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Granholm’s Energy Plan Ruffles Coal’s Fans

Her big ‘green jobs’ program aims to cut utility bills, fossil fuel use

March 3, 2009 | By Glenn Puit
Great Lakes Bulletin News Service

Clackamas County
  Governor Granholm’s plan would “weatherize” 100,000 homes, create thousands of jobs, cut energy bills, and push back the date when the state needs a new coal plant.
Responding to Michigan’s loss of 49,000 Michigan jobs last year and its nation-leading 10.6 percent unemployment rate, Governor Jennifer Granholm announced a remarkably ambitious plan during her State of the State address last month that she said would bring tens of thousands of “green collar” jobs to the state.

The governor told the Legislature that she wants electric utilities to cut their fossil fuel use by 45 percent within 12 years, and then unveiled a sweeping plan to help them do it.

The governor’s plan included helping homeowners and businesses weatherize their homes to cut their energy consumption and save energy dollars, keeping those dollars in the state, employing people in a wide array of clean-energy jobs, and allowing homeowners and small businesses to make money by putting up their own wind turbines and solar panels.

But then the governor said something that quickly drew strong protests from some state leaders: Noting that her plan would sharply cut the need for new power generation in the state, Ms. Granholm announced that her administration would look more critically at Michigan’s coal rush—a push to build up to eight new coal-fired power plants in the state. The governor said the state must make sure that there’s actually a need for more power and whether relying on coal plants to provide it is a “prudent and feasible” approach.

State Senate Majority Leader Mike Bishop (R-Rochester), Michigan Chamber of Commerce environmental and energy lobbyist Doug Roberts, and others promptly cried foul, arguing that if the governor stopped new coal plants, it would both cost jobs and deny Michigan its future power needs. And Attorney General Mike Cox issued a legal opinion claiming that the governor’s order was illegal.

But renewable energy experts said such reactions reflect deep misunderstanding of the state’s current and future energy needs, ignore the vast jobs-building and money- and energy-saving potential of renewable energy and energy efficiency, and show little understanding of state and federal environmental law. They predicted that the governor’s plan, combined with legislation she signed last October, would eliminate the need for even one new coal plant for decades, and could eventually facilitate the gradual retirement of the state’s oldest, dirtiest coal plants.

And, they said, “going green” would produce many more long-term jobs than building and operating new plants—even if all eight coal plants were built. Advocates pointed to estimates that making Michigan a center of green energy technology and manufacturing could produce as many as 61,000 new, good-paying jobs.

“Our current state leaders—I don’t know what they are thinking,” said James Clift, policy director for the Michigan Environmental Council. “Everywhere you go in America, people want cleaner energy, and they understand that clean energy will create new jobs. Our leaders need to get that old mentality out of their heads and get on the bandwagon.”

Sticking to Basics
Supporters of the governor’s plan said it would work because it pays close attention to clean energy basics: funding for energy efficiency, new electricity rates that reward utilities for efficiency efforts, job training, and do-it-yourself green entrepreneurship.

Ms. Granholm said she would use a combination of federal economic stimulus money and “pay as you save” financing to weatherize 100,000 Michigan homes and 1,000 public buildings in the next year. She said the Michigan Public Service Commission would change how utilities charge for power so that they make money by increasing customers’ efficiency.

Governor Granholm also announced an “Energy Corps” that would help the state transform its energy economy by training unemployed workers to caulk windows, install insulation, retrofit buildings, and erect renewable energy systems. And the governor threw her support behind a proposal introduced to the Legislature last year that still awaits action—allowing homeowners and businesses to earn steady incomes by installing their own solar or wind energy systems and selling their power to the grid.

Ms. Granholm painted a dramatic picture of what her plan would do: “Instead of spending nearly $2 billion a year importing coal or natural gas from other states, we’ll be spending our energy dollars on Michigan wind turbines, Michigan solar panels, Michigan energy-efficiency devices, all designed, manufactured and installed by Michigan workers.”

A Different Picture
But critics of the governor’s decision to reconsider Michigan’s coal rush painted a very different picture. Their comments indicate that they view renewable energy as a good idea, but not as something that can significantly reduce the state’s dependence on coal, which provides more than 60 percent of the state’s electricity, anytime soon.

Within minutes of her speech, for example, State Senator Jason Allen (R-Traverse City) told a TV reporter that he was skeptical of her plan and the effect it could have on the proposal to build a 600MW coal plant in Rogers City. An aide later told Great Lakes Bulletin News Service that Mr. Allen does, however, support the governor’s move toward green energy jobs.

Senate Majority Leader Mike Bishop (R-Rochester), who did not respond to a request for an interview, told another news agency that he was concerned that holding up new coal-fired plants would drive up the price of power and that a pause in coal plant construction could "chase jobs out of the state."

He also feared that the governor might go even further.

"Do we put the current plants in a position where they might be mothballed by next year?" asked Senator Bishop. "We have to figure out a way to get there and we have to do it in a way that's not going to create an energy shortfall in this state and create energy that's way too expensive for our consumers to pay for."

And Mr. Roberts of the state Chamber said in an interview that the Granholm directive disappointed him. Michigan, he said, will need more power in the future, and coal is one of the best sources for it.

Wanted: Better Numbers
But energy advocates said that worries about an energy shortfall in Michigan are greatly exaggerated.

Those exaggerations, they say, stem from a frequently quoted 2007 MPSC report, Michigan’s 21st-Century Energy Plan, which said the state needs at least one new coal-fired power plant by 2015 to keep up with rising demand. The report drew heavy criticism when it was released, however; critics point out that it largely ignored Michigan’s economic crisis, which was well underway when the report was assembled and has worsened considerably since then.

Last September, MPSC officials reversed themselves and predicted that Michigan’s electricity sales would probably decrease, not increase, in 2008.

Yet most of Michigan’s new coal proponents still use the original, now admittedly flawed numbers. And while some of them, like the Chamber’s Mr. Roberts, acknowledge that the original MPSC prediction is wrong, they argue that energy demand will increase over the long haul.

“We are in a rough patch in our economy right now,” is how Mr. Roberts put it, “but we also know citizens are individually using more energy than ever before.”

But the most recent demand projections by the state’s two largest utilities—DTE Energy and Consumers Energy—point even more strongly toward decline. DTE now predicts its customers’ energy use will fall by 6 percent between now and 2013, and Consumers now predicts a 5-percent decline by 2018.

However, green power advocates insist that even those projections are inaccurate because they do not factor in the cut in energy demand now mandated by state law: New state laws require utilities to help their customers cut their energy use; by 2011, that decrease must be one percent per year.

Lee Sprague, who manages the Michigan Chapter of the Sierra Club’s clean energy campaign, said the utilities are refusing to admit that energy consumption in Michigan will stagnate for years—and by the time it starts growing again, coal will have much less to do with the state’s power supply.

“It’s like this old coal industry talking point that they keep on saying in the hopes that it somehow will end up being true,” he said of claims that Michigan needs more coal power. “This is a persistent industry, and they know they are in a last ditch effort to save themselves from a new era.”

Cut Costs, Grow Jobs
Renewable proponents also reject claims that new coal plants will help keep energy prices down and employment numbers up.

They point to studies warning that new coal power is very costly. One released last spring by Sanzillo & Associates, a New York firm that analyzes municipal and state bonds, estimated that the cost of the new Rogers City plant would force a doubling of customers’ current rates, even without widely expected, expensive new regulation of the plant’s huge CO2 emissions in place.

The Federal Energy Regulatory Commission, which monitors utility rates, agreed with Sanzillo this fall, finding that energy from new coal plants costs about the same as from new wind power, even without CO2 regulations.

Proponents also point to studies and on-the-ground experience elsewhere indicating that renewable energy investments, from wind turbines to building retrofits, create many more jobs than investments in new coal.

One study, by the National Renewable Energy Laboratory, in California, focused specifically on Michigan. It compared the jobs potential of new wind farms to new coal plants in the state, and found that the farms would provide double the construction and maintenance jobs over a twenty-year period.

And the difference in job creation between investing in coal to make electricity and investing in efficiency to save electricity is even more dramatic.

“Coal is very capital intensive and presents high fuel costs,” explained Dr. Martin Kushler, director of the utilities program for the American Council for an Energy-Efficient Economy. “That’s why spending money on energy efficiency is a good strategy for producing jobs. It tends to go into very labor-intensive types of activities, and it’s all focused locally. Every kilowatt-hour of energy saved reduces costs for homes and business.”

Glenn Puit is a veteran journalist and a policy specialist for the Michigan Land Use Institute. Reach him at glenn@mlui.org.

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