Renewable Electricity Standard Good News for Economy Energy Consumers and Carbon Dioxide Reduction

Washington, D.C. — A new comprehensive analysis of the Renewable Electricity Standard (RES) in the pending House and Senate energy legislation shows that, if adopted, the RES would cut consumer energy bills and carbon dioxide (CO₂) emissions as well as stimulate job growth.

According to ACEEE, which authored the five-month study, the RES would in 2030 reduce CO₂ emissions by 100 million metric tons (MMT), save 22 billion kilowatt-hours (kWh) of electricity usage, create 21,000 net new jobs, and displace a total of 32  500-megawatt (MW) conventional powerplants. This proposal would save consumers $5 billion in 2030 and a cumulative $60.5 billion through 2030.¹

“RES saves money for consumers in all regions, and for the nation as a whole,” said Executive Director Steven Nadel. "Although the opponents of the RES claim that it would raise electricity prices and harm regions like the Southeast, ACEEE’s analysis shows these concerns to be based more on political rhetoric than substantive facts,” continued Nadel.  According to the ACEEE report, the direct energy efficiency savings, and the indirect impacts of efficiency and renewable energy on natural gas and coal prices, more than offset the slightly higher cost of renewable energy.  These conclusions apply to both a national analysis and to separate analyses of the Southeast and the Midwest regions.

The study further examined these renewable and efficiency policies against a climate policy framework similar to the Lieberman-Warner America’s Climate Security Act under consideration by the Senate Committee on Environment and Public Works. These scenarios showed even greater benefits in terms of lower energy prices, greater consumer savings, and a stronger economy from setting RES and resource targets. “Renewable electricity and energy efficiency (RES and EERS) policies should be cornerstones of our climate policy. By enacting the RES in the energy bill, Congress can make the best down payment possible on reducing carbon emissions in the electricity sector,” said Policy Director Bill Prindle.

ACEEE used ICF International's IPM^® model to calculate energy, capacity, wholesale electric and natural gas prices, CO₂ emissions, and other impacts of the RES provision. IPM^® is widely used by federal and state agencies as well as utilities for resource and policy decision-making. The economic analysis was performed using ACEEE's DEEPER model, which evaluates such policies for their overall consumer savings, job impacts, and economic output.

Other key findings include:

• A more aggressive set of renewable and efficiency standards, a 15% RES coupled with a separate 15% EERS, would produce even greater benefits. This "15-15" policy package would by 2030 displace the need for 242 new 500-MW conventional powerplants, reduce annual CO₂ emissions by 590 MMT, and save consumers a cumulative $591 billion on energy bills.  The "15-15" policy would also create 259,000 net new jobs in 2030.
• In a climate policy scenario based on provisions akin to the Lieberman-Warner bill, ACEEE applied the IPM^® model in similar fashion, finding that the RES provision by 2030 would displace the need for 110 new 500-MW conventional powerplants and reduce annual CO₂ emissions by 750 MMT.  The RES would reduce average wholesale electricity prices slightly, create 31,000 net new jobs and save nearly $132 billion in cumulative consumer energy bills.²  Economic benefits are greater in the climate policy scenario since efficiency and renewable resources reduce the cost of carbon credits in a cap and trade system.
• The more aggressive "15-15" policy package combined with climate policy would avoid the need for 306 new 500-MW conventional powerplants and 958 MMT of CO₂ emissions.  This policy package would reduce average wholesale electricity prices by 1.3 cents per kWh, create 329,000 net new jobs in 2030, and save consumers over $800 billion cumulatively on energy bills.

“The 15% efficiency plus 15% renewables package substantially reduces the costs of a greenhouse gas cap and trade program,” stated Nadel.  “Given these benefits, we hope that a package along these lines will be included in a final climate bill.”

The House provision reflects the growth of state RES (in place in 25 states and the District of Columbia) and EERS (similarly set long-term resource targets for utilities in some 12 or more states). The RES provision would build on this experience, moderately expanding this policy approach through a national standard and requiring 15% of electricity sales to be provided through renewable sources by 2020. Up to 27% of the resource requirement can be met through energy efficiency.

Assessment of the House Renewable Electricity Standard and Expanded Clean Energy Scenarios can be downloaded for free at http://aceee.org/pubs/e079.htm or purchased for $25 plus $5 postage and handling from ACEEE Publications, 529 14th St, N.W., Suite 600, Washington, D.C. 20045, phone: 202-507-4000, fax: 202-429-2248, e-mail: aceee_publications@aceee.org.

¹ Part of these benefits stem from the RES allowance for energy efficiency to qualify for up to 27% of resource requirements. The analysis also looked at more aggressive renewable (RES) and efficiency (EERS) targets, including a 15% renewable and 15% energy efficiency standard.