Heritage concocts flawed analysis to demonstrate supposed harms of using renewable energy

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"Heritage concocts flawed analysis to demonstrate supposed harms of using renewable energy"

The Heritage Foundation opposes energy efficiency.  And they recently lost their grip on reality, calling science “magic.”   So it’s no surprise that they are trying to  mislead the public about how a renewable electricity standard (RES) would impact electric bills.  CAPAF’s Richard Caperton has the debunking.

In a piece posted to their website on May 5, “A Renewable Electricity Standard: What it Will Really Cost Americans”, several researchers from Heritage’s Center for Data Analysis claim that a renewable electricity standard would increase annual electric bills for consumers by $300, decrease GDP by $5.2 trillion, and cost over 1 million jobs.  Fortunately for those of us who care about making sure that America’s energy future includes plenty of clean energy, these numbers are deeply flawed.

Analysis of how much a federal RES standard would affect consumers is extremely complicated, but government agencies have done the analysis.  For example, the Energy Information Administration looked at the RES in the American Clean Energy and Security Act (ACES) and found that in 2030, electricity rates would be exactly the same with or without a RES (see the table on page viii for a summary).

How does Heritage get such different results than the non-partisan EIA?  It’s simple: Heritage’s report isn’t based on real understandings of electricity markets or how proposed RES policies will work.  Instead, they oversimplify and exaggerate and come up with unfounded results.

Here are a few examples of gross distortions from Heritage:

  • Heritage assumes that 100% of the RES targets would be met by renewable energy.  But, RES proposals in both ACES and the American Clean Energy Leadership Act (ACELA) call for some of the target to be met with energy efficiency.  Data from Duke and Progress Energy indicates that the levelized cost of energy for energy efficiency can be as low as 3 cents per kwh.  (I suspect that even this number is too high.)  This is less than half the cost of conventional coal power and means that the RES can actually save consumers money.
  • Heritage simply takes today’s EIA estimates of how much new electricity from various sources will cost and assumes it will stay constant.  This is wrong.  Renewable energy resources have become much less expensive in recent years (for instance, here’s some information on solar).  Costs will continue to decrease as more renewables are deployed.
  • Heritage doesn’t even truly model electricity cost differences under realistic scenarios.  Instead, they appear to have modeled an absurd scenario comparing the cost of electricity from dirty coal to the cost of electricity from a diverse resource supply.  Thankfully, most consumers get electricity from a portfolio of generating technologies, which provides for a more dependable, secure, and clean system.  If Heritage wants to find out what a RES will cost consumers, they should compare electricity costs under an RES to electricity costs without an RES, not to electricity costs for a mythical consumer who gets all of his/her power from dirty coal.

Par for the course, Heritage also leaves out the biggest impact an RES would have on consumers: reducing greenhouse gas emissions.  EIA’s analysis shows that the RES in ACES could reduce greenhouse gas emissions by 10% in 2030.

A strong RES is one tool that we need to drive investment in clean energy technologies, investment that will create American jobs and clean the environment.  Heritage’s scare tactics shouldn’t stop anyone from embracing this clean energy future.

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10 Responses to Heritage concocts flawed analysis to demonstrate supposed harms of using renewable energy

  1. prokaryote says:

    Heritage’s stated mission is to “formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense.”
    http://en.wikipedia.org/wiki/Heritage_foundation

    Funny that this initiative is conflicting with national defense – energy security. The BP underwater volcano is a perfect example what happens when you lack integral regulation – to preserve the greater good (our environment).

  2. mike roddy says:

    This was phrased quite politely, actually. An equally accurate description would have been: “The mission of the Heritage Foundation is to lie like hell, all the time, in order to protect the short term profits of fossil fuel companies, banks, and financial managers who manage the assets of the idle rich.”

  3. sod says:

    surely the “sceptics” will audit this piece soon!

  4. Leland Palmer says:

    Well, here’s some of the major conservative foundation funding, from the Media Matters Action Network Transparency page:

    Funder : Purpose Amount
    Carthage Foundation $2,559,000
    Castle Rock Foundation $2,948,760
    Charles G. Koch Charitable Foundation $78,000
    Exxon Mobil Corporation $385,000
    F.M. Kirby Foundation $985,000
    John M. Olin Foundation $8,070,835
    John Templeton Foundation $1,007,550
    Lynde and Harry Bradley Foundation $14,255,702
    Richard and Helen DeVos Foundation $3,300,000
    Rodney Fund $62,000
    Roe Foundation $831,000
    Ruth and Lovett Peters Foundation $195,000
    Samuel Roberts Noble Foundation $13,000,000
    Sarah Scaife Foundation $21,235,000
    Shelby Cullom Davis Foundation $45,000
    William E. Simon Foundation $527,500
    William H. Donner Foundation $245,000

    The Carthage foundation and Sarah Scaife Foundation money comes from Richard Mellon Scaife, and I believe these foundations are capitalized mostly by a big block of Texaco stock.

    The Bradley Foundation is capitalized by Rockwell International stock, a big defense contractor.

    The Olin Foundation money came from the aluminum industry, and aluminum does well during wars, which use weapons including airplanes that contain a lot of aluminum.

    The Koch money, including the money from the Claude R. Lambe Foundation, comes from the Koch brothers, owners of Koch industries, big in oil refining, I think.

    Oh, and a few hundred thousand from ExxonMobil, lurking in the background as usual.

    You get what you pay for, I guess.

    This list is just money from the “charitable” conservative foundations, and does not contain contributions from private individuals.

  5. BB says:

    I was looking for ‘table viii’ in the link, and didn’t find it…but did find ‘Table 1 – Summary Results’.

    http://www.eia.doe.gov/oiaf/servicerpt/acesa/pdf/sroiaf%282009%2904.pdf

    Wait…I guess this original CP post has been edited to, so I guess nevermind.

    Anyway, as I read this ‘summary results’ table (if I’m reading it right)…it says that in 2025, electricity will cost 0.4 cents per Kilowatt-hour more than it does now (which would be quite a small increase over that large timeframe– almost unbelievably so) if nothing was done. It says it would rise 0.6 cents per KW/hr from 2007 if Full Credits were in play (RESFEC), and 0.7 cents per KW/hr if a state had no offsetting credits for the new legislation (RESNEC).

    Is that right?

    If so… The average household used something like 920 KwHrs per month in 2008. Under that condition, by 2025, their electric bills will go up $441 for that year compared to 2007 (reference case)…It will go up another $220 in this legislative scenario, if credits are awarded/used. If credits are not awarded/used in this legislative scenario (REFNEC), the energy costs will go up another $110/year over that. It appears it might be possible to see if someone does not use credits that the difference in projected costs according to this summary table could be $330/year, no? Regardless, it seems suspicious that electricity costs would go up such a meagre amount under all scenarios.

    According to http://www.eia.doe.gov/electricity/page/at_a_glance/sales_tabs.html

    It looks like the price of electricity has gone up much more from 1990-2010 than it is projected to from 2007-2025 (around a 20% increase vs. a 2% increase).

    I’d say a 2%-5% increase in electricity costs over a 20-year period would be a fine price to pay for the sorts of renewable energy improvements we’d be getting for it…but I don’t think that sort of minimal increase can be guaranteed since there are so many other factors that play a role in this system (kind of like climate projecting, eh?) ;)

  6. Richard Caperton says:

    @BB:

    Thanks for looking closely through this. I read this chart differently.

    First, the important thing is not how much electricity prices go up versus today, but how different electricity prices would be with or without a renewable electricity standard. So, I go to 2030 and look at the electricity price row, which shows that no matter what, we’ll be paying 10.1 cents per kwh.

    Second, I think your calculations are off by a factor of ten. A .7 cents difference equals $77 per year (.007*920*12), not $770 per year. Again, though, only the difference in the 2025 reference case electricity price and the 2025 RESFEC case (with full efficiency credits) really matters to determine the impact of an RES. In this case, that difference is just $22 per year, or about a 2% increase.

  7. BB says:

    My bad on the calculation…it is off by ten…so the end results seem even more manageable in the different situations. (around a 2% increase as a cost for enacting the legislation, a little more if no credits are awarded/used). I noticed you preferred the 2030 time-frame of the summary table where there were no effective projected differences with or without the program (which I suppose a lot of people would also prefer).

    I still have a few issues with that section though…because it seems to also say that there will be no effective difference between costs for people who get subsidies/credits and those who don’t, which sort of begs the question for why they would exist anyway at that point. It would seem like those credits are sort-of taking costs from one person and moving it to another to maintain the average, but who knows.

    Also, I maintain those costs projections seem very-much overly rosy, even if one assumes the anticipated ‘difference’ in costs for the program are accurate. As stated before, if electricity costs went up 20% from 1990-2010…I don’t see much out there that would keep the baseline increase to just a few percent in the following 20 years. Though that is only an assumptive error, it still makes me think that there could be other fishy elements of the projections (perhaps even including the cruxal differences between the scenarios).

  8. Aaron Lewis says:

    In the old days conservatives believed in the 3 Rs (reading, riting, and rithmatic). Now they do not seem to be able to read or do rithmatic.

  9. Tom Fid says:

    Recently? I thought heritage lost its grip on reality a long time ago.

  10. Chris Winter says:

    Imagine how much money the Heritage Foundation could save if they canned all their researchers and just made this stuff up out of thin air.

    Oh, wait…