Policy Documents

Research & Commentary: Pennsylvania Alternative Energy Portfolio Standard

January 22, 2014

Pennsylvania state Rep. Tommy Sankey has introduced a proposal that would repeal the state’s alternative energy portfolio standard (AEPS), which mandates utilities obtain a specified percentage of their power from renewable sources by a certain date. Such mandates have proven costly for families and businesses across the country. Rep. Sankey’s proposal would repeal these requirements entirely.

Pennsylvania’s current AEPS requires 18 percent of electricity sold by 2020 to come from renewable or approved alternative sources, including 8 percent from “Tier 1” sources such as wind, solar, coalmine methane, small hydropower, geothermal, and biomass. The remaining 10 percent must come from eligible “Tier 2” sources, including waste coal, demand-side management, large hydropower, municipal solid waste, and coal integrated gasification.

Supporters of the AEPS say the mandates are necessary to reduce pollution, will lead to the creation of “green” jobs, and will increase electricity prices only marginally. However, there is little evidence the mandate will benefit the environment. Renewable sources such as wind and solar 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 report from Colorado-based analytics company Bentek Energy evaluated this problem and found, “While meeting RPS-mandated wind generation requirements appears to have a minimal impact on CO2, it appears to appreciably increase SO2 and NOX.”

A December 2012 joint report by the National Center for Policy Analysis and Beacon Hill Institute found the mandate would increase Pennsylvania’s electricity prices by $2.55 billion in 2021, an increase of nearly 12 percent. The Beacon Hill Institute also estimates investment will decrease by $205 million and an average of 17,380 jobs will be lost as a result of the law.

Rolling back, not increasing, the Pennsylvania AEPS would help keep energy more affordable for consumers, attract more business investment, and lead to more job creation. It also would allow more efficient use of these resources and minimize dangerous emissions. Pennsylvania should not pick winners and losers by mandating the use of certain types of energy. Instead, lawmakers should encourage the development of economically competitive energy sources through non-distorting regulatory and tax policies.

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 deal with ongoing changes in markets, technology, and policies adopted in other states, supported by a thorough bibliography.

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 cover 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 force coal plants to accommodate the intermittency of wind power by “cycling” generating units. The report finds the requirement causes 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 wreak havoc on wildlife. 

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 UK-based economic consultancy, found renewable power killed 3.7 jobs in the United Kingdom for every “green job” created. The “renewable obligation” cost the country an additional US$2.3 billion in 2009-10 when all economic costs, including electricity prices, were considered. 

Five Things CEOs Are Worried About in 2014
http://blogs.wsj.com/five-things/2014/01/03/5-things-ceos-are-worried-about-in-2014/
A Wall Street Journal article on the five things CEOs are worried about that are outside their control in 2014 lists “Keeping Energy Costs Under Control” as number one. The information was polled from the Wall Street Journal CEO Council, a group of 33 CEOs from some of the country’s biggest companies. 

Why Is Renewable Energy So Expensive?
http://www.economist.com/blogs/economist-explains/2014/01/economist-explains-0
A brief but informative essay in a January 2014 blog post for The Economist notes countries with the most renewable power generation have the highest electricity prices, and government efforts to abate this problem have been unsuccessful. In addition, the author writes, high electricity prices may force many manufacturers to set up in less-“green” countries, which “might mean citizens end up consuming more carbon, through imports.” Such unintended consequences indicate the construction of more gas-fired power stations is a better strategy for cutting greenhouse gas emissions without raising electricity prices, the author concludes. 

A Global Transition to Renewable Energy Will Take Many Decades
http://www.scientificamerican.com/article.cfm?id=a-global-transition-to-renewable-energy-will-take-many-decades
Writing for the January 2014 issue of Scientific American, the highly respected scientist and policy analyst Vaclav Smil observes, “U.S. and around the world, each widespread transition from one dominant fuel to another has taken 50 to 60 years.” Smil says there are plenty of reasons to want to reduce dependence on fossil fuels, beyond greenhouse gas emissions, but current environmental policies “have been dismal.” He suggests the best way to foster an energy transition is to “avoid picking energy winners,” an effort he says distorts all-important investment and price signals and impedes economic progress. 

State Analysis: Pennsylvania
http://www.eia.gov/state/analysis.cfm?sid=PA
A U.S. Energy Information Administration Analysis of Pennsylvania’s energy portfolio finds Pennsylvania to be “one of the top electricity-producing states in the nation, typically second only to Texas.” Although Pennsylvania is also a high-energy consumer overall, its electricity production “regularly exceeds in-state consumption.” Pennsylvania’s abundant generation from coal, natural gas, and nuclear sources is considered to be a major contributing factor. 

The Economic Impact of Pennsylvania’s Alternative Energy Portfolio Standard
http://heartland.org/policy-documents/economic-impact-pennsylvanias-alternative-energy-portfolio-standard
Pennsylvania’s current Alternative Energy Portfolio Standard law will raise the cost of electricity by $2.55 billion for the state’s electricity consumers in 2021, within a range of $1.71 billion and $3.24 billion, under the current AEPS law, according to this December 2012 joint report by the National Center for Policy Analysis and the Beacon Hill Institute.

 

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.