Study: Renewable Electricity Mandates Raise Prices, Kill Jobs

Study: Renewable Electricity Mandates Raise Prices, Kill Jobs
February 7, 2011

James M. Taylor, J.D.

James M. Taylor is managing editor of Environment & Climate News, a national monthly... (read full bio)

Renewable electricity mandates are causing electricity prices to increase and killing jobs in the states that have enacted them, reports a new study from the Institute for Energy Research. The study is particularly important because Congress is considering imposing renewable electricity requirements similar to the state mandates covered in the report.

The study notes 29 states have enacted renewable electricity mandates and another seven have enacted renewable electricity goals. In addition to raising electricity prices, the majority of states have proven unable to meet their mandates, the researchers found.

Higher Prices, and Rising
“Electricity prices are already nearly 40 percent higher in States with an REM [renewable electricity mandate],” the study reports. “While the renewable mandates may not be the only reason electricity prices are higher in those States, these mandates likely contribute to higher prices and certainly are not helping to decrease the price.

“After all, renewable electricity mandates require the generation of electricity from more expensive sources,” the report continued. “Typically, too, they require backup generation, as well as backup capacity, and they typically place stress on transmission-grid operations (owing to their stochastic nature). As states increase their use of renewable sources, it is therefore likely that the price of electricity in states with mandates will increase even more.”

Jobs Destroyed
The study concludes the claims that governments can create jobs by forcing or inducing people to purchase expensive renewable electricity are a myth.

“One argument people use to promote renewable electricity mandates is that the mandates can create green jobs,” the study observed. “But trying to create jobs through renewable subsidies has proved to be a failure. In Spain, for example, it is estimated that 2.2 jobs were lost as an opportunity cost of creating one expensive, subsidy- and set-aside-dependent job in the renewable sector. In Germany, per worker subsidies in the solar industry are as high as $240,000 per worker.”

National Mistake to Follow?
The failed nature of state renewable electricity mandates is instructive regarding federal efforts to impose similar mandates, the study explains.

“For the past few years, Congress has considered a nationwide renewable electricity mandate, and renewable energy lobbyists have recently been increasing pressure on Capitol Hill to consider a renewable electricity mandate in the 112th Congress. One missing and important piece of this discussion is the experience of the States that have tried renewable electricity mandates,” the study notes.

“This raises an important question for Congressional action: If 36 states have passed some form of renewable electricity mandate or goal, what can be learned from these experiments? Are the states meeting their targets for renewable electricity production? Are these mandates increasing the prices of electricity?” the study asks.

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

Internet Info:

The Status of Renewable Electricity Mandates in the Stateshttp://www.instituteforenergyresearch.org/wp-content/uploads/2011/01/IER-RPS-Study-Final.pdf

James M. Taylor, J.D.

James M. Taylor is managing editor of Environment & Climate News, a national monthly... (read full bio)