The unintended consequence of renewable energy standards
by Chris Elkins
Published: October 5,2009
Much of the current energy policy debate today is on the American Clean Energy and Security (ACES) Act known as the “Waxman-Markey bill.” Unfortunately, there has been a lot of confusion and political posturing regarding this bill and energy policy in general. While the U.S. House of Representatives passed the Waxman-Markey bill by a narrow 219-212 vote, the U.S. Senate has yet to begin debate. Now is the time that Mississippians can speak up on legislation that, if passed, will have a dramatic impact on the sources, cost and perhaps availability of the electricity that powers life at home and work.
Waxman-Markey’s cap-and-trade program has been the brunt of much controversy. However, Mississippians and our neighboring states should have serious concerns about the bill’s renewable energy standards (RES), which mandate that 20 percent of our state’s total electricity supply be generated by renewable energy sources by 2020.
Conceptually, renewable energy sources appear to be affordable, efficient and easy to integrate into the existing electric power grid. However, the reality is that there are significant challenges coupled with unforeseen costs, and it’s almost certain that any federally mandated RES will increase the cost of electricity for Mississippians.
Today, the energy resources defined as “renewable” in the Waxman-Markey bill—primarily solar, wind and biomass fuels—account for about 3 percent of our nation’s total electricity supply.
Mississippians pay about eight cents per kWh for electricity, while the U.S. average is about 12 cents per KWH. The Southeast economy, including Mississippi, has benefited greatly from our abundance of reliable and low-cost energy that encourages businesses to expand and locate new facilities in our region. We have a competitive advantage over states like Connecticut, with power costs at 20 cents per kWh, and even California at 15 cents per kWh, that we do not want to lose.
Renewable energy resources can and should play an important role in our energy supply. However, a federal RES mandate must recognize that different states have different natural capacity for renewable energy. For example, Kansas has prevailing winds, Nevada-solar, and Hawaii-geothermal. Mississippi is a state rich in biomass resources, which today fuel around 2 percent of our state’s electric power generation. It’s notable that the Mississippi Technology Alliance and Mississippi State University have programs underway to enable more biomass power generation in the future.
Well-intended legislation can have unintended consequences. If the Waxman-Markey bill becomes law, how would Mississippi meet the 20 percent RES requirement? Mississippi would have to pay to import electric power from outside our state, rather than relying on electricity generated at home. While the federal stimulus package contained funds for renewable energy, nobody has figured out how to pay for the millions of dollars in new electric power transmission lines that will be required to bring power to such states as Mississippi.
In fact, a primary reason that oil and natural gas magnate T. Boone Pickens shelved his Texas wind farm project is that no one volunteered to pay for the $2 billion it would cost to connect the proposed wind farm project to the Texas power grid.
The Waxman-Markey bill also fails to support nuclear energy, which is safe, clean and reliable. Nuclear energy provides 20 percent of the electricity in the U.S. and in Mississippi. Sensible energy legislation should promote an increase in nuclear generation, especially in view of the Department of Energy’s forecast that the demand for electricity will increase 26 percent by 2030.
Coal is America’s most abundant energy resource. Control technologies are available that reduce harmful emissions up to 80 percent, while carbon dioxide can be captured for use in enhanced oil recovery. Mississippi has an estimated three to five billion tons of minable lignite coal which can be used to secure our state’s energy future while adding hundreds of good-paying jobs.
A serious game of energy legislation is underway in Washington. If a federally mandated “one size fits all” approach is enacted that fails to recognize the diverse energy resources of individual states, the cost and consequences will be high for Mississippi and for America. Let’s not sit on the sidelines during this debate, for if we do, we could find ourselves in the dark, literally.
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