Environment Picture

Energy policy: Let’s slow down $20 billion drain on Michigan’s economy

There’s a big fuss in Lansing as the governor, legislators and lobbyists try to find a way to replace revenue that will be lost when Michigan’s Single Business Tax (SBT) dies at the end of the year. And with good reason; our SBT generates a whopping $2 billion every year. Still, that’s chump change compared to the $20 billion Michigan businesses and residents pay vendors in other states and countries just to meet our annual energy needs.

The tax debate is important, but if we really want to reduce the costs of doing business and living in Michigan, we need to cut our dependence on imported energy. At the same time we should plan for cleaner energy choices that will trim our skyrocketing health care costs. Our old energy choices have been political, needlessly expensive and a burden on public health. If Michigan is to be competitive, we have to get up to speed in the energy game.

Today, only a tiny fraction of motor fuels come from Michigan. And none of our coal and uranium are Michigan products. Consequently, our energy expenditures do virtually nothing to support Michigan’s economy. Happily, we can put money in our pockets with two practical strategies: Cut energy use and begin switching to cleaner, home-grown or locally-generated renewable energy.

Gov. Granholm has made energy reform a key plank in her economic platform. She has repeatedly claimed that she wants Michigan to be the nation’s leader in new energy technologies. Coupling Michigan’s manufacturing capacity and research capabilities could make it a leader in the energy revolution that is already being driven by global warming and national security concerns, not to mention the rising costs of fossil fuels.

Such change will also drive down the cost of treating pollution-linked asthma, heart disease, lung conditions and cancers.

The governor took a big step forward when she charged Peter Lark, chair of the Public Service Commission, to develop a 21st Century Energy Plan. By the time you read this, the proposed plan may well be on the table and under debate. How the legislature and the governor decide to strengthen or weaken it will either put Michigan in the lead or leave us somewhere back in the unremarkable pack.

If the legislature fails to require substantial gains in energy efficiencies, we’ll be sticking ourselves with a reliance on costly imported fuels for decades to come. That’s because the cheapest energy is energy not used. That occurs through better insulation, building codes, appliance standards, more energy efficient industrial equipment, aggressive lighting retrofits, and high-tech LEDs for our traffic lights, Christmas trees and exit signs. The possibilities for savings are endless.

More efficient heating and cooling systems, use of waste heat from electrical generation, expanded mass transit and more fuel efficient vehicles—to name just a few possibilities—could literally cut Michigan’s energy costs by billions. It costs on average just 2.57 cents/kWh to get new energy efficiency, while energy from new coal plants is more than 8 cents/kWh. Besides, each energy-saving choice is an opportunity to generate investments and jobs for Michigan companies, contractors, installers and workers.

After we’ve maxed out on energy efficiency goals, we should commit to getting 20% of our power from local renewable sources by 2020. Wind energy should be a key part of the equation, especially now that its basic costs are on par with new coal and are free of pollution. Though biofuels are still problematic in terms of costs, impact on water and competition for food crops, Michigan researchers and farmers should be encouraged to pursue this relatively flexible approach to energy reform. Even solar power has a role to play in Michigan’s energy future, as the newest technologies are increasingly efficient at pulling energy from even an overcast sky.

Fully half of the other states are ahead of Michigan in their energy policies, measured by their commitments to energy efficiency and renewable energy.

To join the leaders, Michigan should commit to cutting our $20 billion annual imported energy bill by at least $5 billion by 2020. That savings alone would be worth more than twice the cost of our current business tax and would reward us with lower energy and health care costs as well as jobs, investments and profits.
-Lana Pollack, President, Michigan Environmental Council
RELATED TOPICS: clean energy, energy efficiency
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