Green Growth Is The Best Strategy for Puerto Rico — #CleanTechnica Interview

December 12th, 2018 by Carolyn Fortuna

Hurricane Maria ripped through the foliage umbrella over Puerto Rico, destroying much in its path. The territory’s archaic and outdated energy infrastructure was laid open, a gnarl of last century metal and wires that no longer supported 21st century energy needs. The resulting blackout was the longest and largest in US history. Whether well-meaning, self-interested, or incompetent — you decide — the repair efforts of federal and local authorities have been ineffective and continue to have infrastructure gaps into late 2018. Green growth may be the only viable solution to Puerto Rico’s crisis that exposed critical failures in power, economy, and self-governance.

Imported petroleum products provide power for transportation, electricity generation, and industry in Puerto Rico. In the fiscal year ending June 30, 2017, 47% of Puerto Rico’s electricity came from petroleum, 34% from natural gas, 17% from coal, and 2% from renewable energy, according to the US Energy Information Administration.

During this period, 2 wind farms supplied 41% of Puerto Rico’s renewable generation. One of them, the 95-megawatt Santa Isabel facility, is the largest wind farm in the Caribbean. Puerto Rico also had 127 megawatts of utility-scale solar photovoltaic generating capacity and 88 megawatts of distributed/customer-sited, small-scale capacity.

It’s a start, albeit small.

At the recent Sanders Institute event called The Gathering, Puerto Rico’s critical problems were a frequent topic of discussion. With a negative growth trajectory for almost 20 years, Puerto Rico has been in a debt situation that has been completely untenable.

One solution to Puerto Rico’s economic dilemma is a carbon tax on fossil fuels of approximately 1 cent per gallon of gasoline that would allow a Puerto Rico to transition to more of this renewable energy –in fact, many people argue a carbon tax could elevate Puerto Rico to 100% green energy by 2050.

Another idea is to apply 1 – 1.5% of the island’s GDP every year to investments in energy efficiency and renewable energy. About 4-5% of GDP is sent off island every year because the commonwealth must import all its energy. Energy efficiency entails public transportation, retrofitting buildings, enhancing the electrical grid so it’s compatible with green energy, and adding industrial machinery such as combined heat and power systems. The renewable components would be primarily solar and wind, with some geothermal and hydro power as well.

Those items and more are part of a new research study that looks to investment funding for renewable energy, provisions in the forms of rebates to low income people who would be most affected by a carbon tax, and approaches to service the Government debt that stands currently at around $70 billion.

The study, “Austerity Versus Green Growth for Puerto Rico,” by Page-Hoongrajok, Chakraborty, and Pollin, outlines a detailed plan how Puerto Rico can emerge from the crisis through a green growth program.

The advantages of the plan include the following:

Approximately $4 billion per year that is currently being spent on imported fossil fuel would be invested back into the island’s economy.

The green energy used in the island will be up to three times less expensive than the imported fossil fuel.

The net job creation through both clean energy investments and energy import substitution would result in an increase in 25,000 jobs by 2020 and up to 80,000 jobs by 2050.

Energy efficiencies (e.g., public transportation, home solar energy systems, hybrid and electric cars) will reduce expenses for families.

Puerto Rico will be able to recover more rapidly from natural disasters like Hurricane Maria.

Puerto Rico would essentially eliminate its greenhouse gas emissions by 2050 and contribute to the goals of the Paris Agreement, which aims as maintaining global average air temperatures below 2 degrees Centigrade.

#CleanTechnicaExclusive: Robert Pollin and Green Growth for Puerto Rico

A Green New Deal “will dramatically reduce energy costs throughout Puerto Rico,” Political Economic Research Institute (PERI) co-director and University of Massachusetts professor Robert Pollin argued at the The Gathering of the Sanders Institute. We at CleanTechnica sent out a query and were pleased to hear back from Pollin, co-author of “Austerity Versus Green Growth for Puerto Rico,” who readily responded to our questions.

What advocacy is needed for the US federal government to reconsider its current austerity approaches to Puerto Rico?

The critical point to recognize is that austerity is no solution whatsoever. Here is a headline in Bloomberg News from last March that sums things up well: “Puerto Rico Could Cut Spending to the Bone—and Still Not Recover.” So, the question is, ‘How can you make innocent people continue to suffer, and, indeed, increase their suffering, when we know that the result will only benefit Puerto Rico’s bondholders?’ Moreover, as regards even the bondholders, the changes of them getting paid back even some of what they are owed will greatly increase if the Puerto Rican economy begins growing, as opposed to its current trajectory of deepening contraction.

What incentives might hedge funds agree to so as to reduce Puerto Rico’s debt?

If the hedge funds are smart as well as self-interested, they will realize that the best chance for them to see any return on their bonds will be to support an authentic growth program, not the current disastrous austerity program.

What policy changes need to take place for Puerto Rico to make a smooth transition to a green energy economy?

The biggest policy change will be to advance a coherent growth strategy now, not to remain stuck in the current austerity program. Once it is clear that a growth program is the only viable way out of the current depression, then it should also be clear that a GREEN GROWTH program is the best growth strategy.

This is true even if we set aside any concerns about climate stabilization (which, of course, we shouldn’t). This is because Puerto Rico needs to completely rebuild their energy infrastructure anyway. By advancing a green growth strategy, Puerto Rico will be able to generate electricity much more cheaply than what they are paying now.

Residents of Puerto Rico now pay about 20 cents for a kilowatt of electricity. According to Trump’s own Energy Department, we can deliver electricity from wind or solar power for around 5 – 7 cents per kilowatt hour. Building a green energy infrastructure will also be a major source of job creation on the island. And finally, right now, Puerto Rico imports all its electricity. By generating renewable energy domestically, Puerto Rico will be able to stop shipping out something like 4 – 5% of GDP every year in energy imports.

Final Thoughts

Until the end of the 20th century, Puerto Rico’s economy relied mainly on federal aid from the US government. Puerto Rico’s problems include a resulting lack of jobs for an expanding population, a negative rate of economic improvement, and an unbalanced dependence of fossil fuels for energy. As Pollin described at The Gathering, Puerto Rico is a sunny and a very windy place, which makes it an ideal setting for a green transition.

Efforts to restore electricity on the island should include renewable and sustainable sources of energy, with a view to end the use of fossil fuels. It’s a win-win scenario for Puerto Rico and the planet.









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