What’s Clean Energy’s Real Worth?

When policymakers tally clean energy’s real worth, they consider jobs and environment. But other work achieved by clean energy goes forgotten.
Two new papers shed light on some of this work – from saving the lives of US troops to influencing broad economic health.
First, the American Council On Renewable Energy (ACORE) argues that the U.S. military needs to assign a dollar value to energy security in its white paper, Monetizing Energy Security.
The US military has campaigned to green its facilities in recent years with energy efficiency, microgrids and renewables. It’s unclear, however, if Congress will sustain this effort in the face of shrinking budgets and austerity. This puts energy security and military economics at risk, according to ACORE’s findings.
The military has a whopping energy budget. The Department of Defense uses about as much energy as the entire state of West Virginia. In all, it spends an estimated $22 billion per year on energy and of that $20 billion goes to fossil fuels. This leaves the DOD vulnerable to oil price spikes. When oil prices rise by $10/barrel, the military sees its annual energy budget jump $1.3 billion, says the ACORE paper.
Worse, there is a direct tie to fuel use and loss of life in the combat arena. Attacks on fuel conveys are frequent. In Afghanistan, they accounted for one-third of U.S. Army casualties in 2007.
But energy security isn’t a worry just in the war zone. The ACORE paper points out that military installations throughout the U.S. remain largely dependent on a vulnerable electric grid.
“The national electrical grid has evolved regionally and from the bottom up, lacking unified design, which makes it one of the most vulnerable strategic targets,” says the paper.
The grid has already suffered one terrorist attack (San Jose, California, April 2013), as well as attempts by computers hackers. A sophisticated cyber attack could cause outages that last 9-18 months, the paper warns.
Microgrids and renewables could increase energy security and avert financial losses to the military from power outages and fuel cost spikes. However, it’s not always easy for the military to get energy projects built. One challenge is the risk associated with renewable energy costs because of the on-again, off-again nature of incentives. The paper encourages the military to pursue green energy installations in states with strong renewables and microgrid policies – in essence foster the leaders so that others might follow.
ACORE also offers several specific suggestions to more accurately portray the worth of clean energy to the military – to monetize security costs. These include better energy data collection, more standardized energy buying practices and improved supply-chain accounting.
The ACORE paper is available here.
Another paper – this one by always-interesting economist John A. “Skip” Laitner – posits that we need to take a broader view of energy efficiency’s worth. Energy efficiency is more than just a way to save energy, reduce our utility bills and lower greenhouse gas emissions; it offers a strategy to seriously strengthen the U.S. economy.
Energy is a major economic input, he argues, but it is rarely considered so; instead we look to labor and capital to assess economic activity. Thus, the role of energy is “defined and poorly tracked within the standard national economic accounts,” Laitner said in a blog about the paper on Exernomics. He finds the US economy to be only 14 percent efficient, meaning we waste “86 percent of the energy needed in the production and distribution of goods and services.”
We’ve paid for our lack of proper attention to energy efficiency over the last three decades; it’s placed drags on our economy, according to Laitner.
Laitner recommends better tracking and reporting of energy in the economy as it activates capital and labor. He also suggests that energy policies be shifted away from the current supply-side orientation to a focus on exergy efficiency and energy productivity.
Laitner’s paper, “Linking Energy Efficiency to Economic Productivity,” published by John Wiley & Sons, is available for download here.
What’s your take on how we value the worth of energy efficiency, microgrids and renewables? Let’s discuss on Energy Efficiency Markets’ LinkedIn group.
Elisa Wood
Elisa Wood is an editor at EnergyEfficiencyMarkets.com. She has been writing about energy for more than two decades for top industry publications. Her work has been picked up by CNN, the New York Times, Reuters, the Wall Street Journal Online and the Washington Post.