Analysis: Nation ripe for a federal RPS
By ROSALIE WESTENSKOW
UPI Correspondent
WASHINGTON, June 8 (UPI) — A national renewable energy portfolio standard could decrease greenhouse gas emissions and simultaneously shrink electric bills, some experts say.
The mandate would require electric utility companies to generate a specific percentage of their power from renewable energy sources or buy renewable energy credits from others. Almost half of the states already have renewable portfolio standards in place — 23 plus the District of Columbia, and including Oregon and New Hampshire, the two most recent to pass RPS legislation.
However, this medley of standards has created confusion among electricity providers, many of whom operate in multiple states, said Marilyn Brown, a commissioner for the National Commission on Energy Policy.
“Many large companies now … face this hodgepodge of different rules,” she told United Press International. “Different renewable resources qualify in one state and not the other, so it really is a competitiveness issue. How can the U.S. compete and be effective if the regulations aren’t uniform?”
A federal RPS would attempt to reconcile the current patchwork of standards and distribute the burden of renewable-energy development among the states, eliminating so-called “free-rider” states that benefit from the efforts of their neighbors but impose no mandates within their own borders.
Adopting a federal RPS isn’t a new idea. Various U.S. policymakers have proposed a national standard 17 times since 1996, but none has passed into law. This year, the legislation comes from Sen. Jeff Bingaman, D-N.M., requiring that 15 percent of electricity come from renewables by 2020 and allowing states to create higher standards if they chose to do so.
Although not incorporated in any bill at the moment, Bingaman plans to propose an amendment creating a federal RPS to the Senate’s main energy bill — the Renewable Fuels, Consumer Protection and Energy Efficiency Act of 2007 — when it comes to the floor sometime next week.
Despite failure of similar legislation in the past, the prospects for approval look good this year, said Barry Rabe, professor in the Gerald Ford School of Public Policy at the University of Michigan.
“These policies have proven popular in a number of states,” he said. “The majority of American citizens already live in Congressional districts with an RPS.”
And it looks like more states will join their ranks this year, namely Michigan, North Carolina and Illinois, where legislators are considering making the current voluntary standard mandatory.
Passing a federal RPS soon may be necessary to avoid costly lawsuits brought by frustrated utility companies against the states they operate in, said Chris Cooper, co-author of “Renewing America,” a report scheduled for release next week that advocates a national standard.
Utility companies that initiate litigation have a good chance of winning because many RPSs erect barriers to the trade of goods with other states — a power denied the states in the Constitution.
“Some states won’t recognize renewable energy from other states,” said Cooper, executive director of Network for New Energy Choices.
For instance, Pennsylvania’s legislature recognizes energy generated from clean coal as renewable, but New Jersey’s does not, creating confusion for utilities in both states over whether imported electricity from the other can be used to meet their state requirements.
“Because that question is open, it could be taken to court by the regulated utilities who could say, ‘Look this is a violation of interstate commerce,’” Cooper told UPI. “Now, should one of those court cases be successful, the practical effect is that it would nullify the state’s RPS mandate … (then) you’d have all of this copycat legislation that would collapse what is our national energy strategy at the moment.”
Most importantly, some proponents of a federal standard say it will cut costs for consumers. One of the key ways an RPS could save money is by decreasing the use of natural gas to generate electricity.
“The reason why that’s important is because the natural gas market has been extremely volatile, and there are lots of indications it’s only going to go up,” said Benjamin Sovacool, co-author of the “Renewable America” report.
Investments in renewable resources will reduce the use of natural gas, driving down demand and, therefore, price for natural gas, Sovacool said. This yields net savings.
“So the utilities save money and they can pass on those savings to rate payers,” he said.
Large-scale production of renewable energy induced by a federal RPS could also decrease costs, according to the “Renewable America” report, which points to wind power as an example.
When the Department of Energy installed its first commercial wind turbines in 1980, wind energy cost about 81 cents per kilowatt-hour. By 2004, when the wind turbine capacity had increased from a few megawatts to 6,000, the cost fell to 5 cents per kilowatt-hour.
Some utility companies are pushing for a federal RPS precisely because of this rationale, including Alliant Energy, a power company with its headquarters in Wisconsin.
“We believe that a national RPS would help to create a floor for renewables and give us and the wind turbine industry a greater level of certainty,” said Scott Smith, spokesman for Alliant, which just received approval to build its first wind farm. “Instead of a boom-and-bust cycle, it will help to solidify the demand which will create a robust market.”
But RPS opponents say the very fact renewables need government regulations to be competitive proves their economic inferiority.
“Renewable energy is more expensive,” said Ben Lieberman, senior policy analyst with The Heritage Foundation, a conservative think tank. “If they’re as good as their proponents say, they should be able to compete without a federal mandate.”
Renewables, such as wind and solar, can also be less reliable than other energy sources, making them less valuable.
“I think these RPSs are a bad idea, and if 10 or 20 states want to do a bad idea, that doesn’t mean we should force it on all 50,” Lieberman said.
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