|Select Economic and Energy Data†||Value||State Rank|
|Real Gross Domestic Product, per capita||$32,601||14th lowest|
|Gasoline Price, per gallon||$2.78||25th highest|
|Electricity Price, per kWh||9.68¢||17th highest|
Michigan has average electricity prices, with over 65 percent of the state’s electricity generated from coal. The state’s three nuclear power plants together provide over 21 percent of the state’s electricity generation, with natural gas supplying much of the rest. Michigan is considered a major generator of electricity from wood and wood waste, but these resources supply about 2 percent of Michigan’s electricity.
Michigan does not have coal resources and instead imports coal from Wyoming and Montana. Michigan has more natural gas reserves than any other state in the Great Lakes region but lacks other energy resources. The state’s Antrim natural gas fields in the northern Lower Peninsula are among the largest in the nation. Michigan also has more underground natural gas storage capacity than any other state, with more than one-tenth of national capacity. Additionally, the state has some oil production and substantial ethanol production potential.
Regulatory Impediments to Affordable Energy
Although affordable energy is a vital component of a healthy economy, regulations frequently increase energy costs. Regulations imposed in the name of reducing carbon dioxide and greenhouse gas emissions are especially costly. Carbon dioxide is a natural byproduct of the combustion of all carbon-containing fuels, such as natural gas, petroleum, coal, wood, and other organic materials. Today, there is no cost-effective way to capture the carbon dioxide output of the combustion of these fuels, so any regulations that limit carbon dioxide emissions will either limit the use of natural gas, petroleum, and coal, or dramatically increase their prices.
Below are some facts about Michigan’s regulatory environment that are likely to affect the cost of energy or the cost of using energy.
- Michigan does not cap greenhouse gas emissions.
- Michigan is a member of the Midwestern Regional Greenhouse Gas Reduction Accord, a regional agreement among six American governors and one Canadian premier to target greenhouse gas reductions. The central component of this agreement is the eventual enactment of a cap-and-trade scheme, perhaps supported by low-carbon fuel standards and other supplemental policies.
- Michigan requires utilities to sell a certain percentage of electricity from renewable sources. The state’s renewable portfolio standard requires most utilities to provide 10 percent of retail electricity sales from renewable sources by 2015. However, Detroit Edison and Consumer’s Power must generate 600 megawatts and 500 megawatts of electricity from renewables, respectively.[i]
- Michigan does not require gasoline to be mixed with renewable fuels. However, in the Detroit metropolitan area, Michigan requires the use of gasoline blended to reduce evaporative emissions.[ii]
- Michigan does not impose automobile fuel economy standards similar to California’s, which include attempts to regulate greenhouse gas emissions from new vehicles.
- Michigan requires new residential and commercial buildings to meet energy efficiency standards. Residential buildings must meet the 2003 International Residential Code (IRC), while commercial buildings must meet ASHRAE 90.1-1999.[iii] The IRC (developed by the International Code Council) and ASHRAE (developed by the American Society of Heating and Refrigeration and Air Conditioning Engineers) are model codes that mandate certain energy efficiency standards. Governor Jennifer Granholm issued Executive Directive 2005-04 in 2005, stating that larger new state buildings must strive to meet the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) standards and use Energy Star materials, when possible.[iv] The directive also targets a 10 percent cut in state building energy use by 2008, and by 2015 a 20 percent reduction, relative to 2002.
- Michigan does not impose state-based appliance efficiency standards. Executive Directive 2005-04 directs state agencies to purchase Energy Star electronics and appliances.[v]
- Michigan does not allow utilities to “decouple” revenue from the sale of electricity and natural gas. Some states decouple revenue from actual sales, allowing utilities to increase their revenue by selling less electricity and natural gas.
† Data Sources: Real GDP per capita 2008: Bureau of Economic Analysis, News Release: GDP by State (June 2, 2009), http://www.bea.gov/newsreleases/regional/gdp_ state/gsp_newsrelease.htm; Unemployment: Bureau of Labor Statistics, Regional and State Employment and Unemployment–February 2010 (Mar. 10, 2010); Gasoline Prices: American Automobile Association, AAA Daily Fuel Gauge Report (Mar. 30, 2010); Electricity Prices: Energy Information Administration, Electric Power Monthly, Table 5.6.B., Average Retail Price of Electricity, (March 15, 2010), http://www.eia.doe.gov/cneaf/electricity/epm/table5_6_b.html; Electricity Generation Data: Energy Information Administration, Electricity Generation 2009, http://www.eia.doe.gov/cneaf/electricity/epa/generation_state_mon.xls.
[i] Lawrence Berkeley National Laboratory, Renewables Portfolio Standards in the United States, http://eetd.lbl.gov/ea/ems/reports/lbnl-154e.pdf.
[ii] Energy Information Administration, Michigan, Apr. 8, 2010, http://tonto.eia.doe.gov/state/state_energy_profiles.cfm?sid=MI.
[iii] Database of State Initiatives for Renewables and Efficiency, Michigan Building Energy Codes, http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=MI06R&re=0&ee=1.
[iv] Mich. Exec. Order No. 2005-4 (Apr. 22, 2005), http://michigan.gov/gov/0,1607,7-168-21975_22515-116177–,00.html.