Katrina and the Democratization of Energy

by Joseph Tomain

Natural disasters such as Hurricane Katrina,[1] Superstorm Sandy,[2] and the typhoon that devastated Fukushima,[3] as well as technical weaknesses that caused the Northeast blackout in October 2003,[4] and regulatory failures that ended California electric industry restructuring efforts[5] share two commonalities.  First, they all affect the energy system at enormous costs in economic losses and in disrupted lives.[6] Indeed, severe weather events are the leading source of electricity grid disturbances in the US with 679 widespread power outages between 2003 in 2012. Those outages have been estimated to cost the US economy between $18 and $33 billion each year during that decade.[7] Second, the economic and social costs of such disasters are so significant because the centralized structure of electricity generation and distribution guarantees concentrated losses upon such occurrences. 

Consequently, as weather impacts continue and increase[8] in severity and occurrence, [e]lectricity systems are increasingly expected to be prepared for more frequent and intense storms, to rapidly respond to any disruptions, and to minimize all kinds of environmental impacts of their operations.”[9]  As Duke law professor Jedediah Purdy warns “[e]nvironmental crises are defining challenges for the next few decades and probably well beyond.”[10] There are two responses to these environmental threats to the energy system.   Either, the electric grid itself can be upgraded and improved for greater resilience and security. Or, the electric system can be restructured through greater decentralization together with increased competition and consumer participation. This second response, the democratization of energy, is a radical disruption in the way energy business and its regulation has been conducted.

The energy sector constitutes approximately 8-9% of our country’s GDP[11] and, historically, the US has developed an approach to the production, distribution, and consumption of energy that has operated for over a century.[12]  Our energy history can be put into another perspective – significant financial and legal resources have been dedicated to designing and sustaining our current energy system. Consequently, any attempt to change a century-old system entails myriad political, policy, legal, and economic issues to mention a few. Nevertheless, the reality is that changed energy and environmental circumstances and policies demand our attention and demand new policies and a new politics.

The 10th anniversary of Hurricane Katrina, then, arrives at a particularly important time for US energy/environmental policy. Indeed, the promulgation of the final rules of EPA’s Clean Power Plan[13] recognizes the significance of this anniversary in two particular ways. First, the direct intent of the CPP is to combat climate change by reducing carbon emissions from central power plants. Second, one foreseeable consequence of the CPP is to promote decentralized power through greater use of renewable resources, energy efficiency and distributed generation options. It is the second dimension of the CPP that contributes to the democratization of energy and to the disruption of energy business as usual.

Energy and its Democratization

The fundamental assumption behind the traditional energy model is that there is a direct and positive correlation between energy production and consumption, and economic growth.  In other words, the more energy we produce and consume, the stronger our economy will be. That assumption, however, is no longer operative.  Since the 1970s, the United States has been realizing increased energy intensity.[14] Energy intensity simply means that we get more energy bang for our energy buck.  Indeed, as a country, we can realize continued economic growth and, simultaneously, produce and consume less energy.  Such energy efficiency is the abundant and low hanging fruit of an environmentally friendly energy economy.

The direct consequence of the fundamental assumption about energy and economic growth was the promotion of what Amory Lovins of the Rocky Mountain Institute called the hard energy path comprised of large-scale, capital-intensive, highly centralized firms that produce and distribute energy at a national scale. Resources such as oil, natural gas, coal and nuclear power fit the hard path quite neatly as those fuels constitute 90% of our energy portfolio.[15] The alternative soft path, by contrast, relies on renewable resources as well as energy efficiency and delivers power through more decentralized firms and processes.

Importantly, over the last three decades or more, our energy policy discourse has become more nuanced. Instead of focusing solely on the relationship between energy and the economy, policy analysts have widened their attention to energy security, or energy independence, as well as to environmental sensitivity.[16] The need to consider energy and the environment together is not new; it has just not been institutionalized to any significant degree although just such a clean energy transition is underway and is scaling up considerably. For example,  “[i]n 2013, 37% of all new electricity generating capacity came from renewable energy, three times more generation capacity than from oil, coal, and nuclear combined.”[17] And, “[e]lectricity generation from wind grew 3.3-fold between 2008 and 2014, and electricity generation from solar energy grew more than 20-fold.”[18].

Consequently, if the traditional, hard path is no longer as necessary as once believed, then what should replace it?  In contrast to the hard energy path, the more democratic soft path is resource-sensitive, environmentally friendly, scaled-to-task, and, decentralized.  Examples include rooftop solar, micro-grids, geothermal heat pumps, wind power, and back of the switch appliances and controls as well as building codes and land-use standards can all contribute to a clean power future.  

To be sure, utility-scale wind and solar projects and large-scale geothermal developments, as examples, exhibit some hard path characteristics. Similarly, small nuclear reactors exhibit some soft path characteristics as well. There is no single path to a favorable energy/environmental future and hard choices among multiple possible trade-offs must be made.    Regardless, the small-scale technologies mentioned constitute a radical difference as we redefine the composition of our energy portfolio. They also constitute a different energy politics; a more democratized energy politics.

Watch CPR Scholars discuss the lessons learned from Katrina in the CPR Roundtable on Katrina+10


[1] Joseph P.Tomain, Katrina Consequences: What Has Government Learned?: To a Point, 52 Loyola L. Rev. 1201 (2006); Lost in the Flood, 23 Pace Envt. L. Rev. 219 (2005-2006) (review of Adrian J. Bradbrook et al. eds., The Law of Energy for Sustainable Development (2005)).

[2] Lincoln L. Davies et al., Energy Law and Policy 19-22 (2014).

[3] Lincoln L. Davies, Beyond Fukushima: Diasters, Nuclear Energy, and Energy Law, 2011 Brigham Young L. Rev. 1937 (2011); Linciln L. Davies & Alexis Jones, Fukushima’s Shadow, __ Vand. Intl. L. & Pol. J __ (2015).

[4] U.S.-Canada Power System Outage Task Force, Final Report on the August 14, 2003 Blackout in the United States and Canada: Causes and Recommendations (April 2004).

[5] Joseph P. Tomain, The Past and Future of Electricity Regulation, 32 Envt. L. 435 (2002); Severin Borenstein, The Trouble with Electricity Markets: Understanding California’s Restructuring Disaster, 16 J. Econ. Persp. 191, 198–200 (2002).

[6] Total costs of the 2003 U.S.-Canadian blackout, as an example, were estimated at between $4 billion and $10 billion. U.S.-Canada Power System Outage Task Force, supra note 4at 1.

[7] quadrennial energy review: energy transmission, storage, and distribution S-10 to S-11 (April 2015); White House, Economic Benefits of Increasing Electric Grid Resilience to Weather Outages (August 2013).

[8] quadrennial energy review: energy transmission, storage, and distribution S-8 (April 2015).                                                                                     

[9] Jennie C. Stephens, Elizabeth J. Wilson & Tarla Rai Peterson, Smart Grid (R)evolution 15 (2015).

[10] Jedediah Purdy, The Politics of Nature: Climate Change, Environmental Law, and Democracy, 119 Yale L. J. 1122, 1125 (2010).

[11] Institute for Energy Research, A Primer on Energy and the Economy: Energy’s Large Share of the Economy Requires Caution in Determining Policies that Affect It, (February 16, 2010); Gregor MacDonald, Here’s What Happen When US Energy Spending Passes 9% of GDP, Business Insider (June 11, 2011).

[12] Joseph P. Tomain, The Dominant Model of United States Energy Policy, 61 Univ. Colorado L. Rev. 355 (1990).

[13] Environmental Protection Agency, Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units ( August 3, 2015).

[14] US Department of Energy, Monthly Energy Review 14-18 (February 2015).

[15] Amory B. Lovins, Soft Energy Paths: Toward a Durable Peace (1977); see also Amory Lovins & Rocky Mountain Institute, Reinventing Fire: Bold Business solutions for the New Energy Era (2011).

[16] Joseph P. Tomain, Ending Dirty Energy Policy: Prelude to climate change chs. 3 & 4 (2011).

[17] American Council on Renewable Energy, Evolving Business Models for Renewable Energy: 2014 Industry Review 15 (June 2014).

[18] quadrennial energy review: energy transmission, storage, and distribution S-1 (April 2015).

 



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