May 12, 2016

It's the Economy: Maryland RPS Debate Illustrates National Divide on Clean Energy Policy

A curious trend is emerging when it comes to renewable energy mandates: Many states that have them are doubling down, while those that don’t are showing little interest at all.

Since 2009, only Vermont has enacted a new renewable portfolio standard (RPS), yet five states with an RPS on the books strengthened them in the last two years alone.

The discrepancy has more to it than a simple increase in political polarization. While that’s apparent across the nation, the debate behind Maryland’s recent decision to strengthen its renewable energy standards shows there’s more to the recent trend than ideology alone.

The number of states with RPS laws has plateaued since a slew passed in the 2000s, but states with them continue to update policies.

The Maryland RPS coalition

Last month, Maryland lawmakers approved the Clean Energy Jobs Act of 2016 (SB 921) by large majorities in both houses, increasing the state renewable portfolio standard (RPS) from 20% by 2022 to 25% by 2020.

Getting to the 31-14 vote in the Senate and 91-48 vote in the House on the last day of the 2016 General Assembly did not come easy.

“It took a lot of good work to get this bill across the finish line this year,” Maryland State Delegate Bill Frick (D) told Utility Dive.

Last year, he said, the bill did not pass “because a lot of legislators wanted to know what good it would do people in distressed parts of Maryland where the priority is jobs and the ratepayer impact would be very real.”

But this time around, “there was a concerted effort to win those members over,” he said.

The work was done by a broad coalition with disparate interests. It was put together over three years, said Tiffany Hartung, manager at the Maryland Climate Coalition (MCC).

“The first year we introduced the topic to the legislature and the second year we worked to build more grassroots power," she said. "This year we started with a lot of support and built on that.”

The coalition began with environmental groups and brought in business and labor organizations in the second year. In the past year, they reached out to health care groups and faith groups. Each of those then engaged their constituencies, Hartung said.

Choptank Electric Cooperative, the biggest cooperative on Maryland’s rural, largely conservative Eastern Shore, was the main utility supporting the bill, said James McGarry, policy director at the Chesapeake Climate Action Network (CCAN).

“A lot of the state’s clean energy installations have been built on that region’s open land,” he said.

Pepco and Baltimore Gas and Electric, both Exelon subsidiaries and the state’s largest two investor-owned electricity providers, didn’t take a position on the bill.

“It is likely they didn’t see any financial reason to oppose it,” McGarry said.

A spokesperson for BGE confirmed that, saying in an email that the “increase in the standard is modest compared to bills proposed in previous General Assembly session, which means the new standard will have a more modest impact to customers who ultimately pay for the higher cost generation source to comply with this state policy.”

The wide variety of citizens’ organizations and faith groups created “grassroots momentum among voters that our legislators couldn’t ignore,” Hartung said.

But for Frick, it was the new content in the 2016 bill that pushed it over line, while also providing a lesson for RPS policies nationwide.

Since this map was published last October, Oregon doubled its renewable energy mandate to 50% and banned coal-fired electricity from the state by 2035.

It’s the economy...

Passing the RPS bill in 2016 was about more than just the environment, Frick said. It also had to do with recognizing the economic benefits of the current renewable energy standard and building a coalition to enhance them.

“The environmental message was critical,” Frick said, “but the economic message was extremely important.”

While economic concerns derailed the RPS boost in the last legislative session, backers addressed the issue head-on this time, writing in provisions to support women- and minority-owned businesses and enhance energy job training.

An indication of the economic argument’s importance, Frick said, was demonstrated by Senate Majority Leader Cathy Pugh (D). Though she voted against the RPS bill in the last session, she agreed to be a sponsor of the current bill in the Senate this time around.

“It didn’t have the workforce development and small business provisions in 2015," Frick said. “Adding those things to the bill moved her from a skeptic to a supporter and her support was pivotal.”

Multiple attempts to reach Sen. Pugh’s office for comment were not returned.

RPS skeptics
The Maryland RPS expansion passed by wide margins in both state houses, but that doesn’t mean there was not opposition to overcome.

Maryland Potomac Edison, a subsidiary of FirstEnergy, testified against the Maryland bill because it “would result in significant increases in the cost of generation in Maryland.”

"The most economical solution for renewables is competitive markets, not regulatory mandates,” according to the utility’s filing with the legislature. Regularly increasing the mandate creates “uncertainty” which results in “additional risk premiums” and “financial burden on customers,” the filing added.

“Our opposition is based on not wanting our Maryland Potomac Edison utility customers to face increased costs," said Todd Meyers, a spokesperson for the company. “This has been our consistent position with respect to changes in the RPS.”

FirstEnergy’s concerns were echoed in a national context by Travis Kavulla, the president of the National Association of Regulatory Utility Commissioners(NARUC), the organization of state utility regulators.

“A renewable standard is only good or bad depending on whether it achieves its goals,” he told Utility Dive last month. But if the goal is to deal with carbon dioxide emissions, “renewable standards are an inefficient way to do it.”

A carbon tax or fee, though less politically feasible, is more efficient, he said.

“Most economists would say that if carbon is the issue, have a policy that is for abating carbon. We need to ask what renewable standards are aiming at.”

Green, in both ways

The Maryland bill was designed to confront and resolve the economic concerns raised by the likes of Kavulla and FirstEnergy, McGarry said.

The intent of the original mandate, he said, was not simply to boost renewable energy, but to meet the 2009 Greenhouse Gas Emissions Reduction Act(GGRA).

“It required the state to develop a GHG reduction plan to reduce emissions 25% by 2020," McGarry said. "And when it was signed into law in 2012 by Democratic Gov. Martin O’Malley, its number one recommendation was to increase the RPS to 25% by 2020.”

Earlier this year, before passage of the new RPS, current Gov. Larry Hogan (R) signed an extension of the 2012 GGRA, strengthening the mandated GHG reductions to 40% by 2030.

From the beginning, backers of the mandate also addressed the economic concerns, according to McGarry.

“The original 2004 Maryland RPS was signed into law by Republican Gov. Bob Ehrlich,” he said. “It was intended to combat climate change but also to diversify the state’s economy and create clean energy jobs.”

Since then, the renewables standard is on track to create about 30,000 jobs and grow the state’s economy by $1.6 billion, McGarry said.

That economic impact, in turn, could give a clue as to why states like Maryland have looked to strengthen their RPS standards in recent years — they see the tangible economic benefits of the standards, while critics often focus on potential costs of such mandates.

“The economic benefits of the policies have become clear,” McGarry said. “The state solar industry now has 170 companies and 4,300 jobs.”

All eyes on Hogan

While the strengthened RPS bill was passed last month, Gov. Hogan has yet to sign it or even indicate a concrete position on the matter. But that shouldn’t be taken as a sign of opposition, McGarry said.

“It is not an indication of a lack of support,” Delegate Frick said. “His administration did not oppose the bill.”

In Maryland, state bills are signed into laws on specific days. This year, two signing days remain — May 10 and May 19. Hogan has the choice to sign the bill into law, to allow it pass into law without his signature, or to veto it.

The governor’s office did not return multiple requests for comment, but McGarry expressed confidence the governor would sign it. Polling done by CCAN shows overwhelming bipartisan voter support, he said, and the RPS has already grown businesses and jobs in Maryland.

Projections show the new bill will add more than a 1,000 new solar jobs and open up financing opportunities for small minority-owned and women-owned businesses. What’s more, he said, the state needs more renewable energy capacity to meet the strengthened greenhouse gas goals Hogan signed into law last month.

Delegate Frick, like his coalition partner, was “optimistic” the governor would sign the bill. Cutting greenhouse gas emissions and building renewables offers both environmental benefits and economic opportunities to build the middle class and grow jobs and "that is a winning formula," he said.

"Too often dealing with environmental issues is viewed as a zero-sum game between environmental gains and job losses,” Frick said. “In Maryland, we think it is going to put people to work.”

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