While President Trump’s letter is riddled with incorrect or misleading statements, I chose to check out a statement based on something I don’t know too much about. Trump writes, “While little would change for our climate under the Paris Agreement, our electricity prices would significantly increase.” What interested me about this statement is his connection between the Paris Agreement and electricity prices. I’m assuming he means to say that the energy targets we would create for ourselves (and which would be self-enforced) would require significant investment in renewables, which would increase electricity prices. His idea that switching to renewables would raise electricity prices is the crux of an entire paragraphs argument against the agreement so it seemed worthy of a fact check to me.
Cost is always cited as one of the main obstacles to switching to renewable resources. As I began researching the topic I realized that most articles cite the examples of places like Denmark and Germany and explain that their electricity prices are the highest in the world which is easily attributed to their aggressive renewable transition plans. However, I found that the explanations given are often oversimplified or biased and don’t explain why this is happening. I decided to focus on Denmark as it has the highest electricity prices in the EU. I discovered that while Denmark’s citizens are paying more for their energy, the actual price of the electricity has gone down. The price of electricity is in Denmark is lower than the EU average; however huge taxes have basically tripled the price people actually pay. One of the reasons these taxes are so high is the PSO tax, which helps fund renewable resource development. However, at the end of 2016 the Danish government decided to slash the tax to save companies and taxpayers money and will instead find the money for green projects elsewhere. The completion of offshore wind turbine parks is are also expected to drop the price of electricity. Additionally, energy companies in Denmark are relying less on government subsidies, funding offshore wind projects through selling off the oil and gas divisions of their companies. In fact, Dong Energy has plans to build offshore turbines in Germany without any government subsidies at all. It seems that historically, the high prices of electricity are not due to the energy itself, they are caused by high initial construction costs and taxes imposed by the government to fund other projects.
One of the things that makes it very difficult to compare Denmark to North America is that electricity prices vary a lot across each U.S. state. For example, according to the US Energy Information Administration, in June of 2017 the average price of electricity in my home state of New York cost 18.77 cents per Kilowatthour but it Washington it cost just under 10 cents per Kilowatthour, the cheapest of any state in that time frame. It turns out the Washington uses far more renewable hydroelectric power than any other type of energy. They generate so much that some of their hydropower is used in neighboring states. An NPR article about electricity prices explains the reasons for similarly low prices in Idaho, “Idaho generates much of its electricity from hydroelectric dams, which require virtually no fuel. Also, the cost of constructing the dams have been spread out over many decades. This all has kept electricity prices in Idaho low.” Right now, hydropower is an efficient source of energy because dams require little maintenance and so many have been built already. Since using wind power on a mass scale is relatively new (especially using offshore wind) the technology has been changing a lot. New innovations are lowering construction costs and increasing production capabilities. Additionally, as more and more renewable energy becomes available it will make natural gas and coal less competitive Trump’s statement is technically correct in that in many places, sudden investment in renewable resources has risen electricity prices. However, he ignores the many aspects that contribute to this issue and they ways that new technologies and different government policies could and will bring prices down.
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