Boulder Daily Camera, Guest Commentary, April 3, 2022
The Marshall and now NCAR fires make it clear Wildfire Season is all year long and that the fires will be raging in our front yard and no longer “out there” where no one is supposed to build. Climate warming is a magnifier that increases the frequency and intensity of climate events. Do we agree that our world is becoming increasingly inhospitable?
Science tells us that the burning of fossil fuels since the advent of the Industrial Revolution has resulted in the unanticipated warming of our atmosphere due to the greenhouse gas effect. We have been adding heat-trapping greenhouse gas emissions faster than nature can neutralize them. This increase in concentration has an impact on our global temperature. We have managed to overwhelm a system that has provided an average temperature that has been conducive to life as we know it.
In March of 2022, the International Energy Agency declared that the highest quantity of recorded greenhouse gases was introduced in 2021. The report states that: Coal accounted for over 40% of the overall growth in global CO2 emissions, now standing at an all-time high; CO2 emissions from natural gas also rebounded well above 2019 levels. The most significant greenhouse gas emissions from human activities in the United States are from burning fossil fuels for electricity, heat, and transportation.
Our electric utility built a coal-fired plant in 2010, expecting it to run until 2070. It was a state-of-the-art coal-burning powerplant that experienced construction cost overruns. Plagued with repairs, the latest taking the plant offline for nearly all of 2020, the plant will now close by 2034, if not earlier. The plant has been out of commission for 25% of its lifetime. The cost of the June 2021 incident was $20.4 million, and Xcel had to buy $9.5 million in replacement power. The lost production has not been missed, and its continued use ensures further environmental havoc makes me wonder why it has not been shuttered.
A sunk cost is a cost that has already occurred and cannot be recovered by any means. The sunk cost fallacy reasoning states that further investments or commitments are justified because the invested resources will be lost otherwise. This situation is often known as “throwing good money after bad.” Here is an example:
A company spends $5 million on building an airplane. Before completion, the managers realize that there is no demand for the aircraft. The aviation industry has evolved, and airlines demand different plane types. The company has a choice: finish the plane for another $1 million or build the new in-demand airplane for $4 million. The $5 million already spent on the old plane is a sunk cost in this scenario. It should not affect the decision, and the only relevant price is $4 million.
According to a Colorado Public Utilities Commission report, the cost of electricity from the plant — $66.25 for each megawatt-hour (MWh) – was 45% more than forecast, and the annual operating expenses, at $34.8 million a year, were 44% higher than projected. In addition, the average cost of wind projects bid in Xcel’s 2017 solicitation was $19.30 an MWh.
“Actually, during September and December 2020, having Pueblo 3 offline saved customers money, raising the prospect of using the unit for the month- or season-specific operations.”—From the PUC report
There is a story in the Midrash of an old guy observed planting a fig tree. When asked if he expected to live long enough to consume the fruits of his labor, he replied: “I was born into a world flourishing with ready pleasures. My ancestors planted for me, and now I plant for my children…” Our grasping to the poor investment in a coal plant is planting a tree bearing the bitter fruit of an inhospitable climate for our children. Let’s close an expensive, heavily polluting, underachieving plant and call it the bad sunk-cost investment it is.
David Takahashi is a Boulder resident active in intergenerational equity. He may be reached at <firstname.lastname@example.org