WASHINGTON, Feb.18,2014 - Several states are pushing back against renewable energy mandates, but new research suggests that they may be making a mistake. Why renewables? As Willie Sutton reportedly answered when asked why he robbed banks, “Because that’s where the money is.”
Two coal states made headlines when Ohio froze its renewable energy mandate last June for two years while it considers repeal, and earlier this month West Virginia became the first state to repeal its Renewable Portfolio Standard (RPS), which required a modest shift toward non-traditional energy sources for generating electricity.
In Colorado, the GOP-run Senate passed a bill Feb. 5 to cut the state renewable energy requirement for electricity generation from 20 to 15 percent for this year and to eliminate the goal of 30 percent renewables by 2020. The bill is expected to die in Colorado’s Democrat-run House. Other states with active efforts to reduce or repeal renewable mandates include Kansas, Maine, Missouri, New Hampshire and North Carolina.
Meanwhile California, where Democrats control the legislature, is expected to pass legislation this year to increasethe state renewables mandate from the current 33 percent by 2020 to 50 percent by 2030. Because the state’s major utilities have reported they surpassed the interim goal of 20 percent by 2013, the California Public Utilities Commission considers the utilities on track to reach the next goal of 25 percent by 2016, making 50-by-’30 achievable.
In an analysis published Feb. 16, the New York based research firm EnerKnol reports that California’s renewables policies are delivering significant economic benefits including job growth and lower energy costs. Despite opponents charging that RPS mandates increase energy costs, EnerKnol concludes that in California “the average residential electric bill has dropped $44 since 2006 (when adjusted for inflation), and the average Californian spends $305 less overall on energy each year than the national average.”
EnerKnol forecasts that other states may follow California’s lead, writing: “Despite pushback from fossil fuel industries and state congressional debate, [California’s] multiple proposal provisions will likely pass and could shape similar policies in other states.”
For a list of current state renewable requirements, see the National Conference of State Legislatures Renewable Portfolio Standards table.
The American Legislative Exchange Council (ALEC) remains hopeful that more states will follow Ohio and West Virginia in either rolling back or repealing their renewable energy mandates. John Eick, director of ALEC’s Energy, Environment and Agriculture Task Force, tells Agri-Pulse that he expects efforts in Kansas, North Carolina and New Hampshire this year to “reintroduce either language that repeals the mandate or language that makes the mandate a little bit easier, perhaps less burdensome to achieve.”
Stressing “reliable” rather than “renewable,” ALEC’s position is that “North America has extremely large reserves of fossil fuels. Access to these resources should be expanded to provide America with low-cost and reliable energy.” Calling for the free market to guide energy policy, the industry-backed ALEC hopes many legislatures will adopt its model Electricity Freedom Act which states that “the State of (insert state) repeals the renewable energy mandate and as such, no electric distribution utilities and electric services companies will be forced to procure renewable energy resources as defined by the State of (insert state)’s renewable energy mandate.”
Despite the economic gains recorded in California and elsewhere, ALEC maintains that one reason to repeal renewable mandates is that “no state or nation has enhanced economic opportunities for its citizens or increased Gross Domestic Product through renewable energy mandates.”
Susan Sloan, vice president for state policy at the American Wind Energy Association tells Agri-Pulse that AWEA’s response to these repeal efforts is to educate state legislators. “If renewable energy lowers costs for consumers over the long-term, if it diversifies energy sources to keep the lights on, if it saves water, if it lowers the environmental risks and costs, then lawmakers should know that before taking any action,” she says.
Sloan adds that because utilities typically sign 20-year renewable energy agreements, “Wind has brought a lot of new wealth to rural areas, to landowners, providing another source of revenue…., providing an economic development opportunity and ongoing employment.” She explains that utilities are signing wind contracts because “With a wind contract, you can predict the price of power over 20 years. You can’t do that with traditional fuel sources, so it’s a really good hedge to have at least one portion of your electric mix that’s locked in.”
Sloan is disappointed that Ohio has frozen its RPS for two years and is considering a renewables repeal. But she doesn’t expect repeals in states that have more experience with the benefits generated by renewables. She points out that despite an aggressive repeal campaign, there’s solid support for wind power in Kansas because “the utilities have had a good experience with wind, and the evidence is that it has been good for consumers while attracting lots of investment and creating lots of jobs.”
Also, Ohio might reconsider its repeal effort if it pays attention to a January Clean Energy report from the Pew Charitable Trusts. The report warns that after attracting $1.3 billion in private clean energy investments between 2009 and 2013 and the prospect of attracting another $3.3 billion, clean energy investments and revenues “are expected to stall over the next two years, because of the freeze of the renewable portfolio standard, and begin picking up again after 2016. However, future investment may be significantly less than projected if the suspension is maintained indefinitely or if clean energy project developers redirect investment to other states because of policy uncertainty in Ohio.”
The Pew report concludes that “Decisions by government leaders over the next few years will write the story of the state’s ability to compete in the growing global clean energy economy.” The report notes that after Ohio permitted residential pooling for buying electricity, Cincinnati became the first major U.S. city to buy 100 percent renewable energy this way, saving 53,000 customers about $133 each per year.
Natural Resources Defense Council (NRDC) Policy Analyst for Energy and Transportation Pierre Bull tells Agri-Pulse the answer to repeal efforts is “showcasing business and consumer support for renewables and for wind and solar in particular.” He adds that states like California and Kansas which are investing in renewables will have a competitive advantage when the EPA finalizes rules this summer to curb CO2 emissions from power plants.
EPA’s Clean Power Plan (CPP) faces strong opposition at both state and federal level. But Fitch Ratings, in its Carbon Effect Report issued Jan. 30, concludes: “Regardless of the final terms of the CPP or whether the plan is enacted, Fitch believes that pressures to reduce carbon emissions will persist over the long term. Be it through the passage of legislation, regulatory rule-making or a voluntary framework, carbon-reduction initiatives will remain part of the national and global energy landscape, and will be a challenge that public and cooperative utilities will have to address in years to come.”
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