In a Nutshell:
- While Michigan is shifting to more renewable sources of energy, the state still relies heavily on fossil fuels.
- Pollution associated with energy production harms the health of individuals and the environment, imposing costs on society that are not fully reflected in the price we pay for electricity.
- Expansion of clean and renewable energy sources is the clearest path forward for Michigan to balance a vibrant economy with clean cities, pure lakes, and pristine forests occupied by healthy people.
As we near the end of an especially frigid week, many Michiganders have found themselves eyeing their thermostats and contemplating their next energy bill.
After nearly a year spent mostly at home during the coronavirus pandemic, many have found that their household electricity consumption has changed. Even as people use more electricity at home, however, national trends show a reduction in overall electricity consumption resulting from public health efforts (i.e., lockdowns) to mitigate the spread of COVID-19.
Whether temporary or permanent, these changes in energy consumption patterns offer an opportunity to reflect on energy policy.
Even though the public health threat posed by COVID-19 is far from over, we should recognize that other public health threats—such as those posed by air pollution and climate change—have not gone away. The pause in our normal routines imposed by the coronavirus has been anything but pleasant, but the optimists among us might see this pause as an opportunity to improve more in society than just our response to infectious diseases.
Energy Production as a Public Health Issue
While energy policy is frequently discussed in economic terms, it is important to recognize the adverse health and environmental consequences of the production and consumption of electricity (especially from non-renewable sources). Long-term, cumulative exposure to environmental hazards is a significant factor in disease development and premature death. For example, asthma prevalence is highly determined by area of residence, as well as income and education level—factors that, in turn, affect one’s level of exposure to pollution. Polluted air also can contribute to the development of cancer, heart disease, kidney disease, and even diabetes.
Moreover, the deleterious health effects of pollution over time also make us more susceptible to the other health challenges we may encounter — like COVID-19.
Exposure to pollution also raises issues of health equity. Black and Hispanic communities tend to bear a disproportionate and inequitable portion of the air pollution burden, despite consuming fewer goods and services that contribute to creating this pollution.
Amid discussion of the adverse consequences of fossil fuel consumption, the elephant in the room is undoubtedly climate change. Climate change remains one of the greatest threats to global health and global security. According to the American Public Health Association, climate change is one of the biggest public health threats facing the U.S. and is also a major health equity issue.
Michigan’s Renewable Energy Portfolio
Historically, Michigan (like many northeastern states), has relied heavily on coal. In 1990, 66 percent of the state’s electricity was produced from coal sources (see Chart 1). Nuclear energy was the second largest source and hydroelectric energy accounted for just one percent of the state’s total generation thirty years ago.
Electricity Generation in Michigan by Source, 1990
After two decades, reliance on coal had changed very little, with coal still accounting for nearly 60 percent of Michigan’s electricity generated in 2010. This small reduction in coal consumption is partly attributable to increases in the use of natural gas and nuclear energy. Despite decades of awareness regarding the need to shift to renewable sources of energy, Michigan made very little progress in this period.
In October 2008, Michigan enacted the Clean, Renewable, and Efficient Energy Act, requiring the state’s investor-owned utilities, alternative retail suppliers, electric cooperatives and municipal electric utilities to generate at least 10 percent of their retail electricity sales from renewable energy resources by 2015. Renewable energy includes electricity generated from wind, solar, biomass, waste-to-energy, and hydroelectric sources.
Michigan’s renewable portfolio standard (RPS) has subsequently increased modestly from 10 percent in 2015 to 15 percent in 2021.
Spurred by these policy changes (as well as changing economic circumstances), Michigan’s electricity generation has certainly diversified in recent years (see Chart 2). While Michigan still relies on fossil fuels for most of its electricity, that reliance is gradually shrinking. Additionally, within this fossil fuel usage, the uptick in natural gas consumption has reduced reliance on coal.
Electricity Generation in Michigan by Source, 2019
The question remains: Is Michigan doing enough?
Judged among 50 states that collectively derived 62.6 percent of their electricity from fossil fuels in 2019, one might be tempted to think Michigan is doing well enough among its peers. Judged by ongoing health and environmental consequences, as well as future economic realities, however, there is still ample room for improvement.
Michigan’s Energy Future
For Michigan to reliably meet the state’s energy needs in the future, it is essential to diversify energy generation through renewable sources.
Michigan has had multiple past opportunities to be more ambitious with its renewable energy targets, but did not take them. As the social and economic consequences of inaction have become starker, Michigan’s public utilities (e.g., Consumers Energy) have instituted their own clean energy plans. DTE Energy touts itself as the state’s largest clean energy producer, and has published specific goals to mitigate factors affecting climate change.
As both social, political, and market forces have pushed companies toward renewable energy sources, renewables now account for most planned electricity generating capacity additions this year throughout the U.S. And yet, market forces alone are unlikely to fully address this issue. The price of electricity simply does not reflect the social, environmental, and health costs of its production, and, because of these negative externalities, people tend to consume more energy than is socially optimal.
On September 23, 2020, Governor Whitmer took executive actions to make Michigan the 9th state to commit to 100 percent economic carbon neutrality. This “MI Healthy Climate Plan” recognizes that energy, public health, and economic development/vitality are intrinsically linked.
Arguments surrounding environmental regulations are often framed solely in terms of the regulatory burden and costs imposed upon firms. Indeed, governments should avoid imposing undue and/or unproductive costs that serve only to stifle economic activity; however, any such analysis of costs must consider the social and health-related costs that continue to accrue in the absence of environmental protections. Prices in the market should reflect these negative externalities incurred by society as the result of electricity production, and government can play an important role in correcting such market failures when they occur. After all, pollution related diseases also cause productivity losses and increased health care spending for businesses and governments, and these economic impacts shouldn’t be left off the balance sheet when debating government involvement in the energy sector.
A thriving economy provides many benefits to society, fulfilling people’s wants and needs (and even improving their health). The 20th century economy was powered largely by non-renewable sources of energy that have caused substantial damage to our health, environment, and climate. Shedding the vestiges of our coal-driven past and utilizing more renewable sources of energy remains one of the greatest challenges in the 21st century. Nonetheless, expansion of clean and renewable energy sources is the clearest path forward for Michigan to balance a vibrant economy with clean cities, pure lakes, and pristine forests occupied by healthy people.