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Tuesday, September 28, 2010

RES: Symbolism or Substance?

By Daniel GoldfarbOriginally published at the Huffington Post and Americans for Energy Leadership

Amongst those who have fought for energy reform, the announcement that Senators Jeff Bingaman (D- N.M.) and Sam Brownback (R-Kan.) are pursuing a stand-alone renewable energy standard (RES) should be cause for both cautious celebration and deep concern. While a RES could be an effective tool to help catalyze a market for clean-energy, this particular bill falls short of the ambitious legislation needed to ensure that America is competitive in the global clean-energy economy. In talking about this piece of legislation it is important that we distinguish between the effects of the policy and the symbolism of its potential passage.

Although the final language hasn't been released, Bingaman's bill will likely set out of the goal of 15% of renewable production by 2021 with up to 4% coming from efficiency. This proposal is essentially a paired down version of Bingaman's contribution to the 2009 American Clean Energy Leadership Act (ACELA), which called for a stiffer 20% renewable production goal.

Here are some facts about renewable energy standards in America. 36 states already have some form of an RES in place, most of which are more ambitious than the proposed bill - although it should be noted that some do not contain the enforcement mechanisms that a national bill would. Yet even for those states that don't have an RES in place it still may have little effect. A 2009 analysis by the National Renewable Energy Laboratory, a research arm of the Department of Energy, shows that a goal of 15% renewable production by 2021 with 4% coming from efficiency is actually right on track with business-as-usual growth in the industry. Marchant Wentworth, deputy legislative director for the Union of Concerned Scientists, said of the original more ambitious RES standard, "This bill's renewable standard is so pitiful that it wouldn't require any new renewable energy development beyond business as usual."

Some Senators on both sides of the aisle have recognized the realistic implications of this bill, putting aside talking points and rallying around a RES. As of today, Republican Sens. John Ensign of Nevada and Susan Collins of Maine have agreed to co-sponsor the bill. Bingaman's earlier inclusion of a RES in ACELA saw bipartisan support in his committee, with Senators Corker, Sessions, and Murkowski voting "yes" for the RES provision.

Although there are hopes of bipartisan support for the effort, the debate is more likely to descend into party line arguments similar to those employed during comprehensive climate legislation. Republican Senators have begun to make the argument that a RES will drastically raise electricity costs, while Senate Democrats are asserting that without an RES the American clean energy economy will be seriously hampered. While both of these statements are potentially true when talking about an ambitious renewable energy standard, it turns out this particular bill will do almost nothing to change the way America produces its electricity.

Any debate over what is in this RES bill will be taken as an opportunity revert to ideological arguments, leading to gross confabulations from both sides of the aisle about what such a piece of policy would do. Any constructive debate, therefore, should be about what is not in this particular bill. This could provide a national stage for a dialogue that our nation wants and needs, namely, how we can stay competitive and create jobs in the 21st century. While a weak RES will do little to address these problems, the principles behind this type of policy are competitive and industrial in nature. As a net importer of energy sources, the United States is a "price taker", and the biggest one at that. This means that when there are fluctuations in the global price of fossil fuels, the United States is the world's largest loser. As we all know from the 1970s and 2000s, high oil prices mean low job numbers. Now that the energy sector has begun to shift towards renewable sources, America has an opportunity to become energy independent and develop technologies that produce energy at stable rates. The debate around this RES bill could be the jumping off point for a much needed larger discussion, are we willing to invest in energy independence or are we okay with having our economy, jobs, and security being dependent on foreign nations?

At a special committee on Energy Independence and the Environment, Rep. Edward Markey (D-Mass.) warned that if nothing is done, "We will trade our addiction to Middle Eastern oil for an addiction to Asian or European clean energy technologies." In the last ten years China has jumped way ahead in the production of clean-energy technologies. China and Taiwan combined to produce 49% of the solar market in 2009, with 95% of the technology being exported. At the same time China is making efforts to duplicate its success with solar exports in the wind turbine market. Much of China's gains in these sectors, importantly, have been attributed to RES like measures to create robust and stable domestic markets. Surprisingly, according to heads of industry, it is not labor prices that are driving jobs to China, but stable markets.

So if the RES will do little or nothing to actually stimulate an American market for clean energy, then why is it worth advocating for? On the symbolic level, a RES bill represents a critical departure from the environmental rhetoric that has bogged down past energy efforts, and a moment of potential for clean energy industrial and competitiveness policy.

In terms of the real effects of this policy, the passage of this bill would send a stable signal to companies that there will be a market for renewable energy in America ten years down the road, although it will do nothing to guarantee that it will be a robust market. With the impending changes in Congress's make up as well as the expirations of the Clean Energy Treasury Grant Program, the Production Tax Credit (PTC), the Investment Tax Credit (ITC) and ARRA's funding for energy innovation and deployment, America's clean-energy sector may be heading towards a cliff. Although the RES will do little to push America's market for clean-energy past business-as-usual, it will ensure that the market doesn't begin moving backwards. For this reason it is important that this particular bill, in the words of Wentworth, provides a "floor, not a ceiling" for America's clean-energy economy.

In advocating for this bill we must not only recognize its importance, but its serious limitations. A lone RES proposal gets nowhere near the comprehensive energy strategy that will be necessary to create a thriving American clean-energy sector nor does it seriously begin to curb carbon emissions 83% by 2050. While seriously flawed, this RES bill is a necessary step towards a new energy agenda, one based on the limitless potential of technological innovation and not on the politics or capping and limits.

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