Renewable Energy Mandates Raise Prices and Cost States Jobs

Renewable Energy Mandates Raise Prices and Cost States Jobs
October 1, 2004

James M. Taylor

James M. Taylor is senior fellow for environment and energy policy at The Heartland Institute, and... (read full bio)

After repeatedly failing to convince the Colorado legislature to enact a renewable energy mandate, anti-fossil fuel activists have succeeded in placing such a mandate on the November ballot. The proposed measure would require all energy companies servicing more than 40,000 customers to quintuple (from the current 2 percent to a proposed 10 percent) the share of electricity generated from solar, wind, geothermal, biomass, hydroelectricity, or hydrogen fuel cells.

Activists Closely Watch Colorado Vote

The measure marks the first time activists have succeeded in placing a renewable energy mandate on a statewide ballot. To date, 16 states have enacted renewable energy mandates, but all were enacted by state legislatures. Although Colorado power companies currently generate 2 percent of the state's electricity from renewable sources, the state's power companies are not required by law to meet any renewable power mandates.

Elise Jones, executive director of the Colorado Environmental Coalition, one of the groups that has actively supported the renewable power mandate, said she is hopeful the initiative will serve as a model for other anti-fossil fuel activists around the country.

"If it passes, it may provide a precedent to jump-start similar efforts in other states," Jones was quoted as saying in the August 5 issue of Greenwire.

Mandate Would Raise Prices

"But the prospects for Colorado's renewable energy law are not certain," reported Greenwire. "Several bills containing RPS [renewable portfolio standards] provisions have been defeated in the state legislature."

Motivating the Colorado legislature's opposition to renewable power mandates is the hefty price the state's citizens would have to pay for purchasing renewable energy. Anti-fossil fuel activists frequently argue the costs of producing renewable energy are declining, but even accounting for declines, the costs remain significantly higher than those associated with generating energy from traditional sources.

ExxonMobil's A Report on Energy Trends, Greenhouse Gas Emissions and Alternative Energy, released earlier this year, reported, "Currently, the most competitive renewable source is wind power." However, the report noted, "it relies largely on government subsidies to be economical."

According to the ExxonMobil study, it typically costs approximately 3-1/2 cents per kilowatt hour to generate power from coal. By comparison, it typically costs more than 4 cents per kilowatt hour to generate power from the wind. Other renewable sources of power generation are even more expensive. Solar power, for example, typically costs 15 cents per kilowatt hour.

Renewables Hurt Environment

Wind power, in addition to costing approximately 20 percent more to produce, raises serious environmental concerns. Even though "wind farms" of giant, power-generating wind turbines are currently few and far between, they are responsible for tens of thousands of bird and bat kills every year. Many of the victim species are endangered. As a result, a multitude of environmental groups, including the Audubon Society, oppose wind power.

All other sources of renewable power also have opponents within the environmental movement. For example, hydroelectricity requires the construction of large dams that alter the natural state of rivers and impede movement of fish, including the reproductive journeys of endangered salmon. To generate solar power in any commercial quantity requires covering vast amounts of undeveloped land with unsightly power collectors. Geothermal power often results in toxic waste that is unacceptable to the communities in which plants are sited.

Rate Increases, Job Losses Seen

"I think the general population greatly supports renewable energy, as do we, but I think if they delve into the issue more they would realize that this initiative would be far too costly," said Steven Roalstad, a spokesman for Colorado energy provider Xcel Energy Inc, as quoted in the August 5 Greenwire.

According to Xcel, the Colorado renewable power mandate would cost consumers $580 million to $1.6 billion dollars per year in increased energy costs.

"From our perspective, we are very concerned about the negative impact on Colorado's consumers and economy from the provisions in this poorly drafted initiative," Mac McLennan, spokesman for Citizens for Sensible Energy Choices, told Greenwire.

"Our members will be those who are concerned about possible rate increases as a result of the initiative, folks who are worried about mandating future energy sources and reliability, because the wind doesn't blow all the time," added McLennan in the July 28 Denver Post.

Consumers Avoid High Prices

Anti-fossil fuel activists around the country have abandoned their previous strategy of trying to persuade consumers to purchase more expensive renewable energy voluntarily.

Arizona power supplier APS allows its customers to choose the source of the power they purchase. Faced with the much higher costs associated with solar power generated in the state, however, Arizona citizens have elected to purchase 99.9 percent of their power from conventional sources since the program began.

Similarly, power suppliers in New York and Massachusetts give their customers the option of purchasing renewable power. In Massachusetts, only 1.5 percent of eligible consumers have opted to pay the higher prices for renewable energy since it has been made available. In New York, an even smaller 0.6 percent of residents have agreed to pay the higher costs of generating renewable power since the program began. "We believe it is inappropriate for the government to create a market by requiring the purchase of the product," observed Dianna Orf of the Colorado Mining Association, as reported by Stateline.

"I believe that Renewable Portfolio Standards are the most insidious device yet devised by regulators and legislators and governors to create markets for renewable energy producers, shift the high costs to electric customers, and hide them in monthly bills," added Glenn Schleede, a former White House official and president of the Energy Market and Policy Analysis consulting firm.

"Participants in a wind opposition group that I help coordinate have learned of this and are objecting to their legislators," said Schleede.

Kansans Weigh Renewables

Although Colorado is the only state where a renewable power mandate is on the November ballot, the renewable energy debate is raging in many other states as well.

In Kansas, anti-fossil fuel activists are intensely lobbying state legislators to subsidize renewable energy or enact restrictive renewable energy mandates.

Although Kansas produces a greater percentage of its power from wind farms than do most other states, activists in the state are not satisfied. Bruce Snead of the Kansas Energy Council complained Kansas does not quite rank in the top ten in the nation in terms of wind power. "We are behind the curve," said Snead in the August 2 Kansas City Star. "Woefully behind."

"Incentives and mandates are considered key for developers and utilities because wind energy traditionally has cost more than coal-generated electricity," noted the Star.

However, subsidies, tax credits, and mandates come at a social cost. "Are you willing to fund investment tax credits and not education?" asked State Rep. Carl Holmes (R-Liberal), who heads the state's House Utilities Committee.

Audubon Fights Wind Farm

In Maine, environmental groups have rallied to oppose plans to build a wind farm of 400-foot-high turbines in Aroostook County. On June 30, Maine Audubon filed an appeal of the proposed project with the state's Department of Environmental Protection.

"Data from wind farms has shown that turbines can pose a serious and lethal threat to raptors, bats, and migratory songbirds," read a statement on the Maine Audubon Web site. "Tall, lighted structures pose particular collision hazards as lights attract birds to towers, especially during times of fog, mist, and low clouds. Problems tend to be more profound where there are abundant bird populations nearby and/or if the site is part of a migratory corridor.

"Evergreen Windpower has not collected any original data on migrating birds, bats, or raptors at the project site," the statement continued. "In fact, migratory pathways over the interior of Maine have never been studied. However, for a wind-power project proposed for Maine's Redington Pond Range and Black Nubble Mountain, Maine's Land Use Regulation Commission required studies similar to those Maine Audubon has recommended in Mars Hill."

California Solar Would Cost $1 Billion

In California, activists are supporting an expensive mandate to require the state to spend $1 billion on incentives for solar power generation. The proposal, formulated by the state's Environmental Protection Agency, dwarfs all prior efforts to fund or require the purchase of solar technology.

"This is so far ahead of any other state ... there's no comparison," said Bernadette Del Chiaro of Environment California, as reported August 5 by the Associated Press.

The proposal would not only force state taxpayers to foot the $1 billion bill for the incentives, but also would require that more than half the state's new home buyers purchase solar generating systems if the $1 billion in subsidies fails to generate sufficient consumer interest. The proposal would require 15 percent of new home buyers to install solar generating systems by 2006, 25 percent of new home buyers to install solar generating systems by 2007, 35 percent by 2008, 45 percent by 2009, and 55 percent by 2010.

California Governor Arnold Schwarzenegger (R), who voiced his support for solar energy during his campaign for office, has yet to state whether he supports this specific proposal.


James M. Taylor(taylor@heartland.org)is managing editor of Environment & Climate News.


For more information ...

ExxonMobil's A Report on Energy Trends, Greenhouse Gas Emissions and Alternative Energy is available online at http://www2.exxonmobil.com/Corporate/Newsroom/Newsreleases/xom_nr_040204.asp.

The Maine Audubon Web site is http://www.maineaudubon.org.

James M. Taylor

James M. Taylor is senior fellow for environment and energy policy at The Heartland Institute, and... (read full bio)