California is making rooftop solar panels compulsory on new homes from 2020. But some economists are sceptical

A solar panel being fitted on a San Francisco rooftop. Image: Getty.

More California rooftops will soon sport solar panels, partly due to a new state mandate requiring them for all new houses and low-rise residential buildings by 2020.

This rule immediately sparked lively debates. Even experts who generally advocate for solar energy expressed skepticism that it was actually a good idea.

As an environmental economist who studies the design of environmental policies, I believe that doing something about climate change is important, but I don’t consider this new solar mandate to be the best way to achieve that goal. I’m also concerned that it could exacerbate problems with California’s housing market.

More than two sides

You might expect the debate over this policy, which became official when the California Energy Commission unanimously voted in favor of it on May, to pit two well-defined camps against each other.

Environmentalists who prize fighting climate change might love it due to a presumption that increasing the share of power California derives from solar panels will reduce greenhouse gas emissions by cutting demand for natural gas and coal.

On the other hand, those who question whether the costs of addressing climate change are worth it might hate the solar mandate, since they either see no benefits or think the benefits aren’t worth the costs.

But there are more than two sides.


Environmental economics 101

Many renewable energy experts, including economists like me, want governments to do something to address climate change but question the mandate.

University of California, Berkeley economist Severin Borenstein summed up this take in his open letter to the California Energy Commission opposing the rule. University of California, Davis economist James Bushnell also opposes the mandate for similar reasons.

Above all, what we economists call “command-and-control policies” like this mandate – inflexible requirements that apply to everyone – often don’t make sense. For example, going solar is less economical in some cases. Even in sunny California, builders can construct housing in shady areas, and not all homeowners use enough electricity for the investment to pay off before they move away.

The mandate does have some exemptions tied to shade and available roof space, but there could property owners subjected to the requirement to own or lease solar panels who might consider it unreasonable.

We tend to think that “market-based policies” would work better. By relying on incentives instead of requirements, people get to decide for themselves what to do.

Good examples of these policies include a tax on pollution, like British Columbia’s carbon tax, or a cap-and-trade market, like the European Union’s Emissions Trading System. Instead of restricting the right to pollute, these approaches make people and businesses pay to pollute, either through taxation or by buying mandatory permits.

The flexibility of market-based policies can make meeting pollution reduction goals cost-effective. When people – or businesses – have to factor the costs of pollution into their decision-making, they have a financial incentive to pollute less and will find ways to do so. By reducing pollution as cheaply as possible, more money is left over to spend on other pressing needs like housing, health care and education.

This advantage is not merely theoretical. By many accounts, market-based policies have successfully worked according to theory, including the U.S. sulfur dioxide trading program and the EU’s carbon trading program.

California itself has a cap-and-trade market. I believe that expanding and improving it would cut carbon emissions more cost-effectively than the solar mandate would.

Many economists also fear that the mandate will worsen California’s housing unaffordability. This crisis has many causes, such as restrictive zoning regulations that curtail construction. But the solar-panel requirement, which could increase the cost of a new home by more than $10,000, probably won’t help, even though supporters of the policy argue that the solar panels will pay for themselves in terms of lower monthly electricity costs.

The solar mandate’s fans

The solar mandate’s defenders, including Goernor. Jerry Brown and Sierra Club leader Rachel Golden, make several arguments – two of which I find credible.

The first is what I’d call the “Panglossian” argument, after the character in “Candide,” Voltaire’s 18th-century classic satire. In what Voltaire would call “the best of all possible worlds,” taxing carbon would make perfect sense.

But this is a world riddled with political obstacles that make enacting almost any climate policy next to impossible. If a big American state can enact an imperfect law like this mandate that might do some good, then it should go for it.

The other argument I find reasonable is that by drumming up more demand, the solar mandate will expand the solar panel market – thereby driving solar costs down, perhaps more quickly than a carbon tax would. There’s some evidence supporting the theory that these mandates can spur innovation in renewable electricity technologies.

If the mandate works out, it might address two issues at once: shrinking California’s carbon footprint and bolstering technological progress in the solar industry.

To be sure, the cost of residential solar panels has plummeted in recent years, although generating solar energy through rooftop panels remains less cost-effective than power from utility-scale solar farms.

A practical policy

After mulling all the various arguments made by these different camps, I don’t think that whether California’s rooftop solar mandate is the perfect policy for the climate or the state’s homebuyers is the question.

The answer to that question is a resounding no – but that is beside the point because no policy is perfect. The key question is whether this policy – given its imperfections and given the difficulty in passing more cost-effective policies – is a winner overall. That question is harder to answer.

The ConversationUltimately, I believe the mandate will yield some environmental benefits, though they could be more cost-effectively achieved through other means.

Garth Heutel, Associate Professor of Economics, Georgia State University.

This article was originally published on The Conversation. Read the original article.

 
 
 
 

Why aren’t working class people living in cities also “left behind”?

The metropolitan elite. Image: Getty.

If you have hammer, everything’s a nail. The hammer for much of Britain’s political class and commentators is Brexit, which is meant to explain everything from social mobility to the north-south divide to attitudes to immigration to public transport investment.

However, a huge amount is lost in this sort of analysis. One particular casualty is our understanding of working-class communities. This is particularly striking in the presentation of London as being a Remain stronghold inhabited by metropolitan elites.

In fact, the reality is that working class communities, especially in cities, have been just as “left behind” as those elsewhere in the UK. Even 72 people dying in the Grenfell Tower tragedy, a preventable fire which happened within sight of Parliament, hasn’t dislodged the dominant narrative of London as a leafy cosmopolitan elite bubble.

The lazy and reductive “London is cosmopolitan elite” narrative extends well beyond the far right. This shorthand gathers into one category people who have a second home in Provence, and outsourced gig economy workers who live in Hackney. By flattening such diversity into catch-all terms, we erase the existence of working class Londoners, ethnic minorities and migrants.

The facts are stark – London has some of the highest poverty, highest pollution, and largest working class community in all of the UK. Seven of the top 11 local authorities in terms of child poverty are in London, while the capital records the highest level of air pollution in the country.

Yet the statistics are airily dismissed because a majority London residents voted Remain in the EU referendum – and remainers, of course, are all elite, especially if they live in London. By such magic thinking, three in four black people in Britain become elite because they voted to remain in the EU, a point that should perhaps give pause to even the doughtiest proponent of the everything-is-Brexit theory.

Despite our national obsession about class, Britain already had an impoverished understanding and narrative on the topic even before Brexit. Why aren’t the ethnic minority and migrant people who live in tower blocks and experience disproportionate levels of child poverty (rising to 59 per cent for Bangladeshi children) viewed as working class? Why aren’t those living in cities, or who die in preventable fires also “left behind”?

One answer is it doesn’t suit a narrative that wants to make everything about Brexit, and that only addresses class when the context is Brexit. Another is that recognising that many ethnic minorities are also working-class is not helpful when your aim is to prosecute a different argument: that Britain needs “tougher” immigration policies.

At its most extreme, this argument ties into the longstanding narrative that only white people can be British or live in Britain. Of course, this is a narrative that divides working class communities and blames ethnic minorities and migrants for all of society’s ills.

It also has a direct policy effect. It is easier to justify cuts to public services if expenditure on those services is associated with “undeserving scroungers” who don’t really count as fellow citizens.

Recent research published by the Runnymede Trust and the Centre for Labour and Social Studies shows the wider effects of this narrative. The report’s title “We Are Ghosts” are the words of Henry, a working-class Londoner in his ‘60s living in Southwark and capture a wider sense of precariousness, neglect and lack of voice in the face of London’s ongoing gentrification.

Henry happens to be white – but his experience of injustice and prejudice is shared by people of colour interviewed for the same research. Where people engaged with public services, especially housing, policing and social care, they felt treated with indignity and indifference.

Decades of blaming the poor and migrant has led to a punitive culture within our public services which affects all working-class people, white or otherwise, as they see their voices and needs  being routinely ignored.

This is one reason why we need more locally devolved services: to strengthen working class, BME and migrant voices. Terms like “co-production” may sound thinktanky, but the aim is a democratic one: to ensure that those most affected by a service – such as housing services – or decision actually have a say in how that service is delivered.

Devolution isn’t just about putting more power in local rather than national government; it’s also about devolving power more directly to people, through community organisations and charities that are often better placed to represent and understand local needs and experiences.

The British working class has been multi-ethnic for centuries. Working class communities aren’t the same everywhere but they do experience the shared conditions of lack of resources, and lack of voice or power.

By always foregrounding Brexit when we talk about class, we not only miss these shared conditions among working class people across the UK, but deflect from the solutions that might actually address them.

If we’re serious about actually tackling race and class inequalities and prejudice, we need to put down the Brexit – or any other – hammer. Instead we need to change how we think and talk about race and class, invest more in the safety net, and redesign public services to provide those using them with greater dignity, voice and power.

Dr Omar Khan is director of the Runnymede Trust