In the previous decade, 29 states and the District of Columbia established mandates known as renewable portfolio standards (RPS) that require utilities to derive a designated percentage of their electricity from renewable sources by a specific date.
Legislators hoped the mandates would reduce their states’ dependence on fossil fuels and reduce energy costs.
In some states the initial enthusiasm for renewable mandates appears to be fading, because renewable energy has failed to deliver the cheap, reliable energy promised. Growing recognition of the high costs associated with renewable-fuel mandates prompted Ohio to freeze its RPS in 2014, and West Virginia repealed its mandates altogether earlier in 2015.
“This is a bad time to be in the renewable energy industry,” said Marita Noon, executive director of Energy Makes America Great. “In addition to laws enacted in Ohio and West Virginia trimming renewable power’s legislated advantage, ethanol mandates have also fallen from favor at the federal level, and biofuel companies, according to The Economist, are starting to give up.”
North Carolina’s Costly Mandate
In 2007, North Carolina became the first state in its region to enact an RPS. Under that law, investor-owned utilities in the state must provide up to 12.5 percent of their energy through renewable resources or energy efficiency measures by 2021
A March study from the Institute for Political Economy at Utah State University found North Carolinians received an estimated $14.4 billion less in real personal income in 2013 than they would have without the renewable-energy mandates. Because real personal income has fallen an average of nearly 4 percent cumulatively in states with renewable power mandates, a family in North Carolina made $3,870 less in 2013 alone, the study says.
“In addition, RPS states have seen a drop in industrial electricity sales of almost 14 percent and have experienced an overall increase of almost 10 percent to their state’s unemployment rate,” the study states. “This means that there were 23,769 fewer jobs in North Carolina at the end of 2014 than there would have been without government mandates for renewable electricity.”
Similar Problems in Kansas
Kansas also adopted renewable power mandates that have proven to be harmful. Kansas’s 2009 RPS requires at least 10 percent of electricity-generating capacity in the state come from renewable sources, with the percentage slated to rise to 15 percent in 2016 and 20 percent in 2020.
The same Utah State University team of researchers analyzed the effects of Kansas’s RPS and found negative impacts similar to those in North Carolina. The study reports, “Kansas electricity rate payers will face $171 million in elevated electricity costs beyond what they would have paid in the absence of an RPS. In addition, RPS will cause … the loss of 795 jobs, a decrease in investment of $14 million, and a decrease in personal disposable income of $72 million in 2020 alone.”
“These recent studies, using sophisticated economic techniques, provide further evidence our basic intuition on RPS is correct. [They force] people to use expensive, unreliable sources of electricity like wind and solar [that increase] the cost of power,” said Dan Simmons, vice president for policy at the Institute for Energy Research. “These studies should erase all doubt about how harmful RPS mandates are.”
Bonner R. Cohen, Ph.D. ([email protected]) is a senior fellow at the National Center for Public Policy Research.
INTERNET INFO
Randy Simmons, et al., “Renewable Portfolio Standards: Kansas,” March 10, 2015: https://www.heartland.org/policy-documents/renewable-portfolio-standards-kansas
Randy Simmons, et al., “Renewable Portfolio Standards: North Carolina,” March 10, 2015: https://www.heartland.org/policy-documents/renewable-portfolio-standards-north-carolina
Bonner R. Cohen is a senior fellow with the National Center for Public Policy Research, a position he has held since 2002.
