Renewable Energy Standards Reconsidered as States Question Mandates, Fret Over Costs

California Gov. Jerry Brown drew headlines for his proposal to increase the state’s renewable energy standard to 50 percent by 2030, but elsewhere, the momentum on mandates is shifting in the opposite direction.

A half-dozen states have moved to scale back, freeze or eliminate their renewable energy standards in the past year, fueled by concerns over higher energy prices, the impact of the EPA’s Clean Power Plan and the growing perception that it’s time to take the training wheels off the wind and solar industries.

“You’re seeing independent efforts across states [with] legislators just kind of getting tired of it and questioning these mandates,” said Donald Bryson, state director of Americans for Prosperity-North Carolina. “If these industries are already economic engines, then why do we have to force people to buy their product?”

About 29 states have approved some kind of renewable portfolio standard, or RPS, a policy that swept state legislatures eager to go green and attract federally subsidized wind-and-solar investment in the early 2000s.

Those state policies have been critical to the fast-growing industry’s success, says Jim Marston, the Environmental Defense Fund’s vice president for U.S. climate and energy, who supports keeping the standards in place.

“Absolutely, no doubt. The reason prices have gone down and quality has gone up is clearly because of these RPSs,” said Mr. Marston.

Rebecca Stanfield, Midwest deputy policy director of the Natural Resources Defense Council, said: “Nationally, clean energy continues to thrive despite years of attempts by polluting industries to obstruct progress on renewable energy and energy efficiency for their own profits.”

But that growth also has weakened the argument for mandates, opening the door for free market groups like Americans for Prosperity to make the case that the day has come to lift the thumb off the scale in favor of renewable energy.

“In North Carolina, this mandate was set up in 2007, and so people have been forced to buy increasing amounts of renewable energy for the past seven or eight years,” Mr. Bryson said. “What you’re hearing is, ‘Hey, this is either a viable industry or it’s not. You’re not paying your share of taxes, plus you’re forcing people to buy your product, and you’re still not a viable industry?’ Something’s wrong with this picture.”

Both Michigan and North Carolina are considering legislation to roll back the renewable energy standard following the passage of a similar bill last year in Ohio. In March 2014, Indiana Gov. Mike Pence allowed a bill to become law — without his signature — that repealed the state’s energy-efficiency mandate.

In May, Kansas Gov. Sam Brownback signed a bill making the state’s mandate of 20 percent renewable energy by 2020 voluntary and giving future renewable energy projects a 10-year break from property taxes instead of a lifetime exemption.

The Ohio freeze law

The newly Republican-led West Virginia Legislature set the tone in January by repealing, as its first act, the six-year-old law requiring utilities to generate 25 percent of their electricity from renewable or alternative sources by 2030.

West Virginia legislators were driven in large part by the renewable energy industry’s threat to coal. Republican state Delegate Josh Nelson said after the vote: “A vote against repealing West Virginia’s cap-and-trade act is the very same thing as handing another coal miner his or her pink slip.”

Even in states where coal isn’t king, the renewable requirement is falling out of favor. A year ago, Ohio Gov. John Kasich signed a bill freezing the annually increasing mandate until 2017, along with efficiency standards requiring consumers to reduce their power use by 22 percent by 2025 — as measured by 2009 levels.

One reason is the cost to consumers, who pay more for power in states with renewable energy standards. The AFP cites data from the U.S. Energy Information Administration showing that electricity costs, on average, 22.9 percent more in states with mandates.

The Ohio “freeze” law, which also orders a legislative study, was the inspiration for legislation in North Carolina to suspend the renewable energy standard at 6 percent instead of allowing it to hit 10 percent by 2018, and require the state legislature to undertake an examination of grid security and stability.

In many of these states, the renewable energy industry is firmly entrenched, such as in Kansas, where wind energy is expected to reach the 20 percent target by 2016, four years ahead of schedule. Wind production has nearly tripled since 2010, making the argument for mandates harder to swallow.

At a May press conference, Mr. Brownback praised the wind industry’s “fabulous growth,” adding that the agreement “further solidifies and stabilizes the policy environment so that investment can continue in Kansas.”

Even the EDF’s Mr. Marston said it would be hard to fault Kansas’ record on wind power. “If all the country had Kansas’ number, I’d be completely happy,” he said.

Michigan already has reached its 10 percent renewable energy standard. Rather than increase it, however, Republican state Sen. Mike Nofs, who heads the Senate Energy and Technology Committee, introduced legislation July 1 that would eliminate the mandate.

The proposal comes as part of a larger effort to rethink and overhaul the state’s energy grid in response to the EPA’s Clean Power Plan. Lawmakers anticipate that as many as nine coal-fired plants will ultimately be shuttered to comply with the rule’s tighter emissions standards, resulting in a huge boon to renewable energy.

‘Renewable energy potential’

“The question is, do we need a separate standard to overlay with what the federal government’s going to require? And we just don’t think that’s necessary,” said Greg Moore, Mr. Nofs’ legislative policy director. “All these different rules and requirements that utilities have to follow seem to be overly burdensome. So we’re going to get rid of the mandates and just let the integrated resource plan process decide whatever makes the most economic and environmental sense win the day.”

Part of the idea is to replace the goal of renewable energy with that of clean, lower-emissions energy, no matter what its source.

“We shouldn’t care, frankly, as a legislature, what’s being used to generate it as long as the emissions are meeting the standard that we set,” Mr. Moore said. “That gives some people heartburn, those people [investing in] wind turbines and solar farms, but frankly, if it’s just as clean, why do we care? Why are we stepping in the middle of it and trying to make bad decisions in the marketplace?”

Supporters of the mandates argue that states that jettison their renewables requirements make themselves less attractive to wind and solar investment, while foes counter that lower energy prices encourage business and manufacturing development.

Advocates of renewable energy have also notched some victories, starting with the California proposal to increase the standard to a highest-in-the-nation 50 percent. Then there was the defeat in May of a Texas bill to retire the state’s RPS, which was approved in 1999 and stands as the oldest such policy in the nation.

Ultimately, retaining the mandates in top energy-producing and -consuming states like Texas and California matters more than keeping them in states with relatively low renewable energy footprints like Indiana and Ohio, said Mr. Marston.

“They’re relatively small states in terms of renewable energy potential,”Mr. Marston said. “As far as the effect on the industry, I think that, other than in their state, I think the effect was pretty small.”

Environmental groups have blamed the anti-mandate campaign on groups advocating on behalf of the fossil fuel industry, but Mr. Bryson says that’s not the case.

“We’re not anti-solar or anti-wind,” he said. “We’re just trying to be pro-consumer.”


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