Economics And The Environment: Why Oregon Plans To Go Coal-free
Past the debate around Solyndra and tension around how, exactly, government should support green tech, another energy story is emerging. The combination of new emissions regulations and cheaper alternative energy sources has caused, occasionally, rather large-scale shifts toward more sustainable energy production. Case in point: Oregon.
By 2020, Oregon will get rid of all of its coal-fired power plants. The state mainly runs on hydroelectric power now, and the last coal-fired plant, run by Portland General Electric Co, will be either closed or converted to biomass-burning within the next nine years. This plan shows a growing trend not only toward cleaner energy sources, but also toward companies realizing that the high cost of updating to current emission controls is often more expensive than converting to cleaner energy.
According to Reuters, PGE would shell out around $500 million to upgrade emission controls for the plant to operate through 2040, and the company has decided it is simply not financially sound to proceed. PGE will already have to spend about $75 million to upgrade the plant enough to run it until 2020. The 2020 deadline aligns with Oregon regulations requiring the state’s largest utilities to get a minimum of 25% of electricity from renewable sources like wind, solar, wave, geothermal, biomass, or new upgrades to existing hydropower by 2025.
These type of regulations, called renewable portfolio standards (RPS), exist in much of the United States. The first RPS was established in 1983 and after 200 the majority of states created or strengthened standards. Oregon’s RPS was passed in 2007.
With clear profit advantages and legal restrictions, clean energy is becoming not just a good deed, but a business-must in the Northwest. As a result, power companies are truly thinking through energy’s sustainable future. Hydroelectric power is particularly cheap in the Northwestern United States because of existing natural resources; in Oregon, hydroelectric power is a full 3 cents lower per average kilowatt hour than the national average. Burning coal simply isn’t as profitable, and as a result, coal-fired plants are dwindling in the region. The state of Washington also has only one remaining coal-powered power plant in use, the Centralia station.
Throughout the world, governments are providing financial incentives that make renewable energy and emission reduction start to look more financially sound for companies than options like coal. In 2004 New York state passed an RPS so that, by 2013, 25% of the state’s electricity would come from renewable sources. Several Brazilian and Mexican states signed an MOU with California to receive “carbon credits” for reducing deforestation through California’s cap and trade program, as many believe that saving forests is the cheapest way to fight global warming. Cap and trade programs reduce pollution by requiring companies that emit more pollutants to purchase permits, also known as “carbon credits, from a government or from companies who pollute less. That way, companies end up paying for pollution. The UN program Reducing Emissions from Deforestation and forest Degradation (REDD), established at last year Copenhagen summit on climate change, seeks to spread this kind of trade across countries and to provide financial incentives to reduce deforestation. Even without national and international policy, state regulation has moved in to develop financially motivating solutions, even outside of the hydo-rich Northwest.