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August 6, 2007

"House energy bill, this is Senate energy bill. Say hello"

On a Saturday flurry that encroached one day into their summer vacation, the people's house passed an energy bill that should have put a smile on a few faces. For those who believe that we have not seen decent renewable energy incentives in the U.S. since the Carter administration, there is reason to feel somewhat victorious. But before you pop the cork on that bottle of Cold Duck or, as Fred Sanford liked to call it, "the good stuff," I must remind everyone that the Senate passed a different collection of energy bills, and now the two must be reconciled into a bill that President George W. Bush might just veto. That is, unless the most significant language in the bills is tempered rather considerably in an effort to get it past the White House.

The differences between the two bills are many. Some of the highlights include a solar energy tax incentive and the elimination of a multi-billion dollar tax break for big oil companies (coupled with a redistribution of those funds toward renewable energy research/production.). But the most significant piece of legislation in the Senate energy bill was completely omitted in the House version; the House did nothing in terms of raising automobile fuel efficiency standards. The Senate bill increases the requirement to 35 mpg by 2020 for cars, SUVs and small trucks, about a 40% increase. Simply put, the House dropped the ball, and the fact that they whimped out on CAFE standards is not particularly surprising.

Oddly, the part of the House legislation which had the most potential for inducing any sort of real change, was also the most yawn-inducing. The House bill energy mandates that investor-owned utilities purchase 15% of their power from renewable sources by 2020. Beside the point that this renewable portfolio standard (RPS) may get by fillibustered by senate Republicans, the language of it has considerable weaknesses.

I am not as optimistic as some that: a) The bill is an effective policy tool, and; b) The bill will even be passed by Congress. First, RPSs are a little clunky as a policy mechanism; they lack flexibility, and do not incentivize renewable energy prodcution the way European and Canadian mechanisms do. The EU, and parts of Canada have used renewable energy tariffs, feed laws, and fee schedules that mandate utilities to purchase renewable energy from any provider at a (fairly high) fixed rate; a rate high enough that makes buying solar panels and sticking them on your roof fiscally attractive. This very aggressive yet somewhat draconian provision has pushed Germany to the forefront of micro-scale renewable energy generation. Just last month, the German Ministry of Environment announced that the targets for 2020 had increased to 27% from the previous 20% and had added a target of 45% by 2030. If there is to be a substantial increase in renewable energy generation, this is perhaps the fastest way to achieve that goal--but politically it is unlikely.

The second shortcoming of the House RPS is that it is only for investor-owned utilities. The House RPS exempts rural electric cooperatives, municipal utilities, the Tennessee Valley Authority and the state of Hawaii from the mandate. Not surprisingly, the investor-owned utility lobbies were a little disappointed for being singled out in the house's legislation; Thomas Kuhn, president of the Edison Electric Institute, called the House vote “very disappointing.” (I bet you're disappointed, Thomas.)

The third reason I am disappointed with the house RPS is that several states have already enacted renewable energy standards that are considerably tougher than the federal mandate. The cartographic wizards over at the Pew Center on Climate Change have put together the handy little map below that shows the states which have enacted some sort of renewable standard. Doesn't it look strikingly similar to another map of the U.S. you saw last November? Well I have news for everyone, even that map is a little misleading. Can we break those units down a little more? Try this more detailed map from 2004 on for size! (to be continued...)

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