Do We Really Need a Clean Energy Standard?

Senator Jeff Bingaman, Chairman of the Senate Committee on Energy and Natural Resources, is serving his fifth and final term as a senator from New Mexico. By all accounts he has been an effective and thoughtful representative of the Land of Enchantment. His proposal for a national clean energy standard is an equally thoughtful approach to what has been a contentious issue.

What is a clean energy standard and do we really need one?

That is the question being posed in an election year where the partisan differences are on full display. It is difficult to imagine that a Democrat controlled US Senate and a Republican controlled US House of Representatives that can’t agree on much of anything could get together on this clean energy standard idea especially in 2012. But here it is on the table.

This is an issue of debate across the states as well as in Congress. Thirty of the fifty states including in this calculus, the District of Columbia, have adopted renewable portfolio standards.  The US Energy Information Administration says the sum of the thirty jurisdictions with RPS standards account for 42% of the nation’s electricity sales. So some argue we already have a de facto clean energy standard defined by a majority of the states. 

The problem for advocates of the national CES is that it is not uniform. The problem with a uniform CES according to opponents is that a one size fits all policy will not work given the regional differences. Arizona is rich in solar potential, for example Iowa, Texas, Wyoming and a few other places are rich in wind resources but the Southeast has much less potential in either of these renewable categories. These regional differences and the difficulty in permitting and building the electric transmission needed to get remote renewable resources to the load centers has always been one of the biggest hurdles to a national clean energy standard.

And then there is politics! States and their politicians have a natural suspicion and fear of federal intrusion into their business. Federal money always comes with federal strings. Federal rules always cut out local considerations whether they are practical business matters or political considerations.  State regulators jealously guard their territorial jurisdiction over regulated public utilities and state regulators do not want the federal government substituting its judgment for theirs.

So Senator Bingaman hoped that asking the US Energy Information Administration to provide an independent analysis of his clean energy standard proposal would get beyond some of these parochial objections.  The results of that independent analysis frame the issues but will likely do little to close the differences between the sides.

According to the US EIA, the Bingaman Clean Energy Standard proposal alters the proposed power generation mix by reducing coal-fired generation, and replacing it with more nuclear, natural gas, and non-hydropower renewable technologies as you would expect.

• By 2035 coal’s share of power generation falls 54% compared to EIA’s reference case.

• Non-hydroelectric renewable generation increases by 42 % in 2025, and 34 % in 2035 mostly with wind and biomass. Solar market share overall is mostly unchanged, but end-use solar photovoltaic (PV) generation in 2035 is up 71 % while electric utility sector solar PV falls 68 % below the Reference case in 2035. Most of the later-term solar PV capacity happens in California under the EIA models.  

• But the big winner in this proposed clean energy standard is not wind or solar energy but nuclear power growing by more than 80 GW of capacity by 2035 from 10 GW in the reference case, which was itself already optimistic.  By 2035 nuclear generation market share grows under this CES by 62 % more than the EIA reference case.

This is probably not what renewable energy advocates had in mind when they pushed for a federal clean energy standard in order to force the other 20 laggard states to get with the RPS program.  But this is a strategy utilities might love because it reinforces the traditional baseload central station generation power business model substituting nuclear for coal. The CES lets end users cover their rooftops with cheap PV panels to offset electricity demand and allow that feel good doing something about the environment feeling.

And then there is this—it’s going to cost more—average end-use electricity prices under the Bingaman CES proposal are projected to rise 4 % above the Reference Case in 2025, but by 18 % by 2035 as the cost of the new nuclear power plants come on line. And that is on top of the all the wind and solar subsidies lingering on as consolation prizes.