May 5, 2012

Setting an energy standard

When it comes to renewable energy goals, Colorado keeps raising the bar. It was the first state to implement a renewable energy standard (RES) back in 2004 and has twice raised it, now boasting one of the highest in the nation at 30 percent by 2020.

While Colorado and over half of the other states have embraced renewable energy goals and continue to raise and polish them, some have not acted at all. That’s particularly true in the Southeast. While a few southern states have been quietly investigating the possibilities of their own standards, some will likely never adopt an RES, unless they are required by federal law.

It is unclear whether that will happen any time soon. It seems more likely that a national clean energy standard (CES) is in the cards, but in the meantime, renewable energy advocates are working to debunk the myths surrounding RESs. According to Richard Caperton, director of clean energy investment at the Center for American Progress, the most common misperception is that RESs raise consumer electricity prices, and it’s a big reason that law and policymakers in the south have opposed RES legislation.

Fact vs. Myth

“Colorado, California and New Jersey are fantastic examples of successful RESs,” Caperton says. “They have driven a significant amount of investment and renewables there, and there is no data that indicates RESs drive up electricity rates; that is totally a myth, and the most common one.”

John Bonitz, farm outreach and policy advocate for the Southern Alliance for Clean Energy, agrees. “They [myths] have all been effectively exposed as half-truths by numerous studies, most recently by researchers from Duke University’s Nicholas Institute and the Georgia Institute of Technology,” he says. The November 2011 study, “Myths and Facts about Electricity in the U.S. South,” finds that energy efficiency and renewable energy are able to work hand-in-hand to meet the projected growth of electricity demand in the South without escalating electricity rates. Aside from price increases that would occur over time without an RES, the study’s modeling shows that over the next two decades, the average household in the South would see less than a $2 increase in its monthly energy bills under an RES.

The other most common misperception surrounding an RES is that many states don’t have renewable energy sources, according to Caperton. That myth is especially perpetuated in Georgia and parts of the Southeast, where the coal industry has convinced legislators that using traditional resources is the only option.

Another example is Florida, where forest biomass is said to be inadequate for strong growth in biopower. “The myth is that there is not enough biomass, as if the Sunshine State didn’t have a 12-month growing season,” Bonitz points out. “Do Floridians seriously believe that natural gas imports are going to be better for their state economy than home-grown energy crops?”

Aside from myths—and there are many more—other factors influence a state’s decision to implement an RES, including the requirements utilities must meet to prepare for the future. “Most states that haven’t deregulated their electricity markets have resource planning for utilities, which is when the public utility commission or state regulator makes utilities plan for different scenarios—say there’s a price on carbon—and how it would impact the utility and consumers, requiring planning for it,” Caperton explains. “The states that deregulated electricity markets back in the 1990s don’t have that process, so they need other ways for utilities to plan for the future, and that’s why every state that has deregulated their electricity market has an RES.”

While the policy to shoot for on a state level is an RES, on a federal level, it seems to be a CES. But would a CES better suit the country than an RES, and would a federal policy outshine state-crafted standards?

“It really depends on your goal,” Caperton says. “If it’s to get more traditional renewable energy built, then an RES will do that better. If your goal is broader investment in all sorts of technologies in the electricity sector and carbon reductions, then a CES may be better. It’s also politically different because with a CES you bring in the nuclear and natural gas folks, building a bigger base than with an RES.”

A CES such as the one being considered by Congress wouldn’t significantly help renewable energy, according to Bonitz. “With natural gas at the lowest prices in a decade, it does not need any help and will only further weaken any opportunities for biomass,” he says. “What’s worse is that energy efficiency is the cheapest and most widely available resource, but the CES is an unlikely policy tool to help the full array of efficiency measures.”

Sen. Tom Bingaman, D-N.M., is the sponsor of recently introduced CES legislation. The Clean Energy Act of 2012 begins at 24 percent clean energy in 2015, increasing by 3 percent per year through 2035 to reach 84 percent. It includes renewables like biomass, biogas and landfill methane, but also natural gas and nuclear power, as Caperton points out. And while some renewables groups seem to be embracing the idea of a CES, others like SACE don’t think it’s enough. “SACE believes the country needs a strong national RES, and until then, it should extend and strengthen the tax credits,” Bonitz says. “We also need to level the playing field to allow a fair competition of renewables against entrenched subsidized fossil energy sources. In the very near term, the biomass community needs to counter attack against the Farm Bill Energy Title programs, demanding that our senators preserve and strengthen these programs—for our national security and economic recovery.”

In addition, Bonitz notes that statewide RESs might be the better option in certain circumstances. “Our analysis is that North Carolina’s (RES), weak as it is, will probably be more effective than any of the national RES proposals we’ve seen,” he says. “And in some national RES scenarios, it’s possible that North Carolina might even export some renewable energy or renewable energy credits.”

Under a CES, however, it is likely that natural gas would gain more advantage relative to efficiency and renewables, causing more of North Carolina’s dollars to leave the state, Bonitz adds.

In 2009, the U.S. Energy and Information Administration performed an analysis on the impacts of a national RES of 25 percent by 2030, and its findings were promising. It found that the RES would lead to increased use of renewables and lower electricity sector carbon dioxide emissions, as well as coal and natural gas emissions. The analysis also found that such an RES would not affect national average electricity prices until after 2020, when they would increase by a maximum of 2.7 percent, but fall back to less than 1 percent after 2030.

Study co-author Christopher Namovicz says the effects of a national RES on electricity prices were minimal in this particular report, but points out that price impacts are largely dependent on the specific policies being proposed.

A final conclusion of the study names biomass and wind as key fuels that sellers will look to in order to comply with the RES.

“In general, biomass and wind have the best combination of low cost and widespread availability,” Namovicz says. “Other resources like geothermal or landfill gas may be somewhat lower costs in some locations, but these are not widely available in sufficient quantity—or quantity at a low cost—to go very far toward complying with the proposed requirements.”

No federal RES legislation is currently in Congress, and while legislation for a CES has been introduced, it doesn’t look as though the bill will pass in the near future.

Moving Forward

“It’s a tough time in Washington to get anything to the president’s desk to sign, so it’s hard to see that happening,” Caperton says. “At the same time there is support of the legislation in both the Senate and the House, so I think it would be very reasonable for them to at least vote on it.”
He believes a CES would be much more likely to pass than an RES, because a CES provides more regional flexibility for states that haven’t invested in renewables, such as those in the Southeast. “Bringing in a lot of different resources is valuable,” Caperton says, adding that the concept of a CES has gotten a broad base of support.

But what would happen to state policies if a national policy is adopted? “There certainly is a fear that some states would say, ‘we have a national policy, we don’t need our state policy anymore,’” Caperton says. “That would probably be a mistake, because I think states would tend to have a stronger RES than a federal CES would lead to, and they are seeing a lot of investment and economic benefit through this.”

Regardless of what may happen, work on state-crafted energy policies continues. Bonitz says SACE’s allies in South Carolina are striving to get an RES or CES introduced in the state legislature, and efforts continue in Florida. “We are hopeful that the myth-perpetuators are beginning to see the beacon of local economic development via off-shore wind and small-scale sustainable biomass, among other clean energy technologies,” he says.

Meanwhile, the states that have implemented an RES will continue to reap the benefits. “All of the states that have them are seeing a lot more renewable energy being sold,” Caperton says. “And that’s good for consumers, businesses and workers in those states.”


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