but only for solar projects—did Elon Musk write that one? A good idea, but we need jobs, so why not extend the red tape cutting process to all infrastructure and business projects? And what about the Federal red tape that business feels has grown so much under Obama?
Second, she suggests that the Federal Government stop being an obstacle to transmission construction, but only for low cost wind and other renewables. Once built, however, transmission lines carry all flavors of electrons, coal, renewables, and everything in between. Further, the major problem for transmission projects is not so much the Feds as it is local populations. Since the 2005 Energy Policy Act, the Feds have had the power to designate (after study) critical areas for improving transmission and expedite the permitting process, but that power has been hobbled by a multitude of court decisions, notably California Wilderness Coalition v. US Department of Energy. From the industry’s standpoint the primary federal issue is FERC’s reluctance to allow them reasonable rates of return on transmission investments, which have to compete with other investment opportunities. We doubt this is the kind of “obstacle” Hillary is targeting.
Third, she suggests making clean energy incentives more cost effective, and cutting energy innovation spending that, “fails to deliver results.” Both excellent thoughts, but undermined by then saying that she will also, “fight to extend clean energy incentives,” and focus innovation efforts on the usual suspects (storage, nukes, CCS) where, as we have discussed elsewhere, the problem is commercialization and acceptability, not just innovation. And as she reminds us, she voted for extension of the current subsidy mess, including ethanol.
Goodies for her supporters? Well, there’s the goal of a half billion solar panels by 2020; help for low income households to access rooftop solar (even in rental homes?); support for declining coal communities (a welcome idea we suspect owes most to the labor unions and Pennsylvania’s swing-state status); and an apparent belief that the only additions the power generation network needs are renewables.
Which brings us to the incredible omissions. The paper mentions neither nuclear (a really scary topic for her with primary voters) nor natural gas. In fact, the added renewable capacity she seeks cannot operate without backup for when the sun does not shine and the wind does not blow. In almost the entire country that means natural gas, and so its infrastructure is just as important as the transmission wires she wants to build to connect wind and solar farms to cities.
Let’s now take a look at her solar targets, which include both a total number of solar panels and total solar generation capacity. First, a half billion “solar panels” in four years. We’ll assume a “panel” is a typical 6×10 array of solar cells. The average U.S. home requires roughly 12 of these arrays. So half a billion is equivalent to about 40 million homes (currently there are only 645,000 solar installations in the entire country), but the “panel” number presumably includes centralized power generation, which use tens of thousands of such panels at each solar farm. It is not at all clear what this target means.
As for total solar generating capacity, the target is 140GW by the end of 2020, an increase of 120GW over our current 20 GW, 90% of which is in just 10 states, and 50% in California, which is mostly funded by the 2008 stimulus program. Capacity increased by 6GW in 2014, the highest year ever. The solar industry’s forecast is for 12GW to be added in 2016—and a fall to 5GW in 2017 if there is no extension of the relevant tax breaks. Let’s assume that the 2013/14 growth rate (34% year-on-year) continues through 2020. That would take total capacity at the end of 2020 to about 115GW; to get to 140GW you have to assume roughly a 38% YOY growth rate. There is no discussion of how this would be achieved, particularly faced with declining site availability (the best solar sites are taken first), no new stimulus money to fund it, and likely saturation of the market in the most enthusiastic state (California).
Second, “add more power generation capacity to the grid than in any decade in American history.” But that’s going to happen anyway: EIA’s 2015 AEO forecasts that in 2016-25, the grid will add roughly 700GW of capacity, which would indeed be the largest increase in any decade. Further, EIA forecasts that there will simultaneously be some 630GW of capacity retirements, mostly old coal and natural gas plants. But Hillary’s plan only adds renewable, mostly intermittent capacity to replace this high utilization (‘always on”) power—though we are intrigued by the promise of more geothermal. On the other hand, we’re skeptical about her proposal to increase output from existing hydro: she does not say how this would be accomplished and the recent trend goes the other way: both removing inefficient hydro dams, and decreasing power generation caused by increased drought. The CPP requires more gas to be burned, and so does replacing coal with more renewables since they need backup. But as noted, natural gas dare not speak its name in Hillary-world.
While all of this is in support of her claim that we should go beyond the Clean Power Plan, and regard it “the floor not the ceiling,” each of these targets is about new capacity and not actual results—reductions in greenhouse gases. Her claim is that we would go from 16% “Renewable Power Generation” (actually capacity) today, to 25% under the CPP (as then proposed), to 33% under her plan. Actual kilowatts from renewables (reflecting how much of the capacity is actually delivered) were about 13% of the total in 2014—about half of which came from hydropower. But it is those actual kilowatts and their resulting emissions reductions, not capacity, which would reflect how useful her favored capacity additions would be in achieving the alleged main climate goal. We also note that solar, in particular, is among the least cost effective ways to reduce these emissions.
The CPP may be moot, or at least in legal limbo, by November 2016. Even if it is not, aside from the true believers, many observers, and more importantly, most states, don’t see how the current CPP targets are achievable in the period to 2030, let alone how more can be done by the end of her either her first or putative second term.
We’ll pass over the rest of the rhetoric in the statement but note that when discussing her achievements at the Copenhagen summit, she did not mention her ownership of the $100B/ year developed world commitment to developing countries. We hope an intrepid reporter gets well enough briefed to press her on that.
We are promised more about Hillary’s climate and energy plans in future weeks. What she has already promised is either meaningless, can’t be done under current or plausible policy, or will happen anyway. We hope there is more substance and reality in the subsequent proposals.
 Solar installations typically generate over a year about 15-20% (16% actual in 2013) of their theoretical summer capacity, so divide each of the above capacity numbers by 6 to get a rough idea of usable electricity produced. Comparable 2013 figures are 39% for hydro and 32% for wind.