Posted by Rich Sweeney on April 28, 2009
One of the annoying features of the EIA’s Annual Energy Outlook is that it has to model policies exactly as the law is currently written. For example, even though the production tax credit for renewable generation had been extended almost every years since its inception (after the requisite political brinksmanship), these extensions are only on an annual basis, so EIA assumes they expire when it forecasts what the world is going to look like in the future.
Which is why I was surprised to come across this footnote in Table 13.5 (Regional RPS requirements), in the AEO 2009 Assumptions documentation: “California is not projected to meet RPS targets because of funding limitations.”
Now I’ve expressed skepticism of California’s state RPS in the past, but it certainly says something when the hyperliteral folks at AEO call your bluff.
Posted in Renewables, RPS | Leave a Comment »
Posted by Rich Sweeney on January 23, 2009
From RenewableEnergyWorld.com, which, by the way, is one of the best sources for renewable news on the web. Tam Hunt, who’s is apparently a lecturer at Daniel’s alma mater, thinks we can mandate our way out of recession. He wonders, “Where the local stimulus packages are?”. When I saw that title my initial reaction was “states can’t run deficits, so that pretty much takes Keynesian stimulus packages of the table.” Despite acknowledging this budgetary reality, Hunt suggests some crazy other ideas states can use to promote green growth:
One way states can provide a boost is through enacting aggressive renewable energy standards.
Local governments can also enact their own building energy efficiency standards. By doing so, they can spur local investment in energy efficiency projects, creating jobs and leading to cost savings for homeowners and businesses through energy savings.
Last, by choosing to build renewables under CCA, local governments can provide jobs and local infusions of capital that will help kick start local economies more generally.
This is pretty brilliant stuff. If we want to avoid depression, but are concerned about the deficit implications of fiscal stimulus, we can instead simply mandate people to build things. The mind boggles….
Posted in Government Policy, Green Collar Jobs, RPS | 9 Comments »
Posted by Rich Sweeney on September 3, 2008
Over on RenewableEnergyWorld.com, Stephen Lacey* has an article on two controversial California renewable energy ballot initiatives.
The first, Proposition 7, would increase the states RPS to 40% by 2020 and 50% by 2025. The current RPS, enacted in 2002, set a goal of 33% by 2020, which is already by far and away the most ambitious target in the US. In 2007, 11.8 percent of all CA electricity came from renewable resources such as wind, solar, geothermal, biomass and small hydroelectric facilities. Now 40% isn’t necessarily impossible, but the costs and reliability impacts are highly uncertain. As one insider put it a few months ago, “If that passes, I’m stocking up on flashlights.”
The other initiative is Proposition 10, which “authorizes the state to issue US $5 billion in bonds from California’s general fund in order to provide incentives for “clean alternative energy vehicles” and research and development of next-generation transportation.” Ostensibly the idea behind the bill is to jump start California’s alternative fuel market, but Lacey points out that many clean energy analysts are skeptical. For what its worth, this clean energy analyst couldn’t separate the beef from the bs amidst all the legalese. However, the measure is financially backed by T. Boone Pickens’ company Clean Energy Fuels, which at least answers the classic Jim Garrison question “Who benefits?”
Which brings me to the point about California, and about direct democracy in general. Most propositions deal with issues that are far too complex and consequential to simply leave up to a popular vote. Even if every voter was smart and experienced enough to evaluate the issues reasonably, he most certainly would not devote the time and effort necessary to do so. Instead ballot initiatives are incompletely explained by self-interested parties, and decided on a whim by shortsighted citizens. Voters get all of their information on a proposed ammendment in a media blitz that occurs right before the vote, and devote exactly 2.5 seconds to pondering the issue between questions in the voting booth. The result is a hodge-podge of conflicting codifications which would be quite comical it weren’t so disastrous. Two examples:
- During the 80s and 90s CA voters mandated spending increases in every direction imaginable while simultaneously enacting arbitrary estate and sales tax cuts, leaving the government perilously tied to state income taxes. Then when the economy went south and the state went into fiscal crisis, they took to the booth again to oust Gray Davis for allowing the budget deficit to get so large.
- in 1993 Californians voted “three strikes” into law, which mandated life imprisonment for third time felons. The result has been prison overcrowding and countless inhumane incarcerations.
Good policymaking requires a careful consideration of both the costs and the benefits. Ballot propositions emphasize only the positives, often encouraging voters to think they can have their cake and eat it too. Now its totally possible that CA voters will take the time to understand the implications of a 40% RPS, or the benefits of a $5 billion alternative fuels subsidy. Much more likely though they’ll evaluate these propositions in a vaccuum, ignoring the tremendous costs/ stresses of the former and the wasteful, restrictive nature of the latter.
* FYI Stephen Lacey also hosts an excellent weekly podcast for those interested in renewables.
Posted in Government Policy, Political Economy, Renewables, RPS | 1 Comment »
Posted by Rich Sweeney on January 11, 2008
I’m becoming increasingly concerned about the Union for Concerned Scientists. Its gone from simply raising awareness about global warming to strongly advocating very strong policy responses. I came across a UCS briefing the other day which typifies the lack of rigor and questionable logic that has come to define far too much of the organizations work in the past year.
The brief (PDF) is on the impact that a national RPS would have on the southeastern United States . It’s widely feared that the southeast has a lot to loose from an RPS because it does not have very much renewable energy to supply. Yet here are the UCS’s findings:
A national renewable electricity standard can help the Southeast:
• Reduce the billions of dollars spent every year importing fuels from other states and countries by developing local renewable energy resources;
• Create thousands of manufacturing jobs and increase global export opportunities;
• Reduce natural gas costs and reduce or stabilize electricity costs; and
• Purchase the least-expensive renewable energy available, anywhere in the country.
I don’t have time right now to go in to all the problems I have with this report, but I’ll give you some of the highlights. They’re also useful for thinking about RPS policies in general.
The authors are correct to point out that the southeast imports a lot of coal, and that it would import less coal under an RPS. However, this would not translate directly into saving “billions of dollars” as many, if not all, of those dollars would still go out of state and they would still be spent on energy. The only difference is that they would go to purchase renewable energy credits (RECs) as well as coal. The report goes on to say that the southeast has plenty of renewable resources to bring online to meet an RPS, yet I haven’t seen any evidence to support this. Power simply isn’t a major concern on the hydro front, and this will be even more true going forward given the recent water shortages. Wind and geothermal are essentially non-existent, much of the region is actually too hot for viable solar, and wive and tidal technologies are not even close to market fruition. That leaves biomass, which will most likely be dominated by fuel rather than electricity interests.
More generally the report claims that an RPS will reduce electricity prices. I simply don’t see how this is possible. As a general rule of thumb, an RPS will increase prices nationally. In deregulated regions, it’s possible that prices won’t increase, as an RPS essentially works as a transfer from inframarginal producers (like coal) to marginal renewable producers. In regulated regions, prices are equal to the average marginal cost of all producers (for the most part). It’s possible that a regulated state could see a decline in electricity prices under a national RPS, but only if it has a lot of renewable energy, in which it exports RECS and the revenue subsidizes in state prices. Since the southeast is entirely regulated, and is comparatively inefficient at generating electricity from renewables, it’s electricity prices will go up. End of story. (Or think of it this way: as the brief points out the southeast uses a lot of fossil fuels to generate electricity. Under an RPS, it’s still gonna use a lot of fossil fuels, only now its also gonna have to buy RECs to go along with all that coal).
As for the jobs findings they’re expectedly ill-explained. See previous comments for skepticism (here and here).
Posted in Random, RPS | 6 Comments »
Posted by Rich Sweeney on December 18, 2007
1. A recent study by two Stanford professors found that up to 1/3 of wind capacity can be used to supply baseload electricity once a large enough number of wind turbines are linked together. To date, wind’s market penetration has been hindered by its perceived intermittence. If the authors’ findings are correct, they might suggest that government should focus on subsidizing inter-turbine transmission, not turbine production. Read the press release and download the paper here. H/T The Energy Blog.
2. Today’s NYTimes has an article on Nanosolar’s new thin film PV panels. The Google backed company plans to start selling photovoltaic systems for as low as $2 a watt. Assuming a ten year life and a very conservative 8 hours of sunlight a day, that’s less than 7 cents a kilowatt hour.
More evidence that we may not even need an RPS. H/T Thom.
Posted in Renewables, RPS | Leave a Comment »
Posted by Rich Sweeney on December 8, 2007
Today on NYTimes’ The Board, the editorial board derides President Bush’s opposition to a 15% Renewable Portfolio Standard (RPS) as flip flopping. This is because as Governor of Texas, Bush implemented a very forward looking and successful statewide RPS. Therefore, clearly his opposition to a national RPS can only be the result of Cheney, Rove, and industry “getting to him”. However, while it is certainly possible that some undesirable influence got to Bush, the premise that what’s right for Texas’ electricity market is necessarily right for the country as a whole is far from true. Texas is unique for two important reasons. The first received only cursory mention from the Board, while the second was ignored entirely.
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Posted in Electricity, Renewables, RPS | Leave a Comment »
Posted by Rich Sweeney on December 7, 2007
When I was in Russia a few years ago a friend told me a corny, but somehow interesting joke. She told me that the Russian word for a breeze or a draft in a room is pronounced “dooit” (literally, “it blows”). So if you speak both Russian and English, you sometimes say to people, “Close the window. Do it.”, and laugh.
That was a very tangential segue to my second skeptical RPS post of the day. Yesterday I was at a renewables meeting with Peter Bierden, Director of Global Wind Projects at GE Energy. He was going along talking about how great wind energy is when suddenly he dropped this little tidbit of information on the group: GE, by far and away the largest turbine manufacturer in the US, is so backed up that you can’t even place an order for delivery prior to 2010. Every electricity model out there, RFF’s included, predicts meeting the overwhelming majority of renewable generation requirements with wind energy in the short to medium term. Now Peter didn’t discuss exactly how many turbines were set to be delivered, but the fact that they’re booked solid prior to Congress passing an energy bill does not bode well.
Ironically, Congress’s ridiculous, discontinuous approach the the federal production tax credit (PTC) is probably the main source of GE’s current supply constraints. When a Republican congress allowed the PTC to lapse last, in 2003, GE was left holding the bag on its contracts in progress with suppliers. Now we’re going through this charade all over again, as Congress debates whether or not to extend the PTC. Yet, even if they do decide to extend it another year, according to Bierden’s comments, that won‘t affect wind installation at all, as turbine purchasers today would be concerned with a PTC in 2011.
Posted in RPS, Wind | Leave a Comment »
Posted by Evan Herrnstadt on November 6, 2007
Gordon Brown unveiled a new British energy plan in the Queen’s Speech today, as he laid out his first full governmental program. The Bill will supposedly enforce emissions reductions of 60% by 2050 and 26-32% (which I assume can be taken to mean 26%) by 2020. Crucially, the new plan includes international aviation and shipping (what will I post about now?). The bill also calls for an expanded renewables standard and facilitation of private investment in carbon capture and storage. The standard is okay; in the context of binding targets, I think a wisely designed RPS could be an effective complementary policy. The CCS incentive is good. Although we run into the problem of government trying to pick winners, CCS holds enormous potential and faces huge initial capital and risk thresholds.
This is momentous, as it makes Britain the first country to introduce domestic legally binding emissions limits. How binding is “binding”? Only time will tell.
Note: I would love to get some feedback on this from people more familiar with proposed U.S. climate legislation. (Hint, hint, Daniel)
Posted in Climate Change, Energy Technology, Government Policy, RPS, Transportation | Leave a Comment »
Posted by Rich Sweeney on October 24, 2007
Much of the global warming debate in DC of late has focussed on taxing or capping carbon. Yet, in addition to this, it’s become increasingly clear that Washington is going to take an even more active role in greening up our nation’s energy mix by ennacting some sort Renewable Portfolio Standard (RPS). An RPS encourages clean energy by forcing utilities to generate a certain percentage of their electricity from renewable sources. All of the leading Democratic presidential candidates have proposed RPS’s, of either 20% by 2020 or 25% by 2025. The current House version of the energy bill has a fairly timid RPS of 15% by 2020 with lots of rural exemptions and loopholes. The Republicans successfully blocked an RPS from being included in the Senate energy bill.
So far all of the action on the RPS front has occurred at the state level. For a really good overview of RPS in general and of the states’ RPS experience to date, see this paper from the folks at EIA, published in the May 2007 issue of The Electricity Journal.
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Posted in Climate Change, Electricity, Government Policy, RPS | 1 Comment »