Another Energy Bill?

When the first flakes of the second major snowstorm in less than a week began to fall on Northern Virginia, it occurred to me that I might not be in a position to post for a couple of days. I had intended a longer posting covering all the topics mentioned in a renewable energy conference call that I dialed into yesterday, but then I've written previously about most of them. The call was hosted by the American Wind Energy Association and its sister trade associations covering hydropower, biomass power, geothermal energy, and solar energy, for the purpose of laying out a joint "2010 Outlook for Renewable Energy," recommending a national renewable electricity standard (RES) along the lines of the Renewable Portfolio Standards already in place in a number of states. The groups also released a report from Navigant Consulting highlighting the green job-creation potential of such a policy.

All but one of the trade associations involved in the call are members of the larger Renewable Electricity Standard Alliance, so I wasn't surprised to hear them pushing this issue strongly. With cap & trade sidelined at least for now, there's a good deal of speculation about an energy-only compromise bill, presumably built around provisions like the RES. Much of the political popularity of the RES option relies on the fact that it could be implemented at minimal taxpayer expense. However, the real costs, which can be significant, are passed along to electricity ratepayers--though few of them would be able to spot them in their bills. I commented last spring on some practical concerns about how much new generation might be called forth in this manner in the context of the Waxman-Markey bill, which included a little-noticed RES provision. Since most of these technologies generate power on less than a full-time basis, the more ambitious the RES goal, the higher its hidden costs would tend to rise.

What I didn't hear yesterday--though perhaps due to some level of multi-tasking distraction on my part--was any mention of a preferable low-emission electricity standard that would encompass not just renewables, but also nuclear power and any other technology that could generate electricity while emitting negligible quantities of greenhouse gases on a lifecycle basis--in other words much less than a fossil fuel power plant without extremely-effective carbon capture and sequestration. Given the increased emphasis on the potential contribution of additional nuclear power since the State of the Union Address, and the priority that the likeliest Republican participants in any bi-partisan energy compromise would place on nuclear, an "LEES" seems a logical policy evolution, even if many economists consider such standards to be less efficient and ultimately more expensive than setting a price on GHGs via either cap & trade or a carbon tax.

With regard to the report highlighting the potential to create 274,000 additional renewable energy jobs through enactment of a national RES, I noted the absence of any information on the impact on the broader economy from the higher electricity rates that would accompany such an effort. In addition, I continue to believe that much of the "green jobs" emphasis misses the primary role of energy in our economy, which is not to employ as many Americans as possible producing energy, but to produce as much energy as possible for the other industries and sectors that employ most Americans. When I heard the CEO of the Solar Energy Industries Association touting solar energy as creating more jobs per unit of output than any other energy source--at least that's what I thought I heard him say--I groaned (on mute, of course.)

It's anyone's guess whether the Congress will come up with a comprehensive energy & climate bill, a stripped-down energy-only bill, or any such bill at all this year. I can only hope that if it does, it emphasizes producing (or saving) as much domestic energy, as cost-effectively as possible, and that creation of "green jobs" is not the primary policy-selection criterion. The purpose of energy legislation ought to be making the US economy as competitive as possible, and not just in clean energy as the industrial-policy fad of the moment, but in a way that will promote economic growth and job growth across the board over the long haul.