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Not Free to Choose: The Reality behind Clean Energy Standards

Tuesday, August 23, 2011

The new stealth approach to energy policy being pushed under the guise of a Clean Energy Standard is frankly dishonest.

Climate activists failed to achieve comprehensive greenhouse gas controls in the United States in the form of a cap-and-trade program. And while they pursue incremental greenhouse gas regulation at both the federal and state level, they have not given up on their Holy Grail of a comprehensive national regime to control greenhouse gas emissions. Instead, they have rebranded their campaign.

The current incarnation of the greenhouse gas agenda is hidden in the campaign for a national Clean Energy Standard, or CES. Other terms for this approach are Renewable Energy Standards (RES), or, even more obliquely, Renewable Portfolio Standards (RPS). While many states have already implemented such standards, the push now is for federalization. What they all come down to, at the end of the day, is a governmental mandate that energy utilities must buy and distribute a certain percentage of energy that comes from so-called “clean” sources, such as wind power, solar power, nuclear power, “clean coal,” and so on.

Here’s why Clean Energy Standards are a bad idea:

They are hidden energy taxes. Because the kinds of energy that qualify as “clean” to environmentalists are more expensive than conventional energy, forcing them into the energy mix will inevitably raise energy prices. It is never a good idea to overprice energy, which is a critical input to economic productivity, but it is a particularly bad idea to overprice energy when our economy is barely moving.

Hiking energy prices is also unpopular, which is why, in all likelihood, the costs will be hidden from consumers by forcing utilities to charge commercial users such as manufacturers, restaurants, and retailers higher rates, while subsidizing private households. This was a key element of previous greenhouse gas control proposals, such as cap-and-trade.

It is never a good idea to overprice energy, but particularly when our economy is barely moving.

They are hidden subsidies. A CES is a stealth subsidy for wind and solar power because it requires utilities to buy such types of “clean energy” regardless of their cost. Without mandated purchasing, conventional energy forms such as electricity from natural gas render wind and solar power non-competitive–they’re too costly and too unsustainable to win out as the “energy of choice” in a free market. Requiring utilities to buy wind and solar power, then passing that cost onto businesses and ratepayers is simply a hidden subsidy.

The more government distorts energy prices with subsidies, the less efficient our economy and use of energy becomes. Again, that’s a bad enough idea when our economy is humming along: it’s a particularly foolish idea when our economy is in dire straits.

They are hidden greenhouse gas controls. When most people think of the word "clean" in an environmental context, it is a reflection of things they consider dirty.  Previously, these were tangible, observable things such as particulates, ozone precursors, photochemical smog, lead, mercury, etc. They were things that could be shown to cause harm to human beings and property in ways that were intuitive and readily understandable. You could point to them, or make jokes about them. People from Los Angeles still can, such as when they pretend to be uncomfortable in clean air because it’s “hard to trust air that you can’t see.”

Requiring utilities to buy wind and solar power, then passing that cost onto businesses and ratepayers is simply a hidden subsidy.

But environmentalists have taken the word “clean” and used it as camouflage to cover their efforts to control greenhouse gases, which are far different from conventional pollutants. Other than a few classes (such as particulates and ozone, which are already regulated under the Clean Air Act), the greenhouse gases are not “dirty” in any conventional sense of the term. They are not health hazards and they do not produce visible environmental degradation. Nor do they damage physical structures, as, say, acid rain might. And while the warming potential of greenhouse gases is well-established (though, I believe, overstated by alarmists), claims of future environmental degradation and risks to human health are highly speculative, based on computer models riddled with innumerable assumptions, many of dubious validity.

They are hidden technology standards. In previous conflicts over pollution control approaches, conservatives have often argued that government should set a standard for, say, vehicle tailpipe emissions, but then let the market determine how to meet that standard. That level of trust in the market is anathema to environmental regulators, however, who have historically perverted this idea by putting forward “emission standards” that could only be met by a particular technology. As an example, consider the ostensibly technology-neutral vehicle emission standards put into place in California. California’s Zero-Emission Vehicle Standard could only be achieved by a single existing technology (battery electric cars), with no other possible rival on the radar for years. This was not an accident, it was a de facto technology standard by the California Air Resources Board.

The same will happen with Clean Energy Standards, which will pretend to be technology neutral and embrace everything from nuclear power to “coal with carbon capture and storage,” but in reality will only give full credit to things like wind and solar power. There is already jockeying over what kind of “partial” credits might be given to nuclear power, hydro power, “clean coal,” and so forth. In current thinking, credit “multipliers” will favor wind and solar power over nuclear power, natural gas, clean-coal power, and others. In other words, while pretending that all forms of energy are up for discussion, some forms are pre-selected for preferential treatment.

Because the kinds of energy that qualify as ‘clean’ to environmentalists are more expensive than conventional energy, forcing them into the energy mix will inevitably raise energy prices.

They decrease consumer choice. Consider what would happen to your household food budget if the government imposed an “organic food standard” forcing you to consume 80 percent of your household calories as certified “organic” foods (80 percent is the environmentalist goal for a Clean Energy Standard). If you maintained your spending limit, you’d be getting less food and less choice for your money, because organic foods are more expensive and only some foods are produced organically. To get the same quantity and diversity of foods you had without the standard, you would have to pay more.

The same is true of a CES: energy use is hard to reduce, whether by consumers or businesses. Because of that constraint, a larger share of one’s budget will go toward paying for energy, leaving less for paying other bills, or making other buying decisions.

They are Trojan Horse politics. As for who's talking "bullshit," Al Gore has it wrong as usual: environmentalists and environmental agencies have stopped speaking honestly about their motivations (greenhouse gas controls). Instead, they are using poll-tested words to hide their real agenda behind terms that traditionally refer to something entirely different. They no longer speak about offering consumers a “choice” to voluntarily buy green energy and green products. Instead they favor forcing the choice by implementing “standards” such as those for lighting, which are de facto bans on incandescent bulbs. They no longer offer consumers the choice to buy clean energy (which was largely rejected by the public), they want to force people to buy pricey green power whether they want to or not.

Trojan Horse politics is the antithesis of good policy making. Environmental activists should say what they mean, and mean what they say. Then, they should accept the will of the public, expressed through democratic action and freely chosen purchasing decisions. The new stealth approach to energy policy being pushed under the guise of a Clean Energy Standard is frankly dishonest.

Kenneth P. Green is a resident scholar at the American Enterprise Institute.

FURTHER READING: Green writes “Rotten Wind in the State of Denmark,” “On Green Energy: Italy and the Eco-Mafia,” “Obama's Energy Blueprint: Same Silliness, Different Day,” and “Cap-and-Trade by Any Other Name …

Image by Rob Green | Bergman Group

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