Renewable Energy Mandates: Pay More, Get Less

By August 23, 2007Energy

From the John Locke Foundation:

Recently and very hurriedly passed legislation in North Carolina presents the state’s electricity customers with the shocking prospect of paying up to $125 million a year to fund electricity for people not even in North Carolina. Analysis by the John Locke Foundation, North Carolina’s leading think tank, uncovered this loophole and explained how it could result in such a bizarre unintended consequence. The legislation, touted as earth friendly, would require the state’s utilities to provide at least 7/5 percent of their electricity from renewable resources, but as JLF analysis shows, there is not enough renewable energy in the state. The legislation would address that problem by allowing utilities to buy “renewable energy certificates,” which promote investment in renewable energy in other states without providing electricity to North Carolinians.

The indomitable free-market advocates offer more persuasive detail here.

The U.S. House recently passed an anti-energy bill that includes a 15 percent renewable fuels standard — twice that of North Carolina’s! — that relies on the same sort of mechanisms for utilities that cannot attain the mandated level. Artificially limit supply and force the purchase of more expensive energy (or the equivalent compensation) elsewhere.

The NAM joined the Edison Electric Institute this month in writing a letter to Congress warning of the damage that renewable portfolio standards would wreak on manufacturing. EEI’s President Tom Kuhn said:

Everyone’s in favor of renewable energy, but this federal mandate essentially is a tax on electricity for many businesses and consumers. States already are working to increase the amount of electricity produced from renewables. The last thing we need is for Congress to impose a preemptive federal mandate that is neither cost-effective nor achievable nationwide.

As North Carolina shows, this kind of policymaking foolishness is obviously contageous. Trouble is, it’s the jobs-creating economy that gets sick.

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