Climate Bill Effectively Zeros Renewable Energy Standard

The Southern Alliance for Clean Energy and other advocates are becoming increasingly concerned about the House Waxman-Markey energy and climate bill and its companion in the Senate for a host of reasons.

Among the most dramatic changes made by the House Committee on Energy and Commerce is the “Combined Efficiency and Renewable Energy Standard,” or CERES as people are starting to call it.

It's clear that President Obama’s campaign pledge to “create millions of new green jobs” by ensuring that 25 percent of our electricity comes from renewable sources by 2025 is not being realized in this legislation.

Our analysis suggests the latest version of the bill would not help America make any progress towards that goal, at least through 2020. Furthermore, the bill falls far short of Obama’s pledge “to reduce electricity demand 15 percent from projected levels by 2020.”

Let’s be clear, in addition to creating a healthier economy and global environment, these provisions are essential to the long-term jobs strategy that we desperately need.

Prior to combining energy efficiency and renewable energy, the Waxman-Markey bill promised 297,000 new renewable energy jobs by 2025 and 222,000 new energy efficiency jobs by 2020.

With more than half a million jobs at stake, the CERES compromise barely opens the hiring office. The lower energy efficiency targets may be strong enough to create 60,000 jobs. And with the renewable electricity standard almost completely gutted, it looks like all the new renewable energy jobs will be in the credit trading business.

One of the unfortunate conclusions that I draw from analysis of the CERES is that in an effort to add “flexibility” by coupling the renewable energy and energy efficiency portions of the bill, the potential impact of the bill has been diluted to the point where it would actually be better to have just a standalone energy efficiency standard. If that were to happen, the bill would at least represent a more sure-footed path towards achieving the green jobs goal for energy efficiency.

The CERES would result in no new renewable energy development according to our analysis, which considers three basic components. First, the utility qualification threshold and various factors that diminish the effective requirements of the CERES. Second, the existing state renewable electricity standards (RES) and existing generation. Third, the interaction with the opportunity to use energy efficiency to partially comply with the CERES.

In 2020, renewable energy generation will be about 8% simply from compliance with existing state standards and continued operation of existing renewable energy facilities. This 8% floor is derived from data assembled by Union of Concerned Scientists, Lawrence Berkeley National Laboratory, and the Energy Information Administration.

Although the CERES is set at 12-15% for qualified utilities, after taking into consideration the qualification threshold and several other factors, the CERES would at most require an 1.4% increase in renewable energy above the 8% floor. However, additional exemptions that cannot be quantified (for reasons discussed below) are very likely to reduce the impact of CERES to effectively zero.

State Renewable Energy Payments 2020

The renewable energy component of CERES does have an impact: There will be an financial transfer from utilities in states without a state RES to those states that require renewable energy, as illustrated on the map.