Renewable forms of energy, especially solar, have shown strong growth in recent years in the U.S., and that is certainly a positive development. As policymakers across the country continue to encourage this growth, it is important that they take a close look at the policies in place that provide favorable incentives to the solar industry. Currently, Maine has an opportunity to be among a select group of leaders on this front, as the state’s regulators work toward refining policies around solar energy.
Specifically, the proposal put forth by the Maine Public Utility Commission to reform net energy billing and ultimately transition to a more market-based approach for pricing solar energy production is a great example of how we should be thinking about these policies. Here’s what our key consideration should be: What is the most effective and efficient way to grow renewable energy production?
One of the main answers here is that while distributed solar energy can benefit homeowners and communities, it is not nearly the most technically or economically efficient way to achieve the goal of reducing greenhouse gas emissions. Ultimately, large scale solar is much more effective, and it will do more to help keep Maine’s electricity rates among the lowest in the region.
Over the last five years, Americans have enjoyed consistently low oil and gas prices thanks to a massive uptick in the production of oil and gas produced from shale in the U.S. This industry growth has enabled the country to play an increasingly important role in global and domestic energy markets. But how long will these low prices and high productivity levels last? The answer is of great importance for matters like the economy and national security – not to mention the price you pay for gas.
If you look at our current production levels, you might think the good times will last for quite a while. The U.S. is now considered by some to be the world’s “swing producer” of shale oil and gas. In North Dakota’s Williston tight oil basin, crude oil production grew from 98,000 barrels a day in 2005 to 1,174,000 barrels a day in 2015. As a result, the U.S. power sector has drastically increased its reliance on domestically produced natural gas, especially from shale.
A lot of credit for this industry growth is going to technology. Many people say that the technology used to get the resources out of the rock – and the subsequent technology developments – are to thank for the gains we’ve seen in well productivity. But how much can we really link to technology versus the location of the wells?
Looking at this question in a recent study, we found that the oil and gas business is just like real estate. It’s all about location, location, location. Where you drill matters, but in the shale business it matters even more.
We looked at data from the Williston Basin during a 42-month period starting in 2012 to quantify the extent to which improvements in well productivity have been associated with technology as opposed to changes in development location. Using five different regression models, we found that the impact on technology on well productivity is greatly over-estimated. In fact, our study showed that the portion of improvement that came from technology is over-estimated by about 50%. This means that a great deal of the time, the operator was just drilling in the right spots.
Lee Ullmann, Director of the MIT Sloan Latin America Office Office of International Programs
Approximately 34 million people in Latin America and the Caribbean don’t have electricity in their homes and 75% of the regional energy matrix relies on nonrenewable sources of energy, according to the United Nations Economic Commission for Latin America and the Caribbean (ECLAC). However, increasing access to energy and increasing renewable energies and efficiency are critical for sustainable development. In recognition of this major need, the United Nations has made it a goal to make sustainable energy for everyone a reality by 2030 in its Sustainable Energy for All (SE4ALL) global initiative. Read More »
When we set out to find a visionary and thinker in the financial sector to add to our collection of interviews, Kristin Forbes’ name was suggested to us by other economists, as well as from other women her age in finance, the arts and by those equally formally educated, who have opted to stay at home and raise kids. It was one of the first times that such a varied range of people suggested someone to us.
We began to research her. We were intrigued that the Bank of England had selected this American economist to join their Monetary Policy Committee as one of two external members. And we were curious about hearing from someone who was in the White House during President Bush’s years, a controversial President, and who watched the collapse of the financial markets that has brought forth finger pointing and reform. But what interested us most was that this MIT Professor was one of the earliest thinkers to focus on financial contagions. I sat down with Kristin to discuss contagions, the current thinking on energy, inflation and economic growth.
It is a basic tenet of economics that regulations almost always have unintended consequences. While Adam Smith may have been one of the first to understand this, he could not have possibly foreseen the morass of expensive and unwanted consequences that could come from conflicting emission and fuel standards enacted by the state of California and federal programs, such as for greenhouse gases and Corporate Average Fuel Economy.
Both the state and federal regulations have worthy goals: to decrease greenhouse-gas emissions and lower petroleum consumption. Yet taken together, the federal standards effectively cancel out the California standard. Instead of promoting fuel reduction as intended, the California standard allows for the production of less-efficient vehicles, while facilitating a massive transfer of cash via credit trading. It also forms a de facto industrial policy that sends us down a path toward electric vehicles that may or may not be the best technological or environmental choice for the future.