North Carolina is considering joining Ohio, West Virginia, and Kansas by rolling back its Renewable Energy and Efficiency Portfolio Standard (REPS), a law which arbitrarily requires utilities to generate 12.5 percent of retail electricity sales from renewable sources by 2021.
Twenty-nine states have these renewable power mandates, most of which were passed in the early 2000s. In the past two years, more than a dozen states have considered reducing or repealing these mandates. In July 2014, Ohio became the first state in the nation to pass a freeze of its renewable mandate, and in 2015, West Virginia repealed its mandate.
Under current law, municipal utilities and cooperatives in North Carolina 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 that rely on nonrenewable fuels. The overall target for renewable energy includes technology-specific targets that 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 mandate say that these 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 report by Strata Policy in conjunction with Utah State University Institute of Political Economy found that the “real personal income declines in RPS states by almost 4 percent. For a typical household, this translates to about $4,000 per family in Kansas and slightly more than $3,800 in North Carolina in 2013 alone. As a result, our analysis shows that Kansas has lost over 5,500 jobs and North Carolina has lost 23,769 jobs as a result of RPS mandates to date.”
Rolling back North Carolina’s 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
Heartland Institute President Joseph Bast outlines the 10 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.
Renewable Portfolio Standards: North Carolina
This study produced by Strata Policy in conjunction with Utah State University Institute of Political Economy (IPE) found that the “real personal income declines in RPS states by almost 4 percent. For a typical household, this translates to about $4,000 per family in Kansas and slightly more than $3,800 in North Carolina in 2013 alone. As a result, our analysis shows that Kansas has lost over 5,500 jobs and North Carolina has lost 23,769 jobs as a result of RPS mandates to date.”
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
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: Consumers Unwilling to Pay More for Renewable Energy
Relatively few consumers are willing to pay extra for renewable energy offered under voluntary “green” pricing programs, according to a report from the Institute for Energy Research.
Why Is Renewable Energy So Expensive?
This brief but useful essay in a January 2014 blog post for The Economist states countries with the most renewable power generation also have the highest electricity prices, and government efforts to alleviate this problem have been unsuccessful. The author notes 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 make the construction of more gas-fired power stations a superior strategy for cutting greenhouse gas emissions without raising electricity prices, the author concludes.
Study of the Effects on Employment of Public Aid to Renewable Energy Sources
Researchers at King Juan Carlos University in Spain found each “green job” created in Spain costs 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
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.
The North Carolina “Affordable and Reliable Energy Act”
Physicist John Droz, Jr. assesses the Affordable Reliable Energy Act, concluding the bill will result in increased net job creation and economic development.
U.K. 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 United Kingdom for every “green job” created. The United Kingdom’s “renewable obligation” cost the country an additional $2.3 billion 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 website of Environment & Climate News at http://news.heartland.org/energy-and-environment, The Heartland Institute’s website at http://heartland.org, and PolicyBot, Heartland’s free online research database, at www.policybot.org.
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