 Good afternoon from beautiful Honolulu. This is Howard Wigg, think te kawaii program called green. I have the honor of having as my guest today. Executive Vice President of the grassroots Institute, Mr Joe Kent. Welcome Joe. And what we're going to be talking about is the economics of dealing with climate change. And let me set the stage by saying that I'm in the field of energy efficiency and doing whatever we can to ameliorate effects of climate change. My attitude and the attitude of my colleagues is that while we have many, many problems in this world, Russia, Ukraine, so forth, the the 800 pound gorilla overshadowing everything is climate change. And that is the tsunami that is going to wash over us for it to darn soon we don't know if it's one year five years, but it's going to come on like gangbusters in fact it already is coming on like gangbusters. Because of the economics of that, I make the analogy of a parents who discover that their young child as a very rare disease, and it's life threatening, and insurance is going to cover most of the costs, not all of it. And over the next few years, they're going to have to pay out from their pockets $100,000 to keep this child alive. Because benefit, no, they just do it. And that's a pretty extreme analogy for what I and many others think of when we need to deal with climate change. Well, I actually that I think it's a great analogy $100,000 because I was looking at the costs of Hawaii's debts and unfunded liabilities and capital expenditures deferred maintenance energy, you know renewable energy costs and, and if you rack up all of those costs. It's over $100,000 per person. And so, you know, it's over $100 billion. And so that is a huge cost and a lot of those initiatives, people feel passionately about each of them, you know, that we need to pay our debts. Obviously, we need to fund the public retirement systems. We need to make sure our bridges don't fall. And on top of that, there's these energy goals. And so, so I think that's actually your analogy is perfect. And let me give you a real soft opening on this here. My own personal finances improved drastically when an economist friend of mine said Howard, pay off all your credit cards settle all your debts, except your mortgage. And I took his advice, I did it. And boom, instead of paying, having to pay $2200 here $300 there for different credit card debts and other kinds of debt. Boom, that money just kept sitting in my bank and getting larger and larger and larger, because I was controlling my expenses is that a good analogy to lead you off with Joe. Yeah, I think it's always good when we can try to think about our home budget in the same way that we think about Hawaii state budget, because, you know, the state has a quote unquote credit card so to speak, it can put debt on that card. And it can, you know, pay the interest payments and the debt service just like we pay a credit card bill. And so, yeah, it's always a good thing to think about, you know, how does a family budget look like and what does the state do if the state were a family, would its finances actually be in order. And so, of course, you know, I work at the grassroot Institute of Hawaii, which takes a hard look at the numbers. And we're very concerned about the financial sustainability of the state. We see a lot of people who have trouble just paying for their own home bills, let alone paying for the state's bills, and having such trouble that they're leaving the state, which they've been doing now on net since 2016, you know, tens of thousands of people have left every year because of the cost of living. And so my interest in the climate change and renewable energy question is, what is the cost. You know, what is it actually going to cost the average working family in Hawaii or single person in a state that already has the most expensive energy bills in the nation. You know, so I'm just trying to map out the cost and it turns out it's kind of hard to find those costs, because there's a lot of complexities to it. So let me throw into this the concept of payback time, whereas a lot of government costs say repairing a bridge, we do not want bridges falling down we had that in Philadelphia I don't think we want to repeat Philadelphia's insurance, but how do you measure the payback time of that well you don't have accidents that way in the future. But in terms of energy efficiency my own field. If you spend a couple of extra dollars, say just for instance on more efficient lights in your home or in government or street lights. You pay the way way upping your efficiency and say you pay two extra dollars for the lamp, but you're getting twice the efficiency, the payback time, those two extra dollars are going to be paid back within months, not years. Oh yes. We look at it efficiency how. Yeah, that's a great lens. You know, I always love it when renewable energies or clean energies cost less, because what we see when that happens is the market forces naturally gravitate towards adopting those technologies. So your example is perfect. You know, you know my wife looks for the light bulbs that will cost us less money. And in so doing we're actually being more sustainable that way. And so, you know, in the same way we want the economy to drive towards those energy technologies that are more efficient and more sustainable. And then I hear counters to that will solar energy is so expensive and so forth so forth and it's going to have a 20 year payback. And incidentally I in doing my calculations and recommending things I put a five year payback is the absolute max and generally I'm getting under three years. And in many cases, zero time payback you just adopt a different technology, but some people claim, oh, solar energy is going to have a 30 year payback. And there's this huge disparity in how you calculate. And I also might say that when it comes to efficiency more efficient light bulbs and so forth or solar energy. You don't have the continuous maintenance costs that you do with other forms of energy like we're burning fossil fuels. Every day we are importing more and more oil. That's going into power plants and power plants don't run themselves. You have to have a lot of highly skilled people running them. And then you have to shut them down periodically to maintain them. So there's another argument for efficiency and clean energy they they're the gift that keeps on giving you put them in and they last generally for at least 10 years if not 15 if not 20 years. I think that's an important perspective. I'm always want to look at an issue from a bunch of different angles, you know, turn it upside down look inside it. And when it comes to the cost of switching to 100% renewable energy. That's one where I always want to maintain my critical eye, because you know Hawaiian electric companies has just released their integrated grid plan. And that is basically shows the cost to interconnect all of these renewable energies together. The plan is like 1000 pages though it's really difficult to read through all of that. I had to put down my novel reading and take this up, you know, instead, and, and it at the end of the plan it shows that just the cost of interconnecting all of these renewable systems would be around $9 billion. And so that doesn't actually include the cost to actually build the renewable energy, you know, plants and systems themselves solar wind and so on. So far that cost as far as I know hasn't been calculated, you know the cost to create all of that. And that's partly because they're not exactly sure which types of energy they want to produce and how much it will cost in the future and so on. There's a lot of assumptions going into these projections, but already we're seeing really, you know, I popping numbers. Now, Hawaiian Electric says that their renewable plan will actually save people more money in the long run. You know, if, if oil prices go up and renewable prices stay low, as they are now, you know, some renewable energy is low, then in the future it will save money for ratepayers. But that's a big if in my mind because what if oil prices, what if the opposite happens oil prices go down and you know prices for renewable energies skyrocket, then we might see us losing out on that deal from a financial standpoint. So I'm just, you know, kind of looking at the assumptions behind the oil spikes, and we've had a lot of economists throughout the decades and stock pickers trying to pick the price of oil. It turns out it's not that easy to predict to predict the price of oil every time there's widespread agreement that oil is going to go up, it goes down, you know, adjusted for inflation. And so, so I'm just wondering how much this will cost and whether our assumptions are really if we're using all the best assumptions in order to calculate this. Well, if you could accurately predict the price of oil for say for a year from now, and you invested accordingly you and you were accurate, you would be a very rich man. Yeah, that's true. The price of oil is so volatile. Question, what is happening in Russia, which used to be a major, major, major oil supplier. What's happening with the other oil suppliers. Saudi Arabia, turns out to be a very, very iffy entity right now and they are the world's major oil supplier. So that's right if you really volatile but that said I want to point out to the county of Kauai, where they have led the rest of the state and actually the rest of the nation in installing renewable energy and their costs is actually going down. They are now below the rest of the state and I won't go into the economics of electricity pricing right now but due to their extensive renewable energy use and I might say that they also specify efficiency a whole lot. They are really and truly going down and they are in terms of stability resilience, they are less dependent than the rest of us counties on oil. So, in the event that everything shuts down, they've got to keep, they can keep the lights on much more easily than the rest of us can. Yeah, that's true. The, I think there must be some kind of a principle in renewable energy that points to the fewer people that you're powering with renewables, the more savings you can realize quicker. And so, you know, for example, if I put solar panels on my home, I might see savings, you know, this year or next year already. But if you have a large county, like with a million people like Oahu and a comparatively small amount of land on that island, it's much more difficult to find the cost savings that we see on Kauai. You know, Kauai even has, I think, a much better battery solution with their, I guess they have a lake that powers a windmill, and that helps with the sort of storage, energy storage situation. But on Oahu, that's a bit more difficult. Because, you know, Big Island and Maui, Big Island, of course, has geothermal, which contributes greatly to their renewable mix. And I think you could actually do geothermal on Maui, too. But not on Oahu, or at least it'd be very difficult. So, but you're right, though, that Kauai is a leader in this space. And I might point out that Oahu and Kauai are approximately the same size. We, as you point out, have a million people. Kauai has only 75,000 people, or 7.5% of our population. So there's a lot of wide open spaces there. But you're saying that's a good point. And, you know, on Oahu, I've noticed that it seems renewable projects are falling, some renewable projects are falling into disfavor from environmentalists themselves. Not all environmental, they're not a big blob, you know, environmentalists have many different views on many different things. And when it comes to, I think, the Kahuku Wind Farm, for example, a few years ago, that was a really surprising example of protesters at renewable, environmental protesters at renewable energy. And so, of course, they, I think, didn't want to in their community. And the same is true when it comes to solar, which uses lots of land. And, you know, windmills in the ocean, for example, there's a lot of environmental questions about those things as well. So, in, like I said, if you're in, if you have a lot of land and a very small amount of people, it may be easier to get around those things. But when your land constrained, it's much more difficult. Absolutely. And here on Oahu, we are definitely land constrained. There have been proposals to put a solar farm here or there. And other people say, wait a minute, that's farmland that will grow food. We have this great big push to try to get closer and closer to food self sufficiently. And you can't cover solar panels. Actually, you can. There's a proposal to raise the solar panels up at least eight feet, if not 10 feet. And then under that, you plant shade loving food, like, say lettuce, something like that. I didn't know about that. That's interesting. But of course, you'll be the first to point out that the cost of putting solar farms or solar panels just slightly above the ground versus 10 feet up, that's going to raise your cost quite a bit. I think in Hawaiian Electric's integrated grid plan that I talked about, they actually have a land constrained scenario where they don't build any offshore wind mill farms and most of the solar is exported to rooftops instead of using lots of land for that. And so it's interesting that they're actually including that into their main scenarios for future planning because it says that even if we can't even build housing in Hawaii, how are we going to build solar farms? Because they're both competing for the same land. And as you point out, even agriculture is competing for that land too. And of course, open space activists are competing for that land too. So land is at a premium. And if it takes land to produce renewable energy, then renewable energy will be at a premium too, unless there's some solution I'm not seeing, which I'm totally open to. I keep coming back to efficiency, but just to stick with the solar panel analogy, a lot of, especially the neighbor island resorts have big parking lots for their guests. And there, these guests cars are sitting in the sun, but solar panels above that boom, you have increased the value of that parking structure. So there's a payback time in addition to Yeah, that's true. Free quote unquote electricity. That's true. I know my wife and I have been looking at trying to buy a new apartment, you know, and, and of course we look at the parking lots that have solar panels are always more attractive, you know, it's just like shady and and we just like the shade. And so that's nice. But of course there's a capital cost to that. And the HOA has to pay for that and hopefully it gets paid back and everything. Most of the problems I think with renewable have to do with the capital investment. If we just had billions of dollars to invest now. We'd see those billions paid back at some later date. But the problem is, we don't have those billions and and paying it back has to take into account the debt service costs, you know, and rising interest rates right now are are very high. And so, trying to push off that into debt service just raises the cost even more. Which brings in the possibility of incentives, but you would be the first to point out that generally those incentives come from either local or state or federal government, which adds to the governmental costs. That's true, you know, I, I, I started my journey looking at renewable energies very interested in trying to figure out how we can find more renewable energies to replace, you know, coal and oil. And I actually did a tour of renewable energy plants across the US and looked at, you know, wind farms and solar farms and ethanol and methane and every single farm or power station. There would be someone who said that they can't actually profit and make this sustainable without huge government subsidies. And so it seemed to me that at least when I did that, which was, you know, more than a decade ago, the subsidies were required, which then just exports the costs perhaps to taxpayers. And so, you know, if we're trying to save money, it doesn't make sense to save money on one hand and then and then lose money on the other. I think maybe the exception and come up in the last 10 years is the huge swath of great wind regime that goes from Texas all the way up to Canada, and hopefully includes Mexico and hopefully includes Canada as well, where, especially where land is not constrained, i.e. West Texas, just a few cattle roaming around there. It's hugely cost effective even though you have to have these long, long, long extension cords so to speak from the desert into the cities of Texas. Yeah, that's true. I mean, where the wind, where most of the wind is in America is not where most of the people live. Unfortunately, unfortunately for the wind power, it takes a lot of investment and infrastructure to get that power to the places where it needs to go. And then we're going back to the capital costs again. But of course, Hawaii wouldn't be able to plug into that power. You know, we're currently the most reliant state on oil of any state in the nation. And so, and we're not able, like other states are to import renewable energy from other states. And so you can't just flip a switch and get power from New Mexico or something like that. And so we really, you know, if we're going to do it have to do it all on our own. And I'm just wondering what those costs will be. Yeah, you're talking about interconnectedness of different states. The probably the best example is the fact that the Northwest is very, very rich in hydropower and California has something like 40 million people. That's a lot of electricity. So you have these huge lines, exporting electrical energy from the Northwest to California. But as you pointed out, we just cannot do that. Well, you know, maybe if technology changes in the future, it could help some, but, but, you know, where right now I'm kind of concerned about the trend around the world towards renewable energy, simply because that means we've never had a time in history where so many people around the world want to make use and invest in renewable energy such that, you know, the mining that's required for renewable energy is going to be immense. I mean, we're seeing even electric car companies setting up their own mining shops and other countries around the world just so that they can get the stores of lithium that they need for their batteries. You know, not to mention the lithium that's needed just for energy storage, you know, like for the grid. And so there's a huge, you know, this, it used to be a really abundant, low cost thing, lithium, but now with the development of an investment in need for demand for batteries, battery power. And that is going to see prices, I think spike. They may go down in the future. I mean, the one thing about prices going up is then more people try to look for new sources of it. So that sometimes can see prices fall in the future. But, but anyways, at the moment we're seeing a gold rush, a lithium rush. Especially in this country, I've seen an example of Indonesia, and they are really disboiling the environment there by creating huge lithium lines. That's right. Yeah. And I am sometimes concerned about the whether or not the solution is actually better than the problem. You know, if we're now creating all these lithium mines and not just lithium many other rare earth metals. And trying to dig those up, what does that actually mean if we're also, you know, continuing to dig up everything else we've dug up in the past to so this just means more mining perhaps but at the same time if you have all of these countries switching away from oil, it begs the question, again, what the price of oil will do. Hawaiian Electric is assuming that the price of oil will triple in the future, and which is why they say that the base cost that the status quo energy bill will triple compared to switching to renewables. But it would put it from about $80 of barrels to $240. Yes, that's right. Yeah, that's right. Joe, we could continue this conversation for a long, long, long time, but we are both getting the hook. So thank you very much Joe Kent Grassroots Institute and Howard Wig, Code Green. See you in two weeks on farewell. Thank you.