Policy Documents

Research & Commentary: North Carolina Renewable Portfolio Standard

April 2, 2013

North Carolina legislators are considering repealing the state’s renewable portfolio standard (RPS). The RPS requires utilities to obtain a specified percentage of their power from renewable sources by a certain date. Twenty-two of the 29 states with such mandates in place have considered changing those laws over the past two years.

North Carolina’s current RPS requires utilities to generate from renewable sources 12.5 percent of retail electricity sales by 2021. Municipal utilities and cooperatives must meet a target of 10 percent renewables by 2018. Up to 25 percent of the requirement may be met through energy-efficiency technologies, including combined heat and power systems powered by nonrenewable fuels.

The overall target for renewable energy includes technology-specific targets of 0.2 percent solar by 2018, 0.2 percent energy recovery from swine waste by 2018, and 900,000 megawatt-hours of electricity derived from poultry waste by 2014. These technology-specific criteria make North Carolina’s standard more restrictive than other states because it does not allow renewables to compete with one another on a level playing field.

Supporters of the RPS say the mandates are necessary to reduce pollution, will lead to the creation of “green” jobs, and will only marginally increase electricity prices. However, there is little evidence the mandate will benefit the environment. Renewable sources like wind and solar technologies are intermittent and thus require fossil fuel generators to back them up. Running fossil fuel generators in this way can emit more pollutants than if they were used as primary power sources.

A joint report by the John Locke Foundation and Beacon Hill Institute found the mandate would cost electricity ratepayers $1.845 billion between 2008 and 2021. By 2021, North Carolinians’ real disposable income will fall by $56.8 million and more than 3,500 jobs will be lost on net, even after accounting for any “green” jobs the standard may have created.

Repealing the North Carolina renewable portfolio standard would help increase disposable income, attract more business investment, and make energy more affordable for consumers. It also would allow more efficient use of these resources and minimize dangerous emissions. North Carolina should not pick winners and losers by mandating the use of certain types of energy and instead should encourage the development of economically competitive energy sources through non-distorting regulatory and tax policy.

The following documents provide additional information about renewable portfolio standards.

 

Ten Principles of Energy Policy
http://heartland.org/policy-documents/ten-principles-energy-policy
Heartland Institute President Joseph Bast outlines the ten most important principles for policymakers confronting energy issues, providing guidance to help withstand ongoing changes in markets, technology, and policies adopted in other states, supported by a thorough bibliography. 

Tip Sheet: North Carolina Renewable Energy Mandate
http://heartland.org/policy-documents/policy-tip-sheet-north-carolina-renewable-energy-mandate
This Heartland Institute Policy Tip Sheet outlines the fundamental problems of renewable energy mandates and recommends an alternative. 

The Status of Renewable Electricity Mandates in the States
http://heartland.org/sites/all/modules/custom/heartland_migration/files/pdfs/29330.pdf
The Institute for Energy Research analyzed the practical effects of renewable electricity mandates and found states with mandates have on average 40 percent higher electricity rates than those without such mandates. 

Study of the Effects on Employment of Public Aid to Renewable Energy Sources
http://heartland.org/policy-documents/study-effects-employment-public-aid-renewable-energy-sources
Researchers at King Juan Carlos University in Spain found each “green job” created in Spain cost about $750,000. Electricity rates would have to be increased by 31 percent to account for the additional costs of renewables. 

How Less Became More: Wind, Power and Unintended Consequences in the Colorado Energy Market
http://heartland.org/policy-documents/how-less-became-more-wind-power-and-unintended-consequences-colorado-energy-marke-0
Bentek Energy, LLC, a leading energy markets information company, evaluates the “must take” provisions of Colorado’s Renewable Portfolio Standard, which forces coal plants to accommodate the intermittency of wind power by “cycling” generating units. The report finds the requirement results in inefficiency and produces significantly greater emissions. 

Wind Farms vs. Wildlife
http://heartland.org/policy-documents/wind-farms-vs-wildlife
Clive Hambler, lecturer in biological and human sciences at Oxford University and a trained zoologist specializing in species extinction, describes how wind turbines can wreak havoc on wildlife.

The North Carolina “Affordable and Reliable Energy Act”
http://heartland.org/policy-documents/north-carolina-affordable-and-reliable-energy-act-assessment
Physicist John Droz, Jr. assesses H 298, the Affordable Reliable Energy Act, concluding the bill will result in more net job creation and economic development. 

North Carolina Bill Would Freeze Renewable Power Mandates
http://news.heartland.org/newspaper-article/2013/04/01/north-carolina-bill-would-freeze-renewable-power-mandates
Bonner R. Cohen, Ph.D. investigates H 298 and finds North Carolina’s highest wind potential locations are near the Atlantic coast and other popular tourist destinations. 

U.K. Study: Renewable Fuels Kill Jobs
http://news.heartland.org/newspaper-article/2011/03/14/uk-study-renewable-fuels-kill-jobs
A 2011 study by Verso Economics, a U.K.-based economic consultancy, found renewable power killed 3.7 jobs in the U.K. for every “green job” created. The U.K.’s “renewable obligation” cost the country an additional $2.3 billion US in 2009–10 when all economic costs, including electricity prices, were considered.

 

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit the Environment & Climate News Web site at http://news.heartland.org/energy-and-environment, The Heartland Institute’s Web site at http://www.heartland.org, and PolicyBot, Heartland’s free online research database, at www.policybot.org

If you have any questions about this issue or The Heartland Institute, contact Heartland Institute Policy Analyst Taylor Smith at tsmith@heartland.org or 312/377-4000.