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Debate: US Renewable Electricity Standard

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Is a US National Renewable Energy Standard a good idea?

Background and context:

In September and October of 2010, the United States Congress considered legislation for a National Renewable Energy Standard. This would require that all US utilities get 15% of their electricity from renewable sources by the year 2020.
The question is whether this is a good idea, and whether congressmen and women and senators should vote in favor of the legislation. RES mechanisms generally place an obligation on electricity supply companies to produce a specified fraction of their electricity from renewable energy sources. Certified renewable energy generators earn certificates for every unit of electricity they produce and can sell these along with their electricity to supply companies. Supply companies then pass the certificates to some form of regulatory body to demonstrate their compliance with their regulatory obligations. Because it is a market mandate, the RES relies almost entirely on the private market for its implementation. The main questions framing this debate include: Will an RES help cut emissions and solve climate change?; Will it be economically viable and help spur a clean energy economy or will it increase electricity costs too much?; Will it respect state rights and independent energy standards; And, is their sufficient public and political support for it?

See renewable portfolio standard for more background

Contents

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Climate: Will RES help solve climate change and environmental problems?

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Pro

  • Renewable energy standard ensures market certainty for clean energy Daniel Goldfarb. "Renewable Energy Standard: Symbolism or Substance?" Huffington Post. September 28th, 2010: "In terms of the real effects of this policy, the passage of this bill would send a stable signal to companies that there will be a market for renewable energy in America ten years down the road, although it will do nothing to guarantee that it will be a robust market. With the impending changes in Congress's make up as well as the expirations of the Clean Energy Treasury Grant Program, the Production Tax Credit (PTC), the Investment Tax Credit (ITC) and ARRA's funding for energy innovation and deployment, America's clean-energy sector may be heading towards a cliff. Although the RES will do little to push America's market for clean-energy past business-as-usual, it will ensure that the market doesn't begin moving backwards. For this reason it is important that this particular bill, in the words of Wentworth, provides a "floor, not a ceiling" for America's clean-energy economy." And, of course, growing America's clean energy economy in this way will help lower US emissions and fight climate change.


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Con


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Economy: Is a renewable energy standard good for the economy?

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Pro

  • Renewable Energy Standard fosters clean energy economy and jobs Amelia Timbers. "Why a National Renewable Energy Standard *Is* a Jobs Bill." Triple Pundit. February 25th, 2010: "Last week, the American Wind Energy Association held a webinar that went through a study by Navigant Consulting, pointing to the many ways passing a national renewable electricity standard would lead to an economic boon across the U.S. It seems that the FOXNews message that a climate change bill would hurt job growth is untrue. (Surprised?) Paired with rigorous renewable energy standards, Navigant Consulting suggests that 274,000 blue collar construction jobs could be added in areas of the country that need both jobs and renewable energy. While Navigant based its assumptions on the big “if” that climate change legislation passes both houses, however its study should increase the momentum toward such a result. The bad news is that without a climate change/ increased renewable energy standard combination, all states will see renewable energy jobs cut between the years 2010 and 2025, with the heaviest losses in California. Why? Because without increasing requirements for sustainable energy that drive up the demand for renewable energy in other states, California’s proliferating cleantech business is likely to plateau after meeting California’s needs."
  • RES will cause electricity to rise only slightly, then decline. A 2010 Energy Information Administration, a branch of the Department of Energy, estimated a 25 percent renewable electricity standard would raise electricity prices by up to 3 percent in the next decade, but have a negligible impact by 2030. The analysis also found that such an RES would cut electricity sector carbon dioxide emissions by 7 to 12 percent by 2030.[1]
  • Renewable energy standard ensures US green tech competitiveness A 2010 Ernst & Young report, found that China has passed the U.S. for the first time to become the most attractive destination for global clean energy investment: "This issue sees the US relinquishing its top position held since 2006 -- dropping two points to slip behind China, effectively crowning the Asian giant the most attractive market for renewables investment. This follows the failure in the US Senate’s proposed energy bill to include a Federal Renewable Energy Standard (RES) provision."[2]


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Con

  • A national renewable energy standard will increase electricity costs Ronald Bailey. "Forcing Consumers to Buy Renewable Energy." Reason Foundation. July 13, 2010: "So will renewables soon be cost competitive? There are reasons to doubt they will be. Taking EIA projections with the requisite grain of salt, the agency’s Annual Energy Outlook for 2010 estimated the levelized costs [PDF] of various generation plants in 2016. Levelized costs include the cost of constructing a plant, the time required to construct a plant, the non-fuel costs of operating a plant, the fuel costs, the cost of financing, and the utilization of a plant. The levelized costs per megawatt hour are $100 for conventional coal power, rising to $129 for advanced coal with carbon capture and sequestration. On-shore wind costs are $149 per megawatt hour, and off-shore costs are $191. The cost of solar photovoltaic power is $396 per megawatt hour and solar thermal is $257. For what it’s worth, advanced nuclear comes in at $119 per megawatt hour. Crudely, these levelized costs suggest that substituting wind for conventional coal under a 20 percent mandate would boost electricity prices by 10 percent. Similarly substituting solar photovoltaic power would increase electricity prices by about 20 percent."
  • Renewable Energy Standard increases energy prices, kills jobs Karen Kerrigan. "Commentary: Renewable energy legislation would add to drain on small business." Washington Post. July 26th, 2010: "In response to challenging economic conditions, local Virginia retailer Barb Werner has cut costs to the bone, eaten every cost increase without raising prices and forgone her own salary to maintain her employees. Her shop, Black-Eyed Susan, on Church Street in Vienna, is known for its unique merchandise at reasonable prices. If energy costs go up, she says she will have to cut staff. Her margins only allow her to absorb so much. And she predicts that everyone she buys from -- mainly small U.S. manufacturers -- will be forced to raise their prices, too, which means she will be forced to raise hers and lose the competitive advantage she currently enjoys. Higher energy prices are one more cost burden she -- and all small-business owners -- would have to bear. 'It's a slap in the face,' she said. A comprehensive energy policy is critical for our nation, but it cannot come at the expense of the small-business sector -- the backbone of our economy. President Obama and congressional leaders say they want to help small businesses create jobs and grow, but the RES mandate along with other intrusive regulations that will raise costs are non-starters."


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States: Is a national standard better than state standards?

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Pro

  • Utilities can go across state borders to get renewable energy. A utility in one state can easily draw from renewable energy sources in other states if it has to, in order to satisfy its requirement to obtain 15% of its electricity from renewable sources by 2021. The standard is not, therefore, too onerous.


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Con


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Public opinion: Where does public opinion stand on this topic?

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Pro

  • US Renewable Electricity Standard is popular David Roberts. "Does the RES stand a chance?" Grist. September 8th, 2010: "Is it popular? Any politician should be so popular. Last month in a Pew/National Journal poll a whopping 78 percent of respondents supported an RES, including 70 percent of Republicans and 77 percent of Independents. Requiring utilities to use more clean energy has been one of the most reliably popular energy policy options for years. The last few months have seen a stream of editorials, signed letters, and statements of support of the policy from prominent conservatives and industry groups."


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Con

  • Renewable electricity standard increases energy prices - unpopular. Forcing consumers to pay more for their electricity with a renewable electricity standard will always be unpopular. While many might support the general idea - in principle - of an RES, they would oppose it if they knew how much it will cost them, and they will certainly oppose it after having to live with it for a number of years.
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Pro/con sources

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See also

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