Despite Conservative Attacks, States Continue to Realize the Benefits of Renewable Energy Standards

by Matt Kasper and Tom Kenworthy, Center for American Progress

States’ adoption of renewable energy standards—which require electric utility companies to produce a portion of their electricity from wind, solar, and other renewable sources—has considerably driven clean energy advances in recent years. Though Congress has failed to enact a nationwide standard, policymakers at the state level have enthusiastically filled the void, with 29 states and the District of Columbia adopting hard targets for renewable energy production and another eight states setting renewable energy goals. Standards place an obligation on electricity-supply companies to reach set targets, while renewable energy goals are voluntary for companies—although states might incentivize a utility for reaching a set goal.

Those mandates have brought a wide range of benefits, ranging from robust clean energy economies to lower carbon emissions and improved public health. Since the beginning of 2009, eight states—California, Colorado, Delaware, Hawaii, Kansas, Nevada, New Jersey, and New York—have increased their standards, while three states—Indiana, Oklahoma, and West Virginia—have established voluntary goals. Six other states—Colorado, Maine, New Mexico, North Carolina, Ohio, and Washington state—have beaten back attempts to repeal their standards. Most of the states with renewable energy standards on the books are meeting or are close to meeting their interim targets.

Nonetheless, conservative attacks on state renewable energy standards are on the rise.

Two conservative organizations looking to repeal state renewable energy standard policies are the Heartland Institute and the American Legislative Exchange Council, or ALEC. These two organizations worked together to write model legislation—the Electricity Freedom Act—to roll back state standards. The policy, which ALEC’s board of directors adopted last October, argues that “a renewable energy mandate is essentially a tax on consumers of electricity that forces the use of renewable energy sources beyond what would be called for by real market forces and under conditions of real competition in generation resources.”

ALEC is known for helping advance corporate interests by writing and pushing for passage of conservative legislation at the state level. The organization has been a force in shaping conservative agendas, including voter identification laws and right-to-work policies. In the environmental sphere, ALEC has targeted states that regulate greenhouse gases and has promoted bills supporting hydraulic fracturing, or “fracking”; offshore drilling of oil and natural gas; and nuclear energy. Tax documents show that Koch Industries, ExxonMobil, and other energy companies pay membership fees in order to help write legislation repealing carbon-pollution reduction programs in states across the country.

The Heartland Institute is a think tank that promotes skepticism about climate change. Recently, the organization launched a billboard campaign that linked people who care about global warming to Unabomber Ted Kaczynski, murderer Charles Manson, and Cuban dictator Fidel Castro. One specific billboard featured a mug shot of Kaczynski with the words, “I still believe in Global Warming. Do you?” In a statement, the president of Heartland unapologetically called the billboard campaign an “experiment.”

With ALEC’s ability to successfully pass conservative legislation at the state level and the Heartland Institute’s intentions to attack policies that combat climate change, the threat that state renewable energy standard policies could be repealed needs to be taken seriously and aggressively contested.

ALEC and Heartland seem to be targeting North Carolina first. North Carolina State Rep. Mike Hager (R), a member of ALEC, says he is confident that in the upcoming session in his state’s general assembly, the votes exist to repeal or weaken the state’s renewable energy standard. Rep. Hager is the majority whip and the chairman of the Public Utilities Committee in the North Carolina General Assembly. But the bill that implemented the state’s standard passed 107-9 in the House in 2007—a resounding message Rep. Hager should recognize.

Last fall, however, fossil fuel interests funded a successful effort to defeat a constitutional amendment in Michigan that would have increased the state’s renewable energy standard from 10 percent in 2015 to 25 percent in 2025.

But voters in the eight states that have strengthened standards understand that these policies improve the environment and stimulate their state economies. California went from a 20 percent standard by 2010 to a 33 percent standard by 2020—and is currently on track to meet that 33 percent target. California’s three investor-owned utilities, or IOUs, achieved 18 percent of 2010 retail electricity sales with renewable energy. The three investor-owned utilities hit 20.6 percent renewables at the end of 2011. When California, the ninth-largest economy in the world, establishes a 33 percent renewable energy standard, it sends a clear message to every other state that renewable energy provides reliable, cost-effective clean electricity and strengthens the economy.

Long-term commitments to purchase renewable energy from wind, solar, or geothermal sources enable developers to secure financing for such facilities, allowing the market for renewable energy to stabilize and grow. Long-term commitments also lock in electricity prices, helping shield ratepayers from price volatility that is typical of electricity purchased from coal and natural gas facilities.

And California is not the only state in recent years to set a higher standard. Colorado has increased its standard twice since 2004, rising from 10 percent to its current level of 30 percent by 2020. New York originally had a 25 percent renewable energy standard by 2013, but lawmakers in 2010 increased the standard to 30 percent by 2015.

The renewable energy standard program in New York continues to yield significant economic benefits—as it does in all the states that create standards. The planning, development, construction, and operation of renewable energy facilities create short-term and long-term jobs while benefiting local governments and school districts through property taxes and other leases or royalty payments. An analysis conducted in 2009 concluded that $6 billion in direct economic benefits are expected if New York meets its 30 percent target—and this analysis did not even include estimates of the multiplier effects that can accompany direct economic impacts.

In January 2012 London Economics International LLC prepared an in-depth analysis of Maine’s renewable energy standard, required by legislation enacted in 2011. The report found that policies in Maine and New England would create 11,700 jobs in Maine alone over several years. In addition, $1.14 billion of new investment will occur in Maine as more renewable energy facilities are constructed. The report also found that electricity prices will lower for consumers as more wind energy is developed in New England.

Some politically conservative states also recognize the benefits from these standards. In Kansas, for example, House Bill 2369, enacted in May 2009 but finalized in 2010, established the state’s first renewable energy standard. The law requires investor-owned utilities to generate or purchase 20 percent of peak demand capacity electricity from renewable energy facilities by 2020. The eligible generation sources include wind, solar energy (both thermal and photovoltaics), methane from landfills or wastewater treatment, hydropower, and biomass.

The American Wind Energy Association highlights Kansas’s renewable energy standard policy as a driving factor in helping the state attract wind projects and manufacturers like Siemens. According to the Kansas Energy Information Network, 11 of Kansas’s 21 wind farms began operating between 2010 and 2012—eight of them in 2012 alone.

Empire District Electric, a Kansas utility, had already decided to purchase wind power due to the high natural gas prices at the time, and also purchased a high percentage of natural gas base load generation. Empire wrote to its shareholders, “[Wind energy power purchase agreements] decrease our exposure to natural gas, provide a hedge against any future global warming legislation and help us give our customers lower, more stable prices.”

Also prior to the renewable energy standard legislation, the Kansas City Board of Public Utilities saw wind power as “a hedge against high market purchase prices” and estimated that their 20-year power purchase agreement for wind power would save the utility $3 million during the first decade.

The Kansas Corporation Commission, which established the rules and regulations in 2010 for the state’s renewable energy standard, recognized the problems caused by volatile fossil fuel prices, noting that wind energy in a state’s energy portfolio protects consumers. The commission stated:

Natural gas, coal, and wholesale power prices have all experienced significant volatility and upward trending costs. Wind generation provides value as insurance for customers from some of the effects of unexpectedly high and volatile fuel and wholesale energy prices.

In upcoming state battles, ALEC and the Heartland Institute will almost certainly claim that renewable electricity standards raise power rates for consumers compared to states without clean energy requirements. That claim is false, however, as Richard Caperton, Director for Clean Energy Investment at the Center for American Progress, demonstrated in a CAP issue brief last April.

Therefore, with no price impact on consumers of electricity, tremendous economic benefits, and utility companies praising renewable energy standard laws, it would be a mistake for state lawmakers to enact legislation written by ALEC and the Heartland Institute that repeals such standards.

Why we should enact a nationwide renewable energy standard

In his 2011 State of the Union address, President Barack Obama proposed a federal “clean energy standard,” which would require utility companies to produce 80 percent of their electricity from no- or low-carbon sources by 2035. CAP has recommended that an 80 percent clean energy standard should also include a requirement that 35 percent of electricity generation come from renewable sources and efficiency measures. This standard should be met by requiring a national target of 25 percent renewable electricity generation alongside a requirement that utilities reduce demand to save energy by 10 percent.

An analysis conducted by the Union of Concerned Scientists found that a national standard that requires all electric utilities to increase usage of renewable electricity to at least 25 percent by 2025 would create jobs, lower energy bills, and reduce harmful pollution. The analysis specifically found that 297,000 jobs would be created, $263.4 billion in new capital investment would occur with an additional $11.5 billion going to local communities from new property taxes, and consumers would save $64.3 billion in lower electricity and natural gas bills by 2025.

Matt Kasper is a Special Assistant for the Energy Policy team at the Center for American Progress. Tom Kenworthy is a Senior Fellow at the Center.

17 Responses to Despite Conservative Attacks, States Continue to Realize the Benefits of Renewable Energy Standards

  1. BillD says:

    Most of the arguments against greater investment in renewable energy seem to assume “no benefit for reduced air pollution” and no benefit for reduced greenhouse gas emissions.” The surprising thing to me, is that some of these analyses, which parrot the ALEC talking points, seem to come from main stream journalists. So, yes these arguments need to be questions and fought.

    On the positive side, my impression is that most electrical utilities now understand that we will have CO2 taxes well within the life of any power plants that are now planned or being built. They understand that the political and legislative landscape will change over the coming decades.

  2. Leif says:

    “a renewable energy mandate is essentially a tax on consumers of electricity that forces the use of renewable energy sources beyond what would be called for by real market forces and under conditions of real competition in generation resources.” I love that quote. I say run with it. Stop subsidies on fossil as well and we got a deal. Renewable wins hands down.

  3. Daniel Coffey says:

    For reasons which need more exposition than a comment here, the notion of including “low-carbon” energy sources in an RPS is a very dangerous maneuver. It plays neatly into the natural gas industry to be a “bridge,” even where no bridge is actually needed. At the moment, NG is fighting with coal more directly, but if it is included in RPS or RES standards, then it will also compete with wind and solar. For those who care about global warming, and getting large reductions in emissions very soon – as is fundamentally necessary – such an inclusion is a serious mistake, one from which we would not recover.

  4. BillD says:

    Given evidence for large loss of natural gas to the atmosphere during fracking, these losses, amplified by the green house gas effect of methane, ought to be included in any taxes or regulations related to emissions. Unfortunately, it seems that very sloppy pumping and mining is greatly reducing the advantage of natural gas over coal from a climate perspective. We have all of those ads saying that the US has abundant, cheap and clean supplies of natural gas, but sloppy losses to the atmosphere plus the costs of water usage and water pollution make these advantages all problematic.

  5. Dave Bradley says:

    For NY State, if they were only effective! The goals appear to be largely apirational, and if the goals are not met, neither the Governor (Gov. Frackenstein, alias Cuomo) or leaders of the Senate, Assembly and the bureauocrats in charge go to jail. These become an exercise in PR.

    The NY goals of “25% x 2013” became extended to “30 x 2015” (30% renewable electricty) and then “45 x 2015” (30% renewable electricty, 15% reduction in electricty demand). None of these goals, including the orignal, are close to being met.

    NY starts out with a large contribution of hydropower about 2.2 GW average from Niagara Falls and the St Lawrence FDR dam, and 600 MW average from a hundred or so smaller hydroelectric units, and about 2 GW of Quebec Hydro hydroelectricty, out of a total demand of around 18 GW. Of the in state generation of 16 GW, on average, 2.8 GW was being made by hydro before the commercial scale wind turbines were installed starting in 2000. So the state started out with around 17.5% renewables, plus some wood burners, landfill gas and trash burners (these latter ones are treated as renewable for accounting purposes). Since 2004 when the NY State RPS program kicked in, about 1600 MW of commercial scale wind turbine capacity have been installed (with average output of around 350 to 400 MW, depending on the year to year wind speed variation). At present the solar PV output is insignificant (10.6% of rated PV capacity, which is now around 50 MW, or 5 MW delivered).

    The original RPS plans called for an average of 1168 MW (delivered basis) from this RPS plan; they will be lucky to get 1/3 of that by the end of 2013. They might get one extra wind farm installed near Warsaw, NY this year, but with prices or pollution based electricty going for 3.1c/kw-hr for 2012 in WNY, even that is kind of iffy. The price per kw-hr paid by the RPS taxpayer subsidy (a sales tax adder on electricity consumption) is now double what was anticipated, and will need to be around 3.5 to 4c/kw-hr for 2013.

    The RPS program is better than nothing, but it sure needs improvement. So far, the $3.5 billion or so spent on wind farms in NY State has landed maybe 300 wind turbine related manufacturing jobs, along with construction jobs that are temporary (roughly $1 billion worth). That is just horribly sucky…

    The key problem in NY that the RPS cannot finesse is the casino pricing of electricty and the coupling of renewable electricty pricing to fossil fuels prices – coal and especially the below the cost it takes to produce it fracking sourced methane. After all, wind turbines have zero fossil fuel usage, so coupling wind turbine electricty pricing to the price of natural gas makes sense only in syphillitic brainrot land….

    No electric distribution monopoly in NY has signed any long term Power Purchase Agreements with wind turbine owners, nor do they appear likel too. Meanwhile, in Quebec, wher those have been done via Quebec Hydro, the equivalent to NYPA, contracts going for between 10.5 to 12 c/kw-hr and 20 years have been done for about $8 billion worth of wind farms. Quebec has a much better wind resource than does NY, too. This is the unsubsidized price levels needed, and there is no willingness to do this south of the Quebec and Ontario border. Until that happens, the RPS is just a PR game..

    As for the 15% reduction in electricty usage -not happening. There was a 500 MW drop in 2009 from 2008 attributable to the Great Recession mostly from closure of industrial facilities. Since then, nothing.

    It is only through the threat of prison time for posturing politicians for non-performance that something will get done. Meanwhile, the low cost renewable approach – NYPA owned onshore wind farms -is never explored. NYPA can borrow money at 3% for 20 years right now, shaving between 3 to 6 cents off the real unsubsidized cost of production vs. privately owned ones who have much higher money borrowing/equity costs.

    Better than nothing needs to be improved upon, considerably. You’ll never get decent climate friendly energy sourcing in this country unless we get something like FITs or mandates of 100% renewables in 10 years with some teeth (as in “prison romance”) in them. Aspirational goals are just no cutting it….


  6. Mulga Mumblebrain says:

    Sorry, Bill, but there are not ‘decades’ left to play with, to make stately progress at the Bosses’ çhosen pace and discretion. As to main stream ‘journalists’ parroting the denialists’ agit-prop, well that’s what their Bosses pay them to do. It’s a bit of an insult to parrots, which are intelligent and principled creatures.

  7. Mulga Mumblebrain says:

    I’d say that the ‘sloppiness’ is the usual business drive to maximise profits and to hell with the consequences. The ‘fracking’ push is, in my opinion, driven by the desire to delay real renewables as long as possible, to inflict a defeat on the hated ‘Left’ and the even more detested ‘water-melons’ and, I believe, to ensure that climate destabilisation does occur.

  8. Ed Leaver says:

    I’d ask Lief be careful of what he prays for. Without the wind production tax credit ($22/MWhr) we’d lose some 80% of new wind installations. Here in Colorado we allowed Xcel Energy reasonable rate increases to cover increased cost of wind and solar over coal. I somehow think removing all energy subsidies would be welcomed warmly by the fossil fuels industry. Current subsidies to O&G just aren’t that large. (They’re still wrong.)

    BillD is absolutely right about the need to require accounting of all sources of GHG from all energy sources, particularly natural gas fracking and oil sands. I understand US EPA has tighter fugitive methane requirements under review for 2015. Its a serious issue, as otherwise forward-thinking members of the NG industry merely delude themselves into thinking they are “part of the solution”.

    But it’s a sincere delusion; I doubt throwing the term “sloppy” about is going to further its demise. No one wants to throw away (their own) money, regulatory and tax standards must be in place to maximize usable recovery from a given resource.

    Nuclear is the elephant in the room. That, and how to develop carbon-free energy that world-wide will be short-term cheaper than coal. NA and Europe may be a place to start, but in the overall scheme of things we won’t account for much.

  9. Paul Klinkman says:

    The solar Grapes of Wrath effect is when a state provides 1 year incentives to grow local solar. Then ALEX tells state legislators to stop picking on poor little Exxon’s 100% market share, and so the solar incentives to these 10 person companies get cut out. Then the poor people who gambled their careers on solar have to commute each day to another state, burning up their gas money, to keep their solar business afloat.

    A sincere state will try a long-term effort to grow its own industry, not a flash in the pan jobs approach inevitably followed by a sudden lurch to some get-rich-quick payout to a fast-talking businessperson. Some of the classics are as follows:

    “Cut the taxes further to extremely rich people and this time we’ll really create jobs!”

    “A gambling casino will make your state rich.”

    “You need a billion dollar convention center to lure big conventions to your hellhole city. If that doesn’t work, taxpayers should build a new major league sports stadium.”

  10. Nancy says:

    The state of Iowa gets almost a quarter of their energy from wind turbines they installed. Arizona has a huge solar complex starting that AZ Public Service, one of two of the electric companies, will be purchasing much of their energy from.

  11. Rick says:

    Indeed! I agree. Especially if we cut all the military costs of maintaining access to “our” oil, under their soil. We currently spend more than one trillion dollars a year on military expenditures… about 53% of all federal spending. I’d guess at least half that amount is associated with enforcing access to overseas oil. If $500 billion were spent annually on renewable energy and things like soil regeneration and ecosystem protection we might actually be able to avoid extinction – ours. Meanwhile, it wouldn’t hurt our odds of survival if we got rid of those nuclear bombs and delivery vehicles, and their annual costs, either. We need to rethink “defense” and begin to consider existence.

  12. Ozonator says:

    One of the few lobby-tested points deniers through out is the death of bird with wind mills. Naturally, they never compare it to the loss from egg to adults from all other forms of fossil fuel use. Are there any “interweb” links someone could provide?

  13. Artful Dodger says:

    D: EZ on the ACRONYMs (A Cryptic Reminder Of Names You Mean)
    WTF is a RPS/RES?

  14. sal esman says:

    Yes greens like anything that makes electricity more costly.

  15. Joe Romm says:

    And browns like anything that is bad for our kids’ health.

  16. paul says:

    Mumblebrain is right. or is it radicalism and paranoia. Get a clue. Like “conservatives” want to bring about global warming for a political aganda. I am right of center in my political views and yet I have a large scale 12,000 gallon rain collection system, not the 55 gallon under the gutter so I can feel good about myself and my left wing causes garbage as I water my little flowers. I recycle for a living and give polluters that throw crap in the river behind my house total hell. What do you do ? beside write total BS and play steroetypes. You contribute nothing but carefully worded hate mongering complete with the usual “buzz” words. Back at ya !!

  17. Mulga Mumblebrain says:

    Gosh, paul, you sound just like the Rightwingers hereabouts. Tell ’em a few home-truths, and they get all spluttery and splenetic. Have you considered that, by being Green, that you are not a typical Rightist, that by not being a Rightwing power-broker and business greedhead, that you are not directly personally responsible for the disaster and that by so vigorously defending business and the frackers that you might be undermining your green credentials just a little?