Good news! California has moved to curb the spread of coal-fired power plants. This is a really big deal, since energy companies have been vying to build as many as 35 of the carbon-spewing facilities in western states, largely to feed California’s growing demand for electricity.
But California state regulators—justifiably concerned about the climate impacts of burning so much coal—got tricky: they prohibited the state’s utilities from buying power from any plant that emits more carbon than a super-efficient natural gas power plant.
In other words, new coal-fired power is a no-go for the California market, unless plant operators somehow figure out a way to burn coal without emitting CO2 into the atmosphere.
That’s the theory. But the western power market may actually work to undermine California’s good intentions.
Find this article interesting? Please consider making a gift to support our work.
You see, there’s nothing actually stopping California utilities from buying more climate-friendly hydropower from the Northwest. As far as I can tell, that wouldn’t fall afoul of the state’s regulations. But that could mean that Northwest utilities would have to start buying more coal-fired power from new, out-of-state plants, to replace the hydropower that we’re shipping south. The net effect: California’s rising demand for power would still pull more coal into the western electricity market.
Now, I don’t know for sure that this would happen; and even if it does, the indirect effects may be less dire than if California had done nothing.
Still, there’s no reason that the power market has to outfox us at all. All that Northwest jurisdictions have to do is adopt California’s rule, more or less verbatim. That’ll prompt change throughout the western power grid, tilting the whole system towards conservation, renewables, and perhaps even “cleaner” coal. Whee!
I’ve become something of a one-trick-pony on this issue—namely, that a voluntary decision to do the right thing, if taken by only one actor in the marketplace, can create incentives for other actors to do the wrong thing. It’s frustrating, but I think it’s a real problem. But it’s a problem with a fairly straightforward set of solutions—changing the rules of the market, so that incentives for responsible stewardship are built into all purchasing decisions, not just a handful of decisions by a handful of market actors. Of course, when I say that the solutions are fairly straightforward, I’m talking about the economic theory; the political reality of making this happen isn’t so straightforward at all.