Some want to punish household electricity consumption, but that’s a small slice of our energy use.
There is a good deal of ink spilled on how much energy people use in their homes, and plenty of judgment of those who use a lot, as I discussed last week. It’s not uncommon for me to get frowny faces when I mention our hot tub, even when those same faces were just telling me about their recent vacation in an exotic location or multiple trips to conferences on the East Coast.
The focus on home energy consumption is understandable in some ways, because it’s the thing that society can observe most directly and completely through a single entity, the distribution utility. And, it’s the usage for which price is most under the control of government regulators.
Don’t get me wrong, we should try to make homes as energy efficient as can be done cost-effectively. But the reality is that the vast majority of the energy use we are responsible for takes place outside the home, whether we are driving our car, flying across the globe, dining in restaurants, consuming goods that take energy to create, having those goods delivered to our house, or pretty much any other activity we engage in.
Home Energy’s Role in the Economy
While writing the paper about this that I put out last week, I found the 2021 EIA US energy flows graphic above to be a real eye-opener. It shows that about 15% of US primary energy use – which includes the losses in electricity generation and transport – is attributable to residential electricity consumption (Multiplying the share of energy that goes into electricity generation – 36.7 quads divided by 97.3 quads – by the share of electricity that is used by households – 39%). Adding in residential natural gas, raises it to 20%.
Virtually all US energy use eventually benefits some US households (after a small adjustment for the net impact of imports and exports), yet nearly all of the moral judgment – and use of the term “energy hog” – is reserved for energy consumption in the home. There is discussion and policy about how to make the 80% used outside the home more efficient, but you don’t see the sort of shaming or financial penalties that we see for residential usage, and that in many parts of the country is official policy.
Prices for gasoline, air travel, energy-intensive production goods, housing, food, and all of the other goods and services that constitute the 80% are set by market forces.The prudence of households that consume low or high quantities plays essentially no role in the price they pay. In fact, many such goods are sold with quantity discounts or with additional rewards to customers who consume high quantities, such as through customer loyalty programs employed by airlines and other industries.
Residential energy consumption seems to sit alone as an area of consumption for which some believe payment should be based on the ethics of high usage levels. As a result, households whose consumption preferences tilt more towards staying at home take a disproportionate hit relative to those who choose to spend a higher share of their income on travel, dining out, and consuming other goods and services. It is hard to come up with an equity-grounded argument for such asymmetric treatment.
(Source)
It’s the Environment, Stupid
But talking about energy use is so last century. The concern of most policymakers is really environmental impact. Through that lens, singling out home electricity usage is especially problematic. If we apply the residential share of electricity to the EPA’s emissions accounting, electricity use in the home accounts for only 10% of US GHG emissions.
It likely accounts for an even smaller share of the damages from local pollutants, because coal is in decline as a fuel for electricity and power plants generally are located farther from where people live than polluting freeways and industrial facilities. Not to mention the indoor air quality issues created by combusting natural gas or wood at home. If we really care about GHGs and local pollution emissions, a focus on residential electricity consumption is particularly misplaced.
Hogs, Angels and Air Travel – Some Further Context
While working on this topic and writing the paper, I did a comparison of home electricity consumption to air travel that blew my mind, so perhaps this will also blow yours.
I showed last week that controlling for the number of household occupants and the local climate, and counting total electricity consumption regardless of whether the juice is from the roof or the grid, greatly reduces the usage difference between households that appear to be “energy hogs” and those that appear to be more energy-efficient “angels”. In fact, after adjusting for household occupants, climate and total consumption, I report in the paper that the difference between the 25th and 75th percentile consumption per capita among the customers of California IOUs is 2058 kilowatt-hours per year. The difference between 10th percentile and 90th percentile is 4372 kWh/year.
The marginal emissions rate from electricity generation in California is approximately 0.4 metric tons per MWh, so a 75th percentile household generates about 0.82 metric tons more GHG emissions per year than a household at the 25th percentile. The difference between the 10th and 90th percentiles is about 1.75 tons.
(Source: Author’s calculations as describe in text)
For comparison, the US domestic airline industry gets about 62.6 passenger miles per gallon (details in the paper) and each of those gallons puts out about 0.01 metric tons of GHGs. That means one person’s 5400 mile round-trip between San Francisco and Boston burns about 86 gallons and releases about 0.86 tons of GHGs. In other words, one round-trip coast-to-coast flight cancels out the annual GHG difference between a person living in an “efficient” 25th percentile electricity use home and a person living in a “pretty hoggy” 75th percentile electricity use home. Two roundtrips in a year nearly wipes out the emissions difference between an “energy angel” in the 10th percentile and a “hog” in the 90th percentile. That certainly wasn’t something I knew before, and I suspect it is not something known by other halo wearers who buy high-efficiency appliances, install triple-pane windows, set their A/C to 77 degrees, drive EVs, and generally walk the walk…that is, until we fly the flight, to another conference or well-deserved holiday.
My point is not that we should stop flying entirely or that we should stop producing and transporting goods that we buy in stores or have delivered to our homes. It’s that it is easy to judge people by one kind of behavior and ignore all the other things people do that contribute to pollution and the climate crisis. It is human nature to focus on the metrics by which we appear most socially responsible and downplay the ones that aren’t as flattering.
Unfortunately, when it comes to electricity rate design, some advocates and policymakers seem to think this natural bias should drive policy. What I take away from this research is that residential electricity use is a small, though still important, component of our climate crisis and pollution problems. There is clear evidence, however, that net household electricity consumption is not a good guide to determining which people are imposing more or less damage on the planet and its occupants.
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VICTORIA – British Columbia is forecasting a record budget deficit and a rising debt of almost $129 billion less than two weeks before the start of a provincial election campaign where economic stability and future progress are expected to be major issues.
Finance Minister Katrine Conroy, who has announced her retirement and will not seek re-election in the Oct. 19 vote, said Tuesday her final budget update as minister predicts a deficit of $8.9 billion, up $1.1 billion from a forecast she made earlier this year.
Conroy said she acknowledges “challenges” facing B.C., including three consecutive deficit budgets, but expected improved economic growth where the province will start to “turn a corner.”
The $8.9 billion deficit forecast for 2024-2025 is followed by annual deficit projections of $6.7 billion and $6.1 billion in 2026-2027, Conroy said at a news conference outlining the government’s first quarterly financial update.
Conroy said lower corporate income tax and natural resource revenues and the increased cost of fighting wildfires have had some of the largest impacts on the budget.
“I want to acknowledge the economic uncertainties,” she said. “While global inflation is showing signs of easing and we’ve seen cuts to the Bank of Canada interest rates, we know that the challenges are not over.”
Conroy said wildfire response costs are expected to total $886 million this year, more than $650 million higher than originally forecast.
Corporate income tax revenue is forecast to be $638 million lower as a result of federal government updates and natural resource revenues are down $299 million due to lower prices for natural gas, lumber and electricity, she said.
Debt-servicing costs are also forecast to be $344 million higher due to the larger debt balance, the current interest rate and accelerated borrowing to ensure services and capital projects are maintained through the province’s election period, said Conroy.
B.C.’s economic growth is expected to strengthen over the next three years, but the timing of a return to a balanced budget will fall to another minister, said Conroy, who was addressing what likely would be her last news conference as Minister of Finance.
The election is expected to be called on Sept. 21, with the vote set for Oct. 19.
“While we are a strong province, people are facing challenges,” she said. “We have never shied away from taking those challenges head on, because we want to keep British Columbians secure and help them build good lives now and for the long term. With the investments we’re making and the actions we’re taking to support people and build a stronger economy, we’ve started to turn a corner.”
Premier David Eby said before the fiscal forecast was released Tuesday that the New Democrat government remains committed to providing services and supports for people in British Columbia and cuts are not on his agenda.
Eby said people have been hurt by high interest costs and the province is facing budget pressures connected to low resource prices, high wildfire costs and struggling global economies.
The premier said that now is not the time to reduce supports and services for people.
Last month’s year-end report for the 2023-2024 budget saw the province post a budget deficit of $5.035 billion, down from the previous forecast of $5.9 billion.
Eby said he expects government financial priorities to become a major issue during the upcoming election, with the NDP pledging to continue to fund services and the B.C. Conservatives looking to make cuts.
This report by The Canadian Press was first published Sept. 10, 2024.
Note to readers: This is a corrected story. A previous version said the debt would be going up to more than $129 billion. In fact, it will be almost $129 billion.
NANAIMO, B.C. – Former Bank of Canada governor Mark Carney says he’ll be advising the Liberal party to flip some the challenges posed by an increasingly divided and dangerous world into an economic opportunity for Canada.
But he won’t say what his specific advice will be on economic issues that are politically divisive in Canada, like the carbon tax.
He presented his vision for the Liberals’ economic policy at the party’s caucus retreat in Nanaimo, B.C. today, after he agreed to help the party prepare for the next election as chair of a Liberal task force on economic growth.
Carney has been touted as a possible leadership contender to replace Justin Trudeau, who has said he has tried to coax Carney into politics for years.
Carney says if the prime minister asks him to do something he will do it to the best of his ability, but won’t elaborate on whether the new adviser role could lead to him adding his name to a ballot in the next election.
Finance Minister Chrystia Freeland says she has been taking advice from Carney for years, and that his new position won’t infringe on her role.
This report by The Canadian Press was first published Sept. 10, 2024.
HALIFAX – The Nova Scotia government has introduced a bill that would kick-start the province’s offshore wind industry without federal approval.
Natural Resources Minister Tory Rushton says amendments within a new omnibus bill introduced today will help ensure Nova Scotia meets its goal of launching a first call for offshore wind bids next year.
The province wants to offer project licences by 2030 to develop a total of five gigawatts of power from offshore wind.
Rushton says normally the province would wait for the federal government to adopt legislation establishing a wind industry off Canada’s East Coast, but that process has been “progressing slowly.”
Federal legislation that would enable the development of offshore wind farms in Nova Scotia and Newfoundland and Labrador has passed through the first and second reading in the Senate, and is currently under consideration in committee.
Rushton says the Nova Scotia bill mirrors the federal legislation and would prevent the province’s offshore wind industry from being held up in Ottawa.
This report by The Canadian Press was first published Sept. 10, 2024.
