Editorials of The Times: Climate Policies and the Economy

People often notice big, sudden price changes — like, say, when an avocado shortage sends the cost spiraling up at their local grocery. It can be harder to keep track of what happens to the cost of an essential product or service over the course of years.

There has been an intense public debate about energy prices, in particular, and whether efforts to cut the emissions of greenhouse gases would send the cost of electricity soaring. It’s time to check in on what has happened — whether those costs have changed in the way critics and advocates for clean energy had predicted

Conservative politicians, energy executives and others regularly play down the risks posed by climate change and argue that emission reductions would lead to job losses and slower economic growth.

But those who support renewable energy said those sources would become cheaper over time as more wind farms and solar panels came on line.

So, what really happened?

Unsurprisingly, many services Americans use regularly have become more expensive during the last 10 years. But that is not true of electricity — an essential service.

The average retail price of electricity in the United States is little changed from 2007, and adjusted for inflation, prices are actually lower today. This comes as the power sector has reduced carbon dioxide emissions during that period by 28 percent, according to the Energy Information Administration, as utilities have moved away from coal toward natural gas, wind and solar.

In addition to warnings about the economic perils of aggressive climate policy from conservatives, we have also heard claims that wind and solar energy were expensive baubles that could not compete with fossil fuels without subsidies. Recent experience shows that people can, in fact, reduce emissions of carbon dioxide and other greenhouse gases without damaging the economy.

Texas is an oil-rich state that nobody would consider in thrall to idealistic environmentalists. So how has the relative contribution of various energy sources to the state’s electricity market changed during the past decade?

Wind turbines supplied nearly 15 percent of the state’s electricity in 2017, up from 2.2 percent in 2007, according to the U.S. Energy Information Administration. Those turbines helped reduce the state’s reliance on coal, which contributed less than 30 percent of the state’s electricity in 2017, down from more than 36 percent a decade earlier. During that period, the state’s retail electric prices fell to 8.55 cents per kilowatt-hour, from 10.11 cents, before adjusting for broader inflation.

Parts of Texas have lots of wind, which is why developers have put up so many turbines. The state also gets lots of sun, which is why solar panels could, over time, become another major source of energy there.

Of course, electricity prices vary from state to state, for many reasons. For example, prices in California, which has made reducing emissions a priority, have gone up in recent years because state regulators let utilities build more power plants than the state needs. But prices have fallen in New York, which has similarly ambitious climate targets.

Some conservatives have argued that the policies of President Barack Obama amounted to a “war on coal.” Utilities are, indeed, using much less coal, but their decisions have primarily been driven by a drop in the price of natural gas, not Obama-era policies.

The boom in shale gas production has led to a dramatic drop in the price of gas. As a result, many electric utilities are using more natural gas, which generates about half the emissions of coal. While some environmentalists oppose hydraulic fracturing, or fracking, the practice, when paired with regulations to limit its impact on ground water and air, can help in the transition to cleaner fuels.

Today, something similar is happening with renewables. Wind turbines and solar panels are becoming cheaper every year, even as the federal government phases out tax credits for the use of those technologies. The cost of renewable energy is often much lower than electricity from new coal-fired power plants and in the same ballpark as efficient natural gas plants, according to an analysis by Lazard. The cost of batteries, which will be needed when there isn’t enough wind or sun, is also falling.

None of this ought to minimize the scale of the changes still needed to keep global warming to less than 2 degrees Celsius (3.6 degrees Fahrenheit) above pre-industrial temperatures. A recent report by BP said the world is as reliant on fossil fuels as it was two decades ago because developing countries are using more coal while industrialized nations are moving away from nuclear power.

Another recent report, by the Rhodium Group, warns that greenhouse gas emissions from U.S. utilities could increase after 2025 as nuclear power plants are mothballed. To avoid that, state governments may have to subsidize nuclear power plants, at least temporarily. In addition, countries have, so far, made far too little progress in reducing emissions from transportation.

The fact that the United States has been able to reduce emissions from the power sector while keeping prices low shows that the world can address climate change by ushering in an era of abundant, affordable and clean energy.