JUICE: New Source Review’s Power

By Published On: January 30, 2009

I walked four miles back to the office after dropping off my car for suspension work. Like my car--which was falling apart because the streets are turning to rubble where I live--the power plant infrastructure in greater Los Angeles is crumbling too. To help replace aging electricity production, Los Angeles area air quality regulators are working feverishly to facilitate new fossil-fueled power plants. They’re trying to stretch the limits of pollution offset rules for smog--never mind greenhouse gases. Their bid reached new heights last week as they urged Los Angeles-area power generators, local governments, and businesses to storm Sacramento for a legislative “fix” that allows fossil fuel plant construction (Circuit, Jan. 23, 2009). At the same time, Sacramento and federal leaders are rushing to bend environmental impact analysis requirements so they can pump money into highway projects in an effort to stoke the economy. But as I walked home through the vines and trees of a narrow canyon street, I thought too about how energy and environmental regulators also have upped their goals for renewable power and energy efficiency . . . about how state attorney general Jerry Brown is seeking to rein in suburban sprawl in favor of denser neighborhoods where people walk and ride public transit. These opposing impulses--to continue with the old and familiar while seeking the new-- reminded me of the 1972 book the Limits to Growth. Coincidentally, its lead author, Dennis Meadows, was back in the news this week as the Science and Technology Foundation of Japan bestowed him with its annual “Transformation towards a sustainable society in harmony with nature” award. It occurred to me that California is really trying to take to heart the main premise of the Limits to Growth--that holistic analyses and policy are needed to manage the nexus of resources, technology, pollution, population, and the economy. Cradle-to-grave policies are needed, according to the Limits to Growth, because civilization as we know it cannot sustain itself on a long-term basis without achieving a steady-state population and economy. Resource exhaustion, pollution, or food shortages eventually would overwhelm us, resulting in a massive population die off. Mainstream economists scoffed at the book. They called the study exaggerated and said it was based on flawed data and assumptions. Garbage in, garbage out, they concluded of its basis in computer modeling. For the most part, the stewards of our resources, environment, and economy went on their merry way, dedicated to the notion that unceasing growth was a fundamental requirement for a healthy economy and healthy environment. Yet the study continued to gnaw at economists, lawmakers, and energy and environmental managers, giving birth to a number of policies inspired by holism. Those mandates, while restrictive, remain somewhat disjointed and often ineffectively administered. One arcane example is the federal Clean Air Act’s “new source review” policy. That’s what underlies the SCAQMD’s reluctant decision earlier this month to ban fossil fuel power plant construction in greater Los Angeles. They are striving mightily to reverse that edict. The new source review program aims to prevent economic growth from worsening air quality by requiring new industrial facilities, like power plants, to offset their emissions. Offsets can be generated in numerous ways, including shutting down other facilities or using new technology to clean up emissions more than required under air quality standards. Companies that do so either can use the offsets to expand their businesses or sell them to other businesses that need offsets to build new facilities. This ability to use offsets to expand business or to sell to other businesses seeking to expand is supposed to instill the profit motive in cleaning up the air. Companies that develop innovative clean technologies or production methods can grow and make more money. Once the innovations are developed, their spread through the economy is supposed to both clean up the air and spur more economic growth--at least, that’s the theory of the market-based new source review program. However, in Los Angeles, the market failed and the program hit the wall. Just like money on Wall Street, air credits ran out. For instance, for “fine particulates”--the invisible particles emitted into the air when fossil fuel is burned in power plant turbines, boilers, or any other device--credits are scarce. It took a lawsuit by environmentalists to reveal what may be the final limit of credit availability. That’s because even in light of a tight credit market, for the past three years air quality regulators have been trying to bail out the fossil fuel industry by extending credits some say were created out of smoggy air. The air district seems to be sharply at odds with policymakers up and down the state who have been striving to achieve the sustainable future Meadows and his colleagues envisioned more than 35 years ago. They are making progress too. As local air regulators struggle to issue credits to fossil fuel plants, the Los Angeles Department of Water & Power alone has doubled its use of renewable energy. LADWP now claims to produce 10 percent of its power with wind, solar, and other renewable resources. Southern California Edison also has made strides for non-fossil electricity production. At the same time, the state’s embarked on a massive $4 billion energy efficiency program over the next three years aimed at bringing power demand more in line with the capacity of renewable energy technologies to make electricity. The California Air Resources Board established new emissions standards for cars and trucks that promise to further clean the air and cut greenhouse gases. The Air Board’s greenhouse gas reduction plan calls for 33 percent renewable energy by 2020 and forecasts that state residents will use less energy then than they do now. So as I walked along the cracked sidewalk I figured SCAQMD should just abandon its effort to create emissions credits for new fossil fuel power plants and let the offset policy take its course. Out of the rubble would surely rise a new economy, one based on renewable energy, electric cars driven shorter distances, energy efficiency, public transit, and green buildings. Then Meadows might see the triumph of the holistic analysis he championed within his lifetime.

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