Green Electric Industry Mandate: Can It Pass?

Posted May 15, 2009 | folder icon Print this page

 

The editor of National Journal’s Energy & Environment blog recent asked the following question of some policy experts:

A cross-section of Democrats on the House Energy and Commerce Committee are backing legislation that would require U.S. electric companies to generate 15 percent of their power from renewable sources of energy and to demonstrate annual electricity savings of 5 percent by 2020. The provision includes an out for states that can’t meet the mandate: Governors would have the option of reducing the renewable mandate to 12 percent and increasing the efficiency requirement to 8 percent.

House backers of the renewable electricity standard include committee Chairman Henry Waxman, D-Calif.; Energy and Environment Subcommittee Chairman Edward Markey, D-Mass.; and moderate Reps. John Dingell, D-Mich., and John Boucher, D-Va.

Does the proposal go far enough to promote the use of renewable electricity? Would all states reasonably be expected to meet the 15 percent renewable mandate? How would it affect the electricity industry? Will it create winners and losers? Is there a better way to push for more renewable electricity?

Here is IER president, Tom Pyle’s reply:

The renewable electricity mandate will put a tremendous and undue burden on American families already suffering through a recession. Very simply, it forces us to pay more for a sub-par product. So, can it pass? Maybe, if Americans aren’t told the real consequences. But should it? Absolutely not.

The New York Times recently reported that “wind power is currently more than 50 percent more expensive than power generated from a traditional coal plant.”[1] Energy Secretary Stephen Chu told the New York Times that solar technology would have to get five times better to be competitive in today’s energy market.[2] The 29 states that have already mandated renewable electricity are home to electricity prices 38 percent higher than those without. And according to this map, most states would have to more than quadruple the amount of electricity they get from renewables to meet the mandate’s 20 percent requirement.  Yet, here we are, forcing Americans to pay significantly more for a product that even its champions admit is intermittent, unreliable, and wildly expensive.

When governments mandate the use of renewables or energy efficiency, it’s not just electricity ratepayers who get stuck with the bill. Inefficient renewables do more than just increase the price of electricity.  Renewable mandates stick it to the American taxpayer, who foots the bill for the government subsidies on which renewables depend.  And most of all, mandates make it more expensive to do business in America. That means our products become less competitive in the global marketplace. It also means that jobs will move overseas as businesses look for cheap operating costs.

For over thirty years, we have heard that affordable renewable electricity is just around the corner and needs only a few more years of taxpayer subsidies before they’re ready for widespread public use. So far, that hasn’t been the case. Mandating their use is premature and costly at best. At worst, it is unnecessary and disastrous for the many American families already living on the margins who may have to choose between paying their electricity bill and buying groceries.

 

 


[1] Matthew Wald, “Cost Works Against Alternative and Renewable Energy Sources in Time of Recession,” New York Times, March 29, 2009 (available at http://www.nytimes.com/2009/03/29/business/energy-environment/29renew.html).

[2] John Broder and Matthew Wald, “Big Science Role Is Seen in Global Warming Cure,” New York Times, February 11, 2009 (available athttp://www.nytimes.com/2009/02/12/us/politics/12chu.html).

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