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Making Sense: An Economist's Letters

Columns about current events and everyday economics   

Whatcom County is latest local government to combat global warming

"Think globally -- act locally" may have achieved cliché status. Nonetheless, when combating global warming, the slogan is a good guide and one generally being followed by Washingtonians.

Two months ago, Laurie Caskey-Schreiber and Carl Weimer led the Whatcom County Council to vote to increase the county's use of renewable, "green" energy. That move reminds us of three economic lessons in the fight to reduce global warming:

  • The out-of-pocket price of green energy is a little higher than the price of traditionally produced energy.
  • The social cost for green energy is lower than the social cost of fossil fuels because we all save from not having a climate disaster.
  • Public agencies need to take the lead.

Starting in 2007, Whatcom County will switch 100 percent from regular power to buying more expensive power from renewable sources. Kudos to Whatcom County. The energy suppliers, Puget Sound Energy and others, will use the extra money paid by Whatcom County to cover the higher cost of supplying green power.

Note that phrase "higher cost."

Fighting global warming comes down to burning less fossil fuel. There are two stages in winning the fight.

In the first stage, you reduce energy waste—turn off lights when you leave the office at night, don't heat spaces unnecessarily, switch to energy saving bulbs. These steps are pro green energy and pro greenbacks because they save energy while saving money.

The rub comes in stage two, because it costs more than it saves. Energy users either adopt conservation measures that save energy --but don't reduce energy costs enough to pay for the conservation measures -- or switch from fossil fuels to more expensive green energy.

Over the last six years, Whatcom County government has saved enough money (stage 1) through conservation measures that it can use the savings to pay (stage 2) for the green energy it'll be using.

Tacoma Power—the public utility providing electricity to Tacoma and surrounding communities—explains the difference between price and social cost on their Web site, saying

"The price of green power in current electricity markets is typically higher. However, if electricity resources are compared on a level playing field - if pollution, environmental, global warming, and related costs to society are all counted - green power may cost all of us less."

Various utilities around the state offer green power to consumers, businesses, and governments. Tacoma Power charges just over an extra penny per kilowatt hour for its "Evergreen Options." Puget Sound Energy's "Green Power," Snohomish PUD's "Planet Power," Seattle City Light's "Green Up" and Clark Public Utilities' "Green Lights" programs all offer consumers or businesses the opportunity to buy energy generated from renewable sources by paying an extra penny-and-a-half to two pennies per kilowatt hour. For a typical residential customer, going to all green electricity adds about $12 a month to the family's power bill.

Green-energy programs are great, because they make it easy for individuals to do their share to reduce global warming. But the carbon emissions that cause global warming are a classic example of a problem not solvable by individual action. We all benefit equally from carbon reduction, but the individual who chips in for green energy pays all the costs.

Few of us will go all-out in spending extra for clean energy when we only reap a tiny fraction of the benefits. That's why it's important for the public agencies that represent all of us to take the lead. Kudos are due not only to the Whatcom County Council, but also to the City of Bellingham, and to Western Washington University and Evergreen State College for their decisions to buy 100 percent green power.

In a perfect world, the whole globe would pitch in to reduce carbon emissions. That was the idea behind the Kyoto Protocols. The world's not perfect and not everyone is doing their share. But we can be proud that here in Washington some of our public agencies have made a start.




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