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  • Renewable Electricity Standard: Same as a National Energy Tax

    The probability of cap and trade becoming law rapidly diminished as more and more people saw it for what it truly is: a national energy tax. Since 85 percent of our energy comes from carbon-emitting fossil fuels, and the goal of cap and trade is to reduce carbon dioxide, a cap-and-trade system would raise the price of energy to discourage its use. Politicians knew very well that Americans wouldn’t stand for a national energy tax—especially during an election year—so despite several murmurs, the Senate failed to move legislation forward.

    Now, Congress is working on another plan that would mandate higher electricity prices. What makes it more threatening than a cap-and-trade program is that it’s garnering bipartisan support. Senators Jeff Bingaman (D–NM) and Sam Brownback (R–KS) introduced legislation that would require utilities to provide 15 percent of their electricity from government-selected renewable energy sources (primarily wind and solar) by 2021. Known as a renewable electricity standard (RES), it may sound less intimidating, but it’s nothing more than a plan that would cause electricity prices to skyrocket, leading to unnecessary hardship for American families. Why?

    Currently, only 3 percent of our electricity generation comes from renewable energy sources. The reason that number is low and that we need a government mandate for it to be higher is that renewable energy is prohibitively expensive to compete in the market. If these sources could compete, they wouldn’t need the mandate.

    With nuclear power not considered to be renewable, the least-cost renewable source for electricity is onshore wind. The Energy Information Administration’s (EIA) lists the levelized costs of various sources of electricity per megawatt hour projected for 2016 (in 2008 dollars):

    • Conventional coal power: $78.10
    • Onshore wind power: $149.30
    • Offshore wind power: $191.10
    • Thermal solar power: $256.60
    • Photo-voltaic solar power: $396.10

    In effect, an RES would replace that cheap coal power with expensive renewable power. But this doesn’t even reflect the true costs associated with renewables. Wind and solar cannot be turned on at will. As a result, increasing dependence on wind adds variability and uncertainty to the power grid that must be offset by quick-ramping power sources (like natural gas turbines) to maintain a relatively constant flow of electricity. Further, the best places to build wind and solar are located far from where it’s needed, which requires billions of dollars in high-capacity transmission line construction. These add significant costs to an already expensive power source.

    One Republican Senator supportive of the bill said, “The beauty of this is that it’s not cap and trade.” But like cap and trade, it’s an economy killer. Mandated higher electricity prices have rippling effects throughout the economy. More expensive electric bills force businesses to make production cuts and reduce labor.

    A Heritage Foundation generic analysis of an RES found that a 22.5 percent RES by 2025 would cause household electricity prices to jump 36 percent, and industry prices would rise by 60 percent by 2035. There would be 1 million fewer people working on average with the RES in effect. And as the mandated level of renewable use rises over time, so do the losses imposed on the economy. Summing up the impacts for 2012–2035 yields a total loss of $5.2 trillion in GDP.

    This is not an acceptable substitute for cap and trade, and its bipartisan introduction does not make it a good idea. If some politicians believe wind and solar  are economically viable for their respective states, they should work with state legislators to pass something for their state and not allow the rest of America to endure the economic pain of a national RES.

    Posted in Energy [slideshow_deploy]

    6 Responses to Renewable Electricity Standard: Same as a National Energy Tax

    1. K. Canute says:

      The point this article misses is the fact that electrical prices will also increase by 36% if we don't pursue renewables. Coal is cheap at the moment, but the energy content of coal worldwide has been going down steadily while production tonnage has leveled off and the energy cost of mining has gone up. The actual annual net energy we get from coal has declined slightly over the past ten years. It is a geological inevitability that it will decline further, and geology doesn't care about our needs or desires for cheap electricity.

      The same problem exists for natural gas, oil, and uranium: lower net energy over time, combined with lower annual production.

      On the other hand, as technology advances, the net energy obtained from renewable sources keeps going up. The supply of wind and sun won't decline.

      Buying renewable energy now, ahead of the cost curve, is like buying insurance. It costs more than not buying insurance, but you'll be happy when you need it and have it.

      A decline in the annual supply of fossil fuels and uranium is as inevitable as gravity. We need to spend money on the parachute before we hit the ground.

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    3. MW in Minneapolis says:

      @Canute: Could not have said it better myself. This is another short sighted opinion article written by someone who has no understanding of the true state and future of our energy economy. We have the cheapest energy costs of almost any developed nation and thus continue to waste more than any nation.

      By constructing distributed renewable energy generation project we would also be able to cut down on the over 50% losses now occurring in transmission.

      National and international renewable energy companies will not take the risk to invest in manufacturing in the US (creating high paying jobs) if we do not lead on a national level by creating a secure future for these technologies.

    4. Bobbie says:

      some people believe whatever they're told is the way it has to be as if no one has a brain to figure with ration and reason. There's nothing wrong with continuing the usage of oil as we have it, keep people employed and greatly improve the economy overnight, while there are alternative solutions being tried that should be at the cost of those that have the interest to do so.

      Didn't your mother ever tell you not to inhale gas fumes? Now you need to pay government to? Shameful!

      By constructing inconsistent, inefficient, costly renewable energy, it will be impractical to distribute as it is to produce, but we won't have to prevent shortages or blackouts, there won't be any way to.

      What kind of people would neglect the hungry, while they use food for fuel?

    5. Pingback: Another Anti-Energy Proposal introduced in U.S. Senate | Environment Views

    6. David Evans says:

      Hey,

      Love your article, thank you for writing this.

      -David

      p.s. I just wrote one as well here at homemade electricity.

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