Little Killers of Economic Recovery: State Mandates for Dilute, Unreliable Energy

[Editor note: Marita Noon is the Executive Director at Energy Makes America Great Inc., the advocacy arm of the Citizens’ Alliance for Responsible Energy. CARE works to educate the public and influence policymakers regarding the role of energy in freedom and the American way of life.]

At least 18 states have legislation proposed or pending—44 bills—relating to renewable energy mandates, according to the American Legislative Exchange Council. Within the last couple of weeks, I have had wary legislators from two different states ask me about such mandates. I have spoken to energy groups opening with, “How many of you know what an RPS is?” … Nothing…. “It stands for Renewable Portfolio Standard.” … Still blank.

The RPS is a silent little killer of the American economy. “Silent” because, despite widespread activity, its presence is nearly unknown. It is not dramatic or sexy—seeming hardly newsworthy. With little attention, 29 states have enacted an RPS and 7 more have agreed to voluntary goals (see here for more).

Background

The RPS is a legislated mandate requiring a certain percentage of a state’s electricity “portfolio” come from renewable energy (typically referring to wind and solar) by predetermined dates. Most states’ standards are 15% by 2015, and 20% by 2020. Maine is the most aggressive with a goal of 40% by 2017. In his State of the Union Address, President Obama announced that he’d like to see 80% clean energy by 2035.

Renewable energy is known to be more expensive for the consumer than electricity generated from traditional sources—even with subsidies of about $24 per megawatt hour (based on data from the Energy Information Administration). During a hearing for the New Mexico state-wide cap and trade program in which I participated, the supporting attorney stated, “The reason for Renewable Portfolio Standards (RPS) is because renewables are more expensive. No one would choose them if it wasn’t required.”

Regardless of high cost and intermittent availability, renewable energy is touted as the savior. Environmental groups lobby legislators to push for mandates—or higher mandates when the states have already voted in the RPS. But, from what is renewable energy “saving” us?

Two Falsehoods: Oil Security and Climate Alarmism

The need for renewables is based on two falsehoods.

The first is that “we need to get off of oil”—as a woman boldly stated at a dinner party once she found out what I do. Well, very little electricity–something like one percent–comes from oil. Oil is a transportation issue, not a wind or solar power issue.

Second, U.S. dependence on oil from regimes that hate America is not a reason to stop using oil but to 1) produce more domestically and 2) move toward freedom, democracy, and capitalism.

Regarding the first point, we have plenty of oil here; there is no shortage. Access shortage, yes. Oil shortage, no. (Plus, electricity does not generally come from oil.)

Regarding the second point, recent developments in the Middle East are encouraging and might eventually lead to the ultimate reform for energy sustainability: subsoil privatization.

The second falsehood lie is that we must use “clean” energy—meaning that which does not produce CO2. This premise is based on the theory that CO2 causes global warming, global warming is human-caused, and stopping CO2 emissions will save the planet.

Federal Issue Too

The RPS is not just a state issue.

Based on these fallacies the federal government is also attempting to mandate more expensive energy. Senator Bingaman, Chairman of the Senate Energy and Natural Resources Committee, has repeatedly advocated a national RPS of 15% called a Renewable Electricity Standard. (All of this, while support for climate change legislation and/or regulation is waning. Many states have bills that will reverse, reduce or modify their RPS. Promise of a potential RPS repeal was part of Ohio Governor Kasich’s successful campaign. New Hampshire should be the first state to pull out of their participation in the Regional Greenhouse Gas Initiative.)

Regardless of whether state or federal, a new study reveals that these mandated renewable energy requirements will deliver a “devastating blow” to the economy. The American Traditions Institute has analyzed the potential for a national standard at various percentages and the existing RPS from several states. Though the exact numbers differ, the results were the same. Energy prices will increase for both individual citizens and industry. Jobs will be lost and household expenses will climb.

At a time when cities and states are facing record budget shortfalls, the RPS will also inflate their costs. A “2010 Report Card on Renewable Portfolio Standards by State,” done by solar power advocates, reveals that the cents per kilowatt-hour are generally higher with states with an RPS—and this is before they meet goals as high as 40% renewable energy. Local governments pay for the lights, heating and cooling, elevators, and computers in government buildings.

Energy use and America’s Economy go hand-in-hand—meaning any effort to reduce energy availability or increase costs serves to kill a recovery that is barely clinging to life.

Conclusion

Renewable energy is not a per se bad. Off-grid solar, for example, has a niche in the marketplace (off-grid wind does not have this niche, except down on the farm for simple uses). But mandates that unnecessary raise energy costs and compromise reliability (wind and solar are intermittent, not firm or dispatchable resources, is an anti-energy and anti-industrial policy that negatively pressures the American economy at a most inopportune time. This silent killer needs to be exposed.