|Select Economic and Energy Data†||Value||State Rank|
|Real Gross Domestic Product, per capita||$32,917||17th lowest|
|Gasoline Price, per gallon||$2.72||18th lowest|
|Electricity Price, per kWh||7.48¢||15th lowest|
Indiana has below average electricity rates. The state enjoys these prices in large measure because over 90 percent of its electricity is generated from coal. Natural gas meets most of the state’s remaining electricity demand.
Indiana has moderate coal deposits in the southwestern part of the state but few other energy resources. The state produces about 3 percent of the nation’s coal, as well as minor outputs of oil and natural gas. Indiana’s coal meets only about half of its demand, so it imports more coal from Wyoming, West Virginia, and Illinois. Indiana is home is the largest petroleum refinery outside of the Gulf Coast, primarily refining oil from that region. As one of the top corn producing states, Indiana is one of the nation’s largest ethanol producers.
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 Indiana’s regulatory environment that are likely to affect the cost of energy or the cost of using energy.
- Indiana does not cap greenhouse gas emissions.
- Indiana is an observer 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. As an observer of the Accord, Indiana would not be bound to agreements made by Accord members.
- Indiana does not require utilities to sell a certain percentage of electricity from renewable sources.
- Indiana does not require gasoline to be mixed with renewable fuels. However, reformulated motor gasoline blended with ethanol is required in the Chicago metropolitan area and Louisville, Kentucky metropolitan area.[i]
- Indiana does not impose automobile fuel economy standards similar to California’s, which include attempts to regulate greenhouse gas emissions from new vehicles.
- Indiana requires residential and commercial buildings to meet energy efficiency standards. Residential buildings must meet a state-developed code based on the 1992 Model Energy Code, while commercial buildings must also meet a state-developed code.[ii] The Model Energy Code, developed by the International Code Council, mandates certain energy efficiency standards. State buildings must also meet energy efficiency standards. Governor Mitch Daniels issued Executive Order 08-14 in 2008, requiring new state buildings to meet the silver LEED standard or an equivalent standard.[iii] The silver LEED standard is one level of the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) rating system.
- Indiana does not impose state-based appliance efficiency standards.
- Indiana does not allow electric utilities to “decouple” revenue from the sale of electricity, but allows natural gas utilities to decouple revenue from the sale of natural gas. Some states decouple revenue from actual sales, allowing utilities to increase their revenue by selling less electricity or 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] Energy Information Administration, Indiana, Apr. 8, 2010, http://tonto.eia.doe.gov/state/state_energy_profiles.cfm?sid=IN.
[ii] Building Codes Assistance Project, Code Status: Indiana, http://bcap-energy.org/node/67.
[iii] Ind. Exec. Order No. 08-14 (June 24, 2008), http://www.in.gov/gov/files/EO_08_14.pdf.