The Clean Energy Trojan Horse

Caesar Rodney Institute by David T. Stevenson, Director Center for Energy Competitiveness
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Big Green, made up of powerful environmental lobbying groups along with elected and appointed officials, now rules Delaware. Legislation that could not be passed nationally is now routinely approved here. Delaware’s Renewable Portfolio Standard (RPS) requires the increased use of expensive solar, fuel cell, and wind power. Delaware also participates in a regional carbon cap and trade program. This will cost Delaware electric ratepayers $38 million in 2012 and could surpass $300 million in 2025. Those higher electric rates will eliminate 2100 jobs and will add $275 a year to residential electric rates according to a study done by the American Traditions Institute.

So far, Delaware has not allowed less expensive clean energy options such as electric grid efficiency improvements, natural gas fueled power, and nuclear power to count against the standard. This may change in 2012 if the legislature replaces the RPS with a Clean Energy Standard. Beware, the new standard could be a Trojan Horse. The details of the new standard could either make energy much more expensive or put us on the road to lower energy costs.

The current RPS requires 25% of electricity used in Delaware come from renewable sources such as wind and solar by 2025. Solar is five times as expensive as conventional power and offshore wind and fuel cells cost two to three times more. Meanwhile, energy efficiency and natural gas fueled power reduce greenhouse gas emissions and actually cost less than other conventional power. New nuclear power technologies will also reduce emissions at potentially much lower cost. If we simply allowed these options to count toward the 25% goal we could reach the goal a lot quicker than 2025 and move Delaware toward competitive electric rates.

More likely, however, we will see an effort to dramatically increase the 25% goal combined with larger carve outs for the more expensive renewable options. Big Green is trying to severely curtail the use of coal to produce electricity. Nationally, 43% of electricity (55% in Delaware) comes from coal fired plants and Big Green would like to see that cut in half. The problem is the U. S. is the Saudi Arabia of coal. Eliminating the use of coal is like asking American manufacturers to compete globally with one hand tied behind their backs.

The 1990 Clean Air Act required individual coal fired electric generating plants to reduce air pollutants, such as sulfur dioxide and nitrous oxide, by 90% and that goal was met at a cost of about $30 billion. New EPA regulations aim to reduce emissions another 5% but will likely cost about $300 billion. Coal emits about twice the greenhouse gas as natural gas for each kilowatt-hour of electricity produced. Congress has rightly refused to pass expensive greenhouse gas reduction legislation so environmental groups are attacking coal with new regulations such as a national Clean Energy Standard that would require 80% of electricity be produced without coal. An Energy Information Agency study of the proposed legislation shows electric rates on the east coast would increase 50% more than a base case without the legislation. The national effort is going nowhere so the battleground is moving to individual states.

We certainly encourage legislative changes to allow the use of energy efficiency, natural gas, and nuclear power be used to meet the current 25% RPS requirement. However, Delaware manufacturers already pay 50% more for electricity than the average state. We should not increase the 25% RPS goal and risk making Delaware even less competitive on the national and world stage. We should also be eliminating carve outs for specific technologies not increasing them. Government initiatives always seem to bet on the wrong horse. The market place can react much faster and favor the best electric generating option.

David T. Stevenson, Director Center for Energy Competitiveness