Energy Master Plan, BPU Reviews, And DEP Regulations Are Not Based On The Most Basic Cost-Benefit Concepts
A few months ago, I wrote about the release of a National Oceanic And Atmospheric Administration (NOAA) Report on the huge trillion dollars costs of the climate emergency, and I criticized the media’s misleading reporting about those costs, see:
NJ Spotlight once again printed these corporate lies about costs as facts, and did so with no rebuttal and no mention of the well documented costs of the climate emergency, known in the jargon as “the social costs of carbon” (SCC). EPA issued that Draft SCC Report last year, and it got no coverage by NJ Spotlight or other NJ media that I am aware of.
Amazingly, just days ago, the National Oceanic and Atmospheric Administration released a report on the HUGE costs of climate driven storms and catastrophes: (Read the NOAA Report)
The so called “costs” of the transition to renewable energy and decarbonization are only relevant in the context of the benefits (in this case, the avoided costs) of the climate emergency.
But the media is not the only institution that ignores the huge costs of the climate emergency (and the huge $7 trillion dollars in annual subsidies to fossil fuels – see this IMF Report). And these so called “costs” [of transition to renewable energy and decarbonization] are actually investments.
The private sector ignores these costs – and so does government – which economists term “externalities” and examples of “market failure”. This is a critically important omission, because the most basic justification for government intervention is to address market failure and BPU and DEP are responsible for that intervention in energy and environmental matters.
But there are no formal BPU analytical and planning methods and/or DEP regulatory requirements that mandate that policies, regulatory approvals, and infrastructure investments decisions fully and transparently consider and reflect the costs of the climate emergency.
I’ve long been a harsh critic of cost benefit analysis (CBA) – when your house is on fire, you do not worry about how much the fire truck costs – so it is shocking that I must note that NJ State government fails to apply the most basic concepts of CBA in energy planning and environmental regulation.
So today, I was stunned to read a NJ Spotlight story on the release of the fifth National Climate Assessment and note that the focus of the coverage was on the costs of the climate emergency (NJ Spotlight):
The report devoted a full chapter to the economic impacts of climate change, noting that communities will face high costs for defending coastal areas from rising seas or elevating roads, but may also enjoy economic opportunities such as more jobs in renewable energy.
But unfortunately, Spotlight narrowed the issues mainly to the lack of federal flood insurance coverage and risks and costs of coastal flooding.
But, to their credit, the coverage did allude to serious market failure:
Although there is “ample” private capital available that could be used for adaptation projects, there is a perception among the business community that those projects won’t return enough on investment, the report said.
And it did broach the long ignored and essentially taboo subject of “strategic retreat”:
The Rutgers projections for sea-level rise are broadly in line with those in the new report. It projects seas around the U.S. coastline will rise another 11 inches by 2050. That would leave some areas of the Jersey Shore uninhabitable, raising the prospect that some coastal communities in places such as Cape May and Cumberland counties might be required to move inland, a process known as “managed retreat.”
But it did so in a misleading way by presenting the DEP’s Blue Acres program in a favorable light. As I’ve written many times, that program – which is under funded, toothless, scattershot, and reliant on voluntary willing sellers – is not a sound plan or regulatory strategy to effectively implement a real strategic retreat program.
While it is an improvement to see Spotlight finally report on the costs of the climate emergency, and mention market failure by the private sector and the need for “managed retreat”, I sent the following note to NJ Spotlight reporter Jon Hurdle to clarify misleading reporting and urge that future coverage of energy costs incorporate the costs of the climate emergency:
Jon – you wrote this:
“But nearly all the new money is for mitigating climate emissions with wind and solar power and electric vehicle charging stations, leaving little for adaptation.”
That may be correct nationally or globally, but exactly the OPPOSITE is true in NJ – just ask DEP and BPU for the data on investments in adaptation versus compliance costs for emissions reductions (mitigation). Far more is spent on adaptation than emissions reduction. For example, the paltry RGGI allowance price is the ONLY cost imposed on carbon polluters (and that’s only for a segment of the energy sector).
It would be nice now that NJ Spotlight has finally covered some of the cost issues if those costs could be integrated in the coverage of the so called “high costs” of the renewable energy transition (and those “costs” are actually investments and they all pass the traditional cost-benefit test, but that is never analyzed by BPU or DEP and never reported by media).
Wolfe