On behalf of the NJBIA I want to thank you for the opportunity to testify here today on our recommendations for decarbonizing our economy in the light of the threat of climate change.
NJBIA is in a unique position when it comes to climate change and energy policy. As the largest business association in the state, our members include some of the state’s largest employers as well as your Main Street mom and pop businesses. Significantly for this conversation, we represent all interests in this policy debate. Our members include most of the energy utilities who supply our residents and businesses both natural gas and electricity. We also have as members the major businesses engaged in all aspects of renewable energy, from wind developers and transmission providers to solar companies and installers. Significantly, we also represent the businesses that pay for all that energy, either as major users in the manufacturing sphere or in the normal course of operating a business. We also represent oil and gasoline refineries, the owners of truck fleets that rely on diesel, the retailers who sell their goods, and the installers of both electric and natural gas boilers, among many others.
Energy policy, obviously, is extremely important to NJBIA’s members. We look at our role as business advocates, not so much as that of balancing all the various interests, but of seeking out the best, most practical solutions to achieve our policy goals, both economic and societal. We are not deniers of climate change, nor are we ideological in our approach. We try to be factual and pragmatic in our policy recommendations. Hopefully you will find we are meeting those goals with our testimony here today.
There are two hard truths about climate and decarbonization policies. One, energy, primarily through fossil fuels, is essential to our economy and our way of life and substantially eliminating fossil fuels based on current technologies is impractical or far too harmful to our modern society. If it were easy, it would have been done by now, or we would be much further along in this effort. It is not, as some would say, “just a matter of will.” There are real and substantial impediments to our decarbonization goals that must be overcome before they are achieved. Also true, is that we do need to significantly decarbonize. The only questions are how, when, and at what cost?
So, decarbonization is hard, if not impracticable with today’s technology, but yet it must be done. So, what do we do? I want to emphasize three points today:
- As I have already mentioned, fossil-based fuels are essential to our modern economy and we cannot just stop using them. It is far more complex than that. We must acknowledge that complexity.
- Policies that set firm, unrealistic or unachievable deadlines to decarbonize do more harm than good because they result in the implementation of policies that are too costly, result in an unreliable energy supply and may actually result in the failure to pursue better technologies.
- Finally, I will provide some specific policy criteria that must be addressed if we are to both protect our standard of living and significantly reduce the amount of carbon we use.
Before I discuss those issues, I want to start off with a bit of good news. Last year in its Sixth Annual Assessment Report on Climate Change, the International Panel on Climate Change (IPCC) narrowed the range of potential impacts from all studied emission scenarios and said that the most extreme emission scenario (RCP 8.5), which I will discuss in a bit more detail, is unlikely to happen given current trends in emissions and energy usage. The narrowing of the impacts means that the worst results that some have predicted are not going to happen no matter the emission scenarios. This is good news; our global emissions policies are working to curb greenhouse gases and the impacts will be less than previously predicted. The most likely emission scenarios are likely to result in a temperature increase in the 2-to-3- degree Celsius range, with 1 degree already accounted for over the last century. Again, good news.
The impacts of climate change that we are seeing are a mixed bag, but not as bad as some make it seem. Heatwaves (although only a degree or two increase) have been detected, as has heavier precipitation, ecological and agricultural drought, and fire weather. What we are not seeing is increases in flooding, meteorological droughts, hydrological drought, tropical cyclones, winter storms, thunderstorms, tornadoes, hail, lightning, or extreme winds. I will note that the IPCC did find increases in peak flows in certain parts of the world, including the northeast of the United States, but they did not attribute that to manmade climate change.
Important to New Jersey is that there has been no increase in landed hurricanes and there is no pattern of any increase for the last century. Even Rutgers, in its Report of the 2019 Science and Technical Advisory Panel, found there to be no increase in the frequency of tropical storms, although there were minor increases in intensity and rainfall.
One quick note on flooding and Tropical Storm Ida that we should be aware of given the recent announcement by the DEP that it will adopt emergency rules to change flooding maps as a response. The harm caused by Ida, as unfortunate as it was, was the result of inland flooding, away from streams and rivers, and caused by inadequate stormwater facilities. If we are going to be effective in addressing the impacts of climate change, we need to address our infrastructure needs to make them resilient and to account for a changing climate.
Also encouraging is the history of our adaptation to changes in climate over the last century. We have learned that a prosperous society can develop the means to protect itself from natural disasters. Over the last 100 years there has been over a 90% decrease worldwide in deaths due to natural disasters and a 99.7% percent decline since its peak in 1931. At the same time agricultural production has dramatically increased, and production is expected to continue to increase. The Federal Reserve Bank of New York has stated that it does not believe that extreme weather due to climate change will pose any threats to banks over the next 30 years. In fact, the New York Fed stated: “For policymakers, our findings suggest that potential transition risk from climate change warrants more attention than physical disaster risk.” Even under projected climate change scenarios, the IPCC has stated that GDP would not be impacted by more than a few points from projected significant increases in the global economy that will occur despite climate change. We can adapt.
New studies have also indicated that sea level rise will not be nearly as serious at the turn of the century as some predicted only a few years ago. The IPCC in AR6 stated that the West Antarctic icesheet is not predicted to collapse and we will thus not experience 5 feet of sea level rise by the turn of the century. One could easily argue that pandemics, war, disease, and poverty are far greater threats to humanity and should engender an equal, if not greater, public policy response.
So why have we been hearing so much about apocalyptic climate disaster in the media and even from scientific journals? Part of the answer is that climate scientists, for various reasons, have focused on only four emission scenarios for the purposes of modeling, which is the primary method used to predict the impact of climate change. These scenarios do not necessarily represent the most likely outcomes but were chosen for reasons related to modeling needs. The most extreme scenario, representative concentration pathway 8.5 (RCP 8.5), was previously labeled as “business as usual” (BAU) even though it was never patterned on likely emissions or trends. The IPCC no longer refers to it as BAU and, as previously mentioned, is considered unlikely. For instance, for RCP 8.5 to happen, the world would need to abandon all efforts to reduce carbon emissions and build over 30,000 new coal fired plants. Population would have to explode beyond projections, and we would have to burn more coal than supply allows. This is unrealistic.
I mention these scenarios only to make you aware, as policymakers, you must be cognizant of what scenarios are being used when you are told certain impacts will happen. Facts matter, science matters, and we need to set policies based on realistic outcomes. But as I also said, the threats from climate change are real and serious, although not as severe as some initially predicted. And just because catastrophic impacts may not happen this century, we owe a debt to the future to be responsible and not to leave future generations a world with challenges that we can help solve today.
But solving the issue of carbon and climate is not easy. Energy, in all its various forms and uses, constitute the fundamental building block of the modern economy. Having reliable, abundant, and affordable energy to run our factories, heat and cool our homes, and power our transportation sector has transformed our economy from an animal-powered agrarian economy to the most advanced economic system known to man. It has provided us with the power to create millions of jobs, elevate people out of poverty, and provide a standard of living never before accomplished in human history. It generates tax revenues that support the services needed by our residents. We take our energy system for granted; we merely flip a switch and the lights turn on, we turn the ignition and our cars power up, and we turn on the furnace and our homes and offices are heated. Since we stopped using whale blubber and trees as our primary sources of energy, our world has relied on cheap, abundant sources of fossil fuels, be it oil or natural gas. Fossil fuels have been the energy source that has powered our economy. I would venture to say that more people have risen from poverty due to the use of fossil fuels than for any other reason.
Extreme poverty around the world has also dropped to historic lows. In fact, the big success over the last generation was that the world made rapid progress against the very worst poverty. The number of people in extreme poverty has fallen from nearly 1.9 billion in 1990 to about 650 million in 2018. This happened as economic growth reached more and more parts of the world, and that economic growth was fueled primarily from fossil fuels. I think it is also obvious to say the by taking people out of poverty, especially extreme poverty, we are saving many, many lives. If our goal is to help lift people from poverty and save lives, if we favor policies that benefit humankind, we need to recognize the role that energy, and fossil fuels, play.
We continue to need fossil fuels today and will for many years to come. If the answer was so obvious and the solution was merely to stop their use, then we should stop today. It isn’t and we can’t. This Legislature or Congress has not banned fossil fuel use because the fact of the matter is there in no current realistic alternative available at the scale we need.
No large, complex electrical supply system in the world currently relies on the intermittent energy sources of wind and solar for more than 30% of its power. There is a good reason for that. Intermittent power is unreliable and at levels above 25% becomes problematic from a reliability perspective and costly as a power source.
New Jersey currently obtains 6% of its energy for electric generation from renewables. Solar power provides most of this energy, as wind energy is largely still in development although we expect this industry to ramp up in the very near future. Thus, 94% of the electrical energy produced in New Jersey is from non-renewal sources with over 50% coming from natural gas and over 40% from nuclear. That means to achieve a carbon-free electric generation system we would have to shift natural gas to wind and solar over the next 30 years. Unless we can prolong our nuclear power plants well beyond 2050, we would need to convert an additional 35% to 40%. These numbers do not account for the increase in electricity that will occur as a result of economic growth and electrification policies.
Heating is also dominated by carbon-based sources with over 75% of homes and businesses reliant on natural gas for heat and another 10% using oil. This significant investment in infrastructure cannot simply be turned off in favor of electric boilers and furnaces. There are issues of cost, effectiveness, practicality, and the potential need to double or triple our electricity resources to meet this new demand.
Assuming these policies were even physically possible, the cost would be untenable. Using data developed by the Consumer Energy Alliance, the cost of all renewables in New Jersey would be about $115 billion (similar numbers are derived from national data and assumptions developed by Wood Mackenzie when extrapolated to New Jersey). This amounts to $12,900 per person, or $40,000 per state household. This does not account for the cost of heating conversions, not to mention transportation issues.
Cost, however, may be the least of the problems with achieving a 100% renewable grid or anything remotely close. Evidence has shown that attaining a 25% market penetration for intermittent sources can be done relatively easy, “[b]eyond that point, operational and cost complexities progressively multiply in large part due to the intermittent nature of renewables.”
The German electricity grid, which relies more heavily on intermittent energy sources, has come close to blackouts and significant blackouts are expected to occur in the next few years. Worse, despite electricity prices that are more than 45% above the European average, Germany has not come close to realizing its carbon reduction goals, has been importing more of its energy. In fact, their energy policies have resulted in increased coal production. The German path of unintended consequences should not be our path.
These power variances, in the absence of battery storage (which currently does not exist at sufficient power capacities, is cost prohibitive and technologically impossible to meet demands beyond a few hours) result in overbuilding systems by 100% or more. This creates a hugely underutilized system when power is not being generated or unneeded and creates excess generation when in operation.
There are pathways to a net-zero approach, as this committee knows through the testimony provided by the group at Princeton University who produced the Net-Zero America report and is conducting ongoing research. This report assumes an investment of $2.5 trillion additionally for energy system upgrades over the next decade as well as substantial interstate transmission of renewable resources. It also assumes certain technological and societal changes.
We can certainly have policy debates over how best to obtain a clean-energy or net-zero energy system by 2050, but I think that is the wrong question. We now have much better scientific information about timescales and potential harm from climate change as presented by the IPCC in the past summer’s AR6 report. We know that the extreme emission scenarios are improbable, if not impossible, and we know that the impacts from all scenarios are not as great, in this century, than we initially thought when we set our goals and statutory mandates. We should capitalize on this scientific information.
Our recommendation to this committee is to pursue an aggressive decarbonization policy, but to do so in a manner that avoids unacceptable impacts and in a timescale that makes sense technologically and that is in aligned with the latest science. We should not set artificial deadlines for actions because such deadlines often result in policies that ignore the tenants of affordability and reliability and may have unintended consequences. We see that in Germany today as it is increasing its use of coal, in California where another season of brownouts are expected, and in this country, generally, as the average price of gasoline is now $5 a gallon.
Trying to push policies with artificial deadlines has caused this Administration to pursue an all-electrification policy and to seek to abandon natural gas as an energy source despite cost, impact to the grid, and questionable effectiveness. For instance, converting a modern fuel-efficient natural gas boiler to an electric one would actually increase carbon emissions because of the carbon footprint of the PJM grid. An all-electrification policy has resulted in a mandate to electrify heavy duty trucks before the technology is capable of handling heavy loads and is commercially available at affordable prices, and before the grid and infrastructure has the capacity to handle the loads. We need a more holistic, practical response to our decarbonization needs.
We must ensure that energy, in all its forms, remains affordable for both residents and businesses. We need to ensure our electrical grid is reliable and not subject to periodic blackouts or brownouts. Affordability and reliability need to be the guardrails of our decarbonization and energy policies.
We recommend that New Jersey’s energy policy be founded on six foundational principles:
- Decarbonization – Policies should strive to reduce carbon emissions as much and as quickly as practicable based on the best interests of the people living in this state and our economic needs. However, no decarbonization policy should be put in place until a full economic impact assessment, including a ratepayer analysis, is conducted. Our policies should emphasize what we can readily achieve now in an affordable and reliable manner and delay other efforts until the technology or other cost-containment measures allow for such adoption.
- Affordability and Reliability – Affordability means that low-income or average resident, as well as business, can afford to use the energy needed considering the other costs of living and doing business in New Jersey. While climate advocates, and the Energy Master Plan, will often use the term “least cost,” this does not denote affordability as “least cost” is in relation to other considered options. Reliability is essential for the functioning of an energy system and, thus, our economy and quality of life. Both affordability and reliability have been central tenets of New Jersey’s energy policies in the past but have recently been ignored for decarbonization policies.
- Emphasis on Technology – Technological advances should be pursued as a key component of the state Energy Master Plan. While intermittent sources of energy need to be part of our energy future, renewables alone cannot replace carbon sources of fuel and still meet the goals of affordability and reliability. We will need new technologies, some of which may not even be known, in order to meet net-zero emissions goals. Technologies such as hydrogen, next generation nuclear, renewable natural gas (RNG), wave energy, fusion, geothermal, microgrids, smart metering, energy efficiency, carbon capture, and others should be fully vetted and discussed in our Energy Master Plan. Everything should be on the table.
I want to specifically reference next generation nuclear, be it modular or from some other advanced technology. The Energy Master Plan assumes our nuclear fleet will be operational through 2050, but it makes no provision or assumptions beyond that. This is unacceptable from a planning perspective. Much of the rest of the world is rediscovering carbon-free, nuclear energy. We need to engage in a serious policy discussion about its efficacy.
- Sound Planning – No major changes in energy sources should be mandated until affordable and reliable alternatives are readily available to replace those sources, and the infrastructure is in place or planned to be in place when those sources are activated. The promotion of current electrification policy initiatives has not considered the needs of increased electrical generation and the transmission systems necessary to support them. We have been putting the cart before the horse.
- Emphasis on Clean Energy Sources – We should continue to pursue established clean energy options, including wind, solar, and nuclear power. New Jersey already has substantial sources of clean energy, and more is rapidly coming on board. Our three remaining nuclear power plants provide roughly 40% of electric generation in the state. Our solar industry supplies another 6% and is growing. Our offshore wind industry has already been approved for 3700 MW with a total goal of 7500 MW. Numerous bids have already been submitted for the transmission projects to build out the offshore wind generation. Together, the continuation and expansion of these sources of power represent a substantial sum of our total electricity energy needs, although we recognize that those needs may significantly grow in the future depending on state and federal electrification policies. These industries should be supported, eliminating unnecessary regulatory burdens and establishing the process for their development in a cost and time effective manner. We need to solve our transmission and congestion problems if these industries are to reach their full potential.
- Energy Security – Multiple energy options should be available to ensure security and the continuous availability of energy in varied forms, in sufficient quantities, and at affordable prices. It has been a tenet of energy policy, until recently, that an energy system provides for a range of energy options and sources so that consumers are protected from sharp price increases and disruption should one energy market be disrupted. We are seeing this play out in real time in Europe, which stopped fracking for natural gas and began to close nuclear power plants only to become dependent on natural gas from Russia. New Jersey’s energy consumption policies should embrace an “all of the above” approach to protect against market disruptions.
In addition, beyond efforts to mitigate climate change by reducing carbon emissions, we recognize that extreme weather events have and always will be part of living in a coastal state. We also recognize, as we have stated above, that sea levels are rising, rainfall is getting more intense, and heatwaves are increasing. Therefore, we should emphasize resiliency efforts. We favor the use of sound science to predict future climate impacts and the protection of our citizens and infrastructure rather than a general policy of retreat.
Our policy recommendations are not rooted in artificial deadlines for actions. Rather, they are based on what is in the best overall interest of the citizens of New Jersey. We fully agree on the need to deeply decarbonize our economy and to achieve a net-zero, or lower, carbon policy but we believe the science shows we do not have to rush to take actions that may preclude the use of more effective technologies. We are happy to discuss the science and risks in as much detail as you want.
In conclusion, we know that deep decarbonization is difficult but that we must pursue it. We also now know much more about the future impacts of climate change science and as a result we know we have more flexibility, timewise, to achieve our goals. Giving ourselves more time will better allow us to make the right choices, and not force decisions with unintended or unacceptable consequences. We support policies that are both affordable and ensure energy reliability. We need to maximize our current, effective technologies, but not overly commit to them and cut off needed, future innovation. And we need to be more resilient.
The path forward will be difficult, but if we emphasize policies that promote the well-being of our residents first, we will be successful.