New Analysis: Renewables and Efficiency Key to Economic and Public Health Benefits in Michigan

A new UCS analysis released today shows that strengthening Michigan’s commitment to renewable energy and energy efficiency will drive billions in capital investments in the state, reduce carbon emissions, and lead to significant public health benefits through avoided emissions of harmful air pollutants.

Michigan has long relied on coal-fired power to meet the majority of its electricity demand. But this paradigm is changing as competition from more efficient, cleaner, and lower cost resources has accelerated in recent years. Just last week, Consumers Energy retired 7 coal-fired generating units and by 2020, 25 units in Michigan will be permanently retired due a mixture of economic and environmental pressures.

The state’s successful renewable energy and energy efficiency standards have also played a big role in driving investment in Michigan’s clean energy resources. Utilities have met the requirement of meeting 10 percent of energy demand with renewable energy by 2015. The state now ranks 14^th in the U.S. for installed wind capacity, and we’ve recently seen a lot of activity and commitments to begin tapping into Michigan’s solar resource. Utilities are also exceeding the state’s energy efficiency target of 1 percent annual savings and these investments are returning more than $4 for every dollar spent.

But with lots of cost effective efficiency measures still available, no future targets for renewable energy, the Clean Power Plan (CPP) looming, and many communities continuing to suffer harmful effects of pollution from coal-fired power plants, uncertainty remains about Michigan’s energy future. Governor Snyder and the state legislature have struggled to find agreement on energy policy in this complex landscape, but it’s becoming increasingly clear that strong commitments to renewables and efficiency will be key to maximizing the economic and public health benefits for Michiganders.

Renewables and efficiency key to maximizing CPP benefits

Using the Regional Energy Deployment System model developed by the National Renewable Energy Laboratory, UCS analyzed the impacts of Michigan meeting its CPP obligations under two scenarios: a “Clean Path Case” where the state enacts complementary clean energy policies—to achieve 30 percent renewable energy by 2030 and 1.5 percent annual electricity demand savings through energy efficiency—and a “CPP Only Case” with the CPP in effect but without these strengthened commitments to clean energy.  Under both scenarios, we assume that every state adopts the same approach to meeting the CPP and that states are allowed to buy and sell carbon emission allowances with other states.

Our findings show that under the Clean Path Case, Michigan can exceed 30 percent renewable energy and 1.5 percent annual energy efficiency, meet its obligations under the CPP, and generate significantly greater economic and public health benefits for Michiganders than under the CPP Only Case. Under the Clean Path Case, our results show:

• More than 8,300 megawatts (MW) of new wind and solar resources would be developed in Michigan by 2030, meeting 32 percent of Michigan’s energy demand and generating more than $11 billion in new capital investments
• More than $1.8 billion would be invested in energy efficiency, driving savings equal to 12.5 percent of total electricity sales
• Reduced emission of carbon dioxide (CO₂), sulfur dioxide (SO₂), and nitrogen oxides (NO_x) would provide $4.1 billion worth of public health benefits by 2030.

By comparison, under the CPP Only Case, which does not include complimentary clean energy policies to drive investments in renewables and efficiency, Michigan continues its overreliance on coal, actually increasing coal generation in Michigan by 12 percent compared to 2014 levels. Compliance with the state’s CPP obligations is met largely by purchasing carbon allowances from other states while renewable energy development in Michigan stagnates.

Our analysis also found that the cost of these very different energy futures for Michigan is almost identical—about 4 percent greater than under a reference case that did not include the CPP or these strengthened clean energy commitments. When you consider all of the additional economic, public health, and environmental benefits that renewables and efficiency provide, the choice becomes clear.

We also found that under a national carbon emissions trading program, Michigan could generate an average of $428 million in annual revenues through the sale of its allotment of carbon allowances under the CPP. These revenues could then be used to offset the additional cost of CPP compliance or invested in communities that have historically born a disproportionate burden of pollution from coal-fired power plants or that are otherwise struggling with the state’s transition away from coal.

Driving investments in Michigan’s renewable energy resources

More than 5,000 MW of new wind capacity and almost 3,000 MW of new solar capacity would make up the bulk of new renewable energy builds under the Clean Path Case, including more than 900 MW of rooftop solar on homes and businesses. This build-out represents more than $11.3 billion in new capital investment in Michigan—$7.8 billion more than under the CPP Only Case.

More renewables and efficiency mean a cleaner, healthier Michigan

Under the Clean Path Case, Michigan reduces its emissions of carbon dioxide (CO₂) by about 15 million metric tons by 2030, or about a 23 percent reduction compared to 2014. Emissions of sulfur dioxide (SO₂) and nitrous oxides (NO_x) are also reduced by about 9,000 tons each compared to 2014—three times the emissions reductions that we found under the CPP Only Case.

Each of these pollutants takes a toll on public health and the economy in Michigan. Climate change, caused primarily by carbon emissions, is already causing heat waves, flooding, droughts, and increased ozone pollution that have significant implications for public health. SO₂ and NO_x have long been linked to a variety of health impacts, including premature deaths, pregnancy complications and respiratory ailments such as asthma.

These impacts are often disproportionately born by communities of color and poor communities. A 2012 report put out by The National Association for the Advancement of Colored People, Indigenous Environmental Network and Little Village Environmental Justice Organization analyzed the environmental justice considerations of the country’s coal fleet. The report showed that of the 6 million people living within three miles of operating coal plants in this country, 39 percent are African American and the average per capita income is $18,400 per year. Further, five of Michigan’s coal plants received a ‘failing grade’ for environmental justice due to their public health impacts on surrounding communities.

Reducing Michigan’s emissions of these pollutants not only means healthier communities, but also a stronger economy. The costs of dealing with climate change and the public health impacts of air pollution are very real—whether recovering from heat waves and drought, paying for increased hospital visits, or reduced productivity of people exposed to pollution. Our analysis shows that the reductions in CO₂, SO₂, and NO_x emissions resulting from the Clean Path Case represent more than $4 billion in economic benefits—nearly $2.5 billion greater than the benefits of reduced pollution under the CPP Only Case.

Michigan can and should commit to renewables and efficiency

The U.S. Supreme Court’s recent ruling to put a hold on the CPP until the merits of the rule are decided does not change the reality of climate change or the urgent need to continue reducing our dependence on fossil fuels. Nor does it change the fact that renewables and efficiency are cost-effective resources that provide a host of economic, environmental and public health benefits. Our analysis shows that clean energy makes sense for Michigan, and that a robust set of policies designed to drive investments in these resources is a smart choice.

As Governor Snyder and the legislature continue to debate policies that will shape Michigan’s energy future for decades to come, Michigan would be well-served if strong, binding commitments to renewable energy and energy efficiency are in place to ensure the state continues its transition to a sustainable 21^st century electricity system to power our 21^st century economy.