A History of California's Energy "Policies"

Over at the City Journal, Max Schulz - a senior fellow at the Manhattan Institute and director of its Center for Energy Policy and the Environment - wrote a brilliant summary on California's myopic energy policies. Below are some of the many highlights. I encourage everyone to read the whole thing:

In truth, however, the Golden State’s energy leadership is a mirage. California’s environmental policies have made it heavily dependent on other states for power; generated some of the highest, business-crippling energy costs in the country; and left it vulnerable to periodic electricity shortages. Its economic growth has occurred not because of, but despite, those policies, which would be disastrous if extended to the rest of the country.

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To understand better how California’s environmental policies have played out, however, consider what two of them—opposition to nuclear energy and promotion of solar power—have done to Clay Station, California, 25 miles outside Sacramento, where two gigantic cooling towers rise up over rolling fields and farmland. This facility was once the Rancho Seco Nuclear Generating Station, capable of generating over 900 megawatts (MW) of electricity, enough to power upward of 900,000 homes. Rancho Seco opened in 1975, when antinuclear fervor in California was just beginning to gain momentum, and at one point, it generated more electricity than any other nuclear plant in the world.

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The [Rancho Seco] facility didn’t entirely close, though. In 1984, trying to position itself as a national leader in solar power, the Sacramento Municipal Utility District (SMUD) began building photovoltaic solar panels on the site, taking advantage of the already constructed infrastructure to transmit power. At the same time, in a bid to position itself as a national leader in solar power, SMUD instituted programs subsidizing the construction of photovoltaic panels for Sacramento homes and businesses. The utility halted the installation of new panels in 2002, after it became clear that the program would cost perhaps three times more than projected and had lost millions of dollars, falling well short of its modest goal to install 2 MW of solar energy that year.

Today, Rancho Seco possesses one of the largest photovoltaic arrays in the world. Yet it provides less than 4 MW of electricity, or less than half of 1 percent of what the closed nuclear plant optimally offered. Total solar capacity for the Sacramento region is less than 50 MW, or about 6 percent of the nuclear plant’s output. In fact, after millions of dollars in subsidies and other support for solar power, the entire state of California has less than 250 MW of solar capacity.

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Another secret: California’s proud claim to have kept per-capita energy consumption flat while growing its economy is less impressive than it seems. The state has some of the highest energy prices in the country—nearly twice the national average, a 2002 Milken Institute study found—largely because of regulations and government mandates to use expensive renewable sources of power. As a result, heavy manufacturing and other energy-intensive industries have been fleeing the Golden State in droves for lower-cost locales.

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Even renewable energy projects can have trouble getting off the ground, often because of Not-In-My-Backyard objections.

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It’s hard to claim credibly that California illuminates the world when it has trouble illuminating itself. Further, California’s particular path makes sense only if the rest of the country refuses to follow it. The state’s lawmakers and regulators have enacted policies that for several decades have allowed Californians to feel good, even smug, about their environmental credentials. Yet California’s economic prosperity has relied on the fact that other states have built power plants and established sensible regulatory regimes that don’t force businesses to flee. The power plants scattered throughout the western United States, as well as the factories in the American Midwest and South, have consistently saved California from the folly of its own anti-energy agenda.

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California is certainly within its rights to set policies for itself and to live with the consequences. But everyone can’t do what California does. Someone needs to build power plants and oil refineries. Someone needs to manufacture the cars, trucks, airplanes, and other pieces of heavy equipment that enrich Americans’ lives, till our fields, and grow our economy. Someone needs to produce the plastics and chemicals that undergird our prosperity. Those things require energy, and lots of it—growing amounts of it. All the wisdom of Athens and all the power of Sparta won’t change that fact.

Hat tip to Joe Somsel for the link.