The Value of Hawaii 2: Ancestral Roots, Oceanic Visions

A Perspective on Energy Policies in Hawai‘i

A PERSPECTIVE ON ENERGY POLICIES IN HAWAI‘I MAKENA COFFMAN I moved home to Hawai‘i in 2002 with an undergraduate degree in international relations and an ambition to work in policy. I began as a researcher for 3Point Consulting and was assigned to be a recorder in the widely publicized clash over new power lines through Mänoa or Pälolo. Among other environmental concerns, both communities were upset about the impact to view planes as well as the role that the power lines would play in facilitating more development in Honolulu. This experience introduced me to the intricacies of energy planning, ranging from the technical issues of power reliability to community concerns about locating infrastructure . The experience reinforced my decision to pursue a PhD in economics and eventually planning as a career. The knowledge and tools of economics combined with the planner’s engagement with stakeholders, ranging from policy-makers to community members, is how I work to turn ideas into action. One of the more formative experiences of my early career was serving on the State of Hawai‘i Greenhouse Gas Emissions Reduction Task Force [Act 234, 2007]. We were charged with identifying a work plan to reduce Hawai‘i’s greenhouse gas (GHG) emissions to 1990 levels by the year 2020. While the Task Force struggled to come to consensus, the process of inquiry helped to inform my research agenda in two main ways. The first finding, that the electric sector substantially increased its emissions as a result of introducing a coal-burning unit, motivates me to think about both environmental and economic outcomes in crafting policy. The second finding, that ground transportation is the fastest growing contributor to GHG emissions, piqued my interest in transportation planning, and specifically, initiatives to reduce vehicle miles. In this essay, I share some of the challenges and opportunities that Hawai‘i faces in pursuing renewable energy and GHG emissions reductions. * * * * * It is tempting to frame Hawai‘i’s energy challenges as unique—to paint Hawai‘i as a place unto itself that requires Hawai‘i-grown solutions. It is Coffman, A Perspective on Energy Policies in Hawai‘i 101 certainly true that Hawai‘i faces disproportionately high electricity prices and its island geography creates challenges in harnessing energy sources. But in broad terms, Hawai‘i’s experiences are like the rest of the world. We share a desire to wean ourselves from fossil fuels and mitigate human-induced climate change. And we face difficult challenges in deploying renewable energy technologies in cost-effective and large-scale ways. We must learn from others ’ experiences, and our lessons are globally relevant. RISING ELECTRICITY COSTS The defining characteristic of Hawai‘i’s energy system is its extraordinary cost. We meet roughly 75 percent of electricity needs by burning oil. This means that when oil prices rise, both our transportation and electricity costs increase. In contrast, the US is generally more dependent on coal and more recently natural gas. Hawai‘i residents pay electricity rates about three times the national average (see Figure 1), and the gap is widening. Sudden increases in oil prices result in periods of slower growth and even recession.1 Rising and volatile oil prices lead to uncertainty that may delay capital investments,2 and cause bouts of inflation that lower purchasing power .3 Although the high cost of oil is an economic burden, it also provides an incentive for large-scale deployment of alternative technologies. Figure 1. Average Hawai‘i and US Electricity Rates (from the U.S. Energy Information Administration [EIA], Electricity. U.S. Department of Energy, 2013). 102 ENERGY HAWAI‘I CLEAN ENERGY INITIATIVE The US Department of Energy and the State of Hawai‘i recognize this opportunity , and in 2008 launched a collaborative effort to achieve “a 70 percent clean energy economy within a generation.” The motivation is that Hawai‘i’s high electricity rates make renewable energy technologies here more cost-effective than elsewhere in the country. The Hawai‘i Clean Energy Initiative (HCEI) has acted as a catalyst to bring diverse stakeholders into conversation. HCEI is intended as guidance for both electricity and transportation; however, its main effect so far has been codification into statute through a Renewable Portfolio Standard (RPS) for the electricity sector. RPS is one of the most popular policy mechanisms that states and nations use to ensure a minimum amount of electricity generation from renewable sources. Thirty...