A Fairly Sane Radical Solution to Reduce Energy

One idea put forward to reduce carbon is the US cap & trade bill (HR2454). This is one way to help reduce carbon, and we really need to start the process. I am personally dubious of the chances of getting meaningful greenhouse gas reductions out of the Senate after seeing how the house pandered to special interests like King Coal, but we will see.

Unfortunately, it does not really represent a solution that makes the individual consumer aware of our responsibility for climate change. A quick analysis of the proposed cap and trade bill looks like the average American will have to pay somewhere between 5 and 10 dollars a month more because of the legislation, but once again that legislation is pending and probably will be watered down, so the personal "pain" will probably hardly be felt by the average American.

I contend that it is this generation's responsibility to start atoning for the shortsighted use of fossil fuels that we have benefited from. Why, may you ask, is this relevant. As an American, it is important that we recognize that while we are but 4% of the world's population we consume over 20% of the world's energy. That is a 5 to 1 ratio. Imagine if you had to cut your energy consumption to your world percentage "fair share". That represents an 80% reduction in current energy usage! Are you ready to do that? I really believe, as American over consumers, we need to think on those terms.

We need to think about energy and sustainability as one thing. One idea I have would facilitate both the conservation of current energy as well as the creation of new sustainable sources of energy. It is simply this, we allot each American an amount of monthly or yearly electrical energy to use. When you use less you pay less, when you use more you pay more. Here is a quick outline of the basic plan:

Average American usage:

Average American household size -2007 US Census Bureau = 2.6 Persons Average American Household Electricity Usage - Department of Energy = 10,656 KWh Average American Electricity Usage = 4098.461538 KWh / Person

Average monthly usage is approx. 415 KWh / person.

So a family of four would be allotted 1660 KWh/month, based on 2007 information. Now let's say we decide we want to lower our energy usage by 5% in year 1. That would give that family of four a monthly energy budget of 1577 KWh. Great! So here is how it may work.

The first phase:

We would simply read meters. We already do that on a monthly basis. If your base electric rate is 12 cents per KWh then if you use 1577KWh you pay 12 cents per KWh or $189.24. If you use less energy than the monthly allotment your per KWh rate would start to reduce by the percent you are under the allotment. When you exceed the monthly allotment, you pay a higher rate. So here are some quick examples of how it may work:

INPUT VALUES INPUT VALUES

KWh / person 415 KWh / person 415

Cost / KWh $0.12 Cost / KWh $0.12

Year 1 Target Year 2 Target

Reduction 5% Reduction 7%

CURRENT AVERAGE USAGE CURRENT AVERGAE USAGE

Household Monthly Monthly Household Monthly Monthly

Size KWH Energy Size KWH Energy

Allotment Cost Allotment Cost

1 415 $49.80 1 415 $49.80

2 830 $99.60 2 830 $99.60

3 1245 $149.40 3 1245 $149.40

4 1660 $199.20 4 1660 $199.20

5 2075 $249.00 5 2075 $249.00

6 2490 $298.80 6 2490 $298.80

AVERAGE USAGE w/ 5% REDUCTION AVERAGE USAGE W/ 7% REDUCTION

Household Monthly Monthly Household Monthly Monthly

Size KWH Energy Size KWH Energy

Allotment Cost Allotment Cost

1 394.25 $47.31 1 385.95 $49.80

2 788.5 $94.62 2 830 $99.60

3 1182.75 $141.93 3 1245 $149.40

4 1577 $189.24 4 1660 $199.20

5 1971.25 $236.55 5 1929.75 $231.57

6 2365.5 $283.86 6 2315.7 $277.88

COST OF USAGE @10% OVER COST OF USAGE @10% OVER

ALLOTMENT ALLOTMENT

Household Monthly Monthly Household Monthly Monthly

Size KWH Energy Size KWH Energy

Allotment Cost Allotment Cost

1 433.675 $57.25 1 424.545 $56.04

2 867.35 $114.49 2 849.09 $112.08

3 1301.025 $171.74 3 1273.635 $168.12

4 1734.7 $228.98 4 1698.18 $224.16

5 2168.375 $286.23 5 2122.725 $280.20

6 2602.05 $343.47 6 2547.27 $336.24

COST OF USAGE @20% OVER COST OF USAGE @20% OVER

ALLOTMENT ALLOTMENT

Household Monthly Monthly Household Monthly Monthly

Size KWH Energy Size KWH Energy

Allotment Cost Allotment Cost

1 473.1 $68.13 1 463.14 $66.69

2 946.2 $136.25 2 926.28 $133.38

3 1419.3 $204.38 3 1389.42 $200.08

4 1892.4 $272.51 4 1852.56 $266.77

5 2365.5 $340.63 5 2315.7 $333.46

6 2838.6 $408.76 6 2778.84 $400.15

COST OF USAGE @10% UNDER COST OF USAGE @10% UNDER

ALLOTMENT ALLOTMENT

Household Monthly Monthly Household Monthly Monthly

Size KWH Energy Size KWH Energy

Allotment Cost Allotment Cost

1 354.825 $38.32 1 347.355 $37.51

2 709.65 $76.64 2 694.71 $75.03

3 1064.475 $114.96 3 1042.065 $112.54

4 1419.3 $153.28 4 1389.42 $150.06

5 1774.125 $191.61 5 1735.775 $187.57

6 2128.95 $229.93 6 2084.13 $225.09

COST OF USAGE @20% UNDER COST OF USAGE @20% UNDER

ALLOTMENT ALLOTMENT

Household Monthly Monthly Household Monthly Monthly

Size KWH Energy Size KWH Energy

Allotment Cost Allotment Cost

1 315.4 $30.28 1 308.76 $29.64

2 630.8 $60.56 2 617.52 $59.28

3 946.2 $90.84 3 926.28 $88.92

4 1261.6 $121.11 4 1235.04 $118.56

5 1577 $151.39 5 1543.8 $148.20

6 1892.4 $181.67 6 1852.56 $177.85

(Now i am no accounting wiz or economic model person or MBA, the figures I am quoting here are for illustration only, to get the point across. Other folk with more wisdom then me can figure out the real numbers by crunching something)

As you can see from the numbers there would be quite an incentive for folks to become aware of their electrical usage.

Now let's get into the fun part.

There would be both debits and credits on the utility balance sheets depending on the amount of energy used. If your rate reduces below the average as you use less power then the utility will want to make that difference up. This could (and probably would) be made up by the offset of the folks who use more energy. But, let's say that, we are in a perfect world and everyone uses less then the target rate. Well, we would then have to adjust the base rate, right? No, wait, there is another way. Suppose sustainably generated energy had no cap and no adjustment! Then the utlity could build sustainable plants rather then polluting plants to power the grid. They could sell and folks could use as much of this power as was available with no penalties! What an incentive for the utlities to create more sustainable energy plants. They can sell as much as they can produce at the market rate, the great American profit motive shines through! There is another consideration here, if your energy is generated by coal you are having a greater impact on the climate then if your energy is generated by natural gas or solar power. Here is where Cap and Trade re-enters the picture. There should be real costs for greenhouse gas creation for the utilities to push them towards sustainable power production. That, however, is a post for another day.

Right now, remember to think about what your global energy share is and try to relate it to your personal habits.

Cheers!

ps. I know the formatting is messed up, can anyone tell me how to insert a table into this blog?