National renewable energy standard debated in Senate

National renewable energy standard debated in Senate


The U.S. Senate passed an energy bill in April 2002 (HR 4) that contains the first-ever national renewable energy standard, which requires major electric companies to gradually increase sales of electricity from renewable energy sources (wind, solar, bioenergy and geothermal) to about 10 percent by 2020. A House-passed energy bill contains no such provision. A committee of House and Senate members has been meeting to develop a final bill this summer, with plans to bring it to a vote in both bodies this fall.

The Union of Concerned Scientists used a modified version of the U.S. Energy Information Administration’s National Energy Modeling System computer model to examine the costs and benefits of the Senate’s proposed standard—often called a renewable portfolio standard or RPS. UCS found that this policy—along with Senate-passed tax credits for renewable energy—promises to bring economic development and energy security to Illinois, as well as consumer and environmental benefits. The Senate provision would gradually increase renewable energy from about 15,000 megawatts (MW) today to 74,000 MW by 2020—enough to power about 53 million homes. Twelve states, including Texas, have enacted their own renewable electricity standards. The House of Representatives energy bill does not include a renewable energy standard.

The Senate renewable electricity standard is feasible and will save consumers money. The technical potential of our renewable resources far exceeds our total electricity use. The Senate bill requires that renewable energy development increase at the same gradual rate as the successful Texas standard.

The Bush administration’s Energy Information Administration (EIA) found that a more comprehensive 10 percent renewable energy standard than the one included in the Senate energy bill can save consumers even more money. In a study performed for Sen. Murowski, EIA found that a 10 percent standard—with fewer exemptions than the final Senate bill—could reduce bills for both electricity and natural gas consumers.

State RPS laws will provide for over 7,000 MW of new renewable power by 2012—enough clean power to meet the electricity needs of 3.7 million homes. This represents an increase of more than 50 percent over total U.S. renewable capacity (excluding hydro) in 1997. The RPS initiatives in Texas and Nevada create the two largest markets for new renewable energy growth. Significant development has already occurred in Iowa, Minnesota, Texas and Wisconsin. Total new renewable energy production from state RPS programs will reduce as much carbon dioxide—the main greenhouse gas that causes global warming—as taking 2.6 million cars off the road or planting nearly 800 million trees.

Why do we need a federal RPS?

States have demonstrated that Renewable Portfolio Standards can be effective. Investments in renewable energy create important benefits for the entire nation. The RPS should now become a cornerstone of America’s national energy policy. A strong national commitment to renewable energy is needed to:

l Diversify our fuel mix and enhance the reliability of our supplies

l Insulate our economy from fossil fuel price spikes and supply shortages

l Create new competition to help restrain fossil fuel price increases

l Improve our national security

l Reduce a growing reliance on imported fuel and electricity

l Reduce the cost of renewable energy technologies by creating economies of scale and a national market for the most cost-effective renewable energy sources

l Protect our environment and public health

l Build a strong domestic renewable energy industry, which can then serve growing international markets as well as domestic markets.

Renewable energy standard

will benefit Illinois’ economy

Illinois relies heavily on coal and nuclear power to generate its electricity. All of the nuclear fuel and natural gas, and over half of the coal is imported into the state, exporting dollars and jobs in the process. Homegrown renewable energy sources such as landfill gas and bioenergy (plants and clean plant wastes such as prairie grasses or crop wastes) currently provide less than 1 percent of the electricity generated in Illinois. In 2000, Illinois generated 23 percent more electricity than it used.

Illinois has the technical potential to generate all its current electricity needs from renewable energy. The resources with the greatest potential in Illinois are wind and bioenergy. Emerging renewable technologies such as solar photovoltaics also have the potential to play a smaller but important part in the state’s electricity supply. While not all of Illinois’ renewable potential will be developed due to economic, physical and other limitations, the national renewable energy standard will spur significant development in Illinois.

UCS analysis found that under a 10 percent renewable energy standard, Illinois would increase its total renewable power to 1,350 MW by 2020. The majority of this development would be powered by Illinois’ strong winds. This level of renewable development would produce enough electricity to meet the needs of more than 1 million typical homes and reduce the use of imported coal and natural gas.

Renewable energy development would bring significant economic benefits to Illinois. Through 2020, the national standard would produce:

l $215 million in new capital investment

l $10 million in new property tax revenues for local communities

l $4 million in lease payments to farmers and rural landowners from wind power.

The national standard and renewable energy tax credits passed by the Senate would slightly reduce long-run energy costs to Illinois consumers. Increased competition from renewable energy leads to lower natural gas prices, offsetting the incremental costs of meeting the renewable energy standard in the state. Total annual consumer energy bills (not including transportation) would be essentially the same under business as usual in 2010, and $190 million or nearly 1 percent lower in 2020. The cumulative consumer savings through 2020 would be over $350 million.

The renewable energy standard will reduce air pollution from power plants that threaten people’s health by burning coal, oil and natural gas. Carbon dioxide emissions, which trap heat in the atmosphere and cause global warming, would also be reduced. Nationally, the renewable energy standard will reduce about 27 million metric tons of carbon emissions a year by 2020. The renewable standard will also reduce harmful water and land impacts from extracting, transporting, and using fossil fuels.

Status of current bill

During the proceedings of the energy bill conference, Chairman Tauzin announced his schedule for completing deliberations on the bill. House and Senate staff would present recommendations for RPS and the electricity title by Monday, Sept. 16, with final resolutions and votes on those issues by Sept. 23.

A letter was sent out by the Chamber of Commerce to their supporters asking them to sign a letter opposing the RPS. The communication sent out stated, “This provision will raise electricity prices for consumers, threaten electricity reliability and create inequities among states, electricity generators and electricity suppliers… The two versions of H.R. 4 contain a number of provisions that will contribute to the renewable energy resources, including the Section 45 (1.75 cents per kWh) tax credit, a tax credit for residential use of renewable energy, the renewable energy production incentive, a federal purchase requirement and increased funding for renewable energy research and development… A one-size-fits-all federal RPS mandate ignores the specific energy and economic needs of the states. This could inhibit employment and economic development in certain regions of the country. Instead, states already are encouraging the development of renewable energy resources through a variety of programs that best fit their own circumstances. For example, 12 states have adopted renewable portfolio standards. Electric suppliers in nine states with competitive retail markets are offering green power products to consumers. More than 90 utilities in 30 states have implemented or announced green pricing programs to support investment in renewable energy technologies. And, 43 states support programs that offer incentives, grants, loans or rebates to consumers using renewable energy resources. A federal RPS mandate undoubtedly will increase electricity prices for consumers.”

Hans Detweiler, policy advocate at the Environmental Law & Policy Center, Chicago, stated, “The Senate already passed its first version, and the House passed its version. It is now in conference committee; that’s what all the current wrangling surrounds. What we’ve been putting all our efforts into is the ‘Dear Colleague’ letter. We haven’t heard anything yet.”

The Dear Colleague Letter and fact sheet was published in the August 7-13, 2002 issue of The Rock River Times.

Compiled by Copy Editor Susan Johnson.

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