It's time for a national renewable portfolio standard
The energy policy that kicks ass and gets too little support 17
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Posted 12:57 PM on 2 Aug 2007
by David Roberts -
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David Roberts is staff writer for Grist. You can follow his Twitter feed at twitter.com/david_h_roberts.
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Tod Posted 5:17 am
02 Aug 2007
Big Thanks
Could this be the first time I've actually thanked you outright, Dave?
You've put together one hell of a brief here, compelling enough that I am inclined to download the PDF. I can't promise I'll read it in one sitting, mind you but it looks as though the info is important enough that we should all be conversant with it.
I agree that, if the numbers can push higher (say 50% by 2030 minimum) this is an equal wedge to carbon taxes. At 20%, I'm not so convinced, but let's not get distracted by numbers at this stage.
My other concern is with the concern of consumer cost. Who cares? If we're really and truly going to pull this airplane out of its nosedive, it is going to HURT. Things will cost more. There will be 'regressive' taxes. The global economy way falter. SO WHAT. For naysayers to put economic concerns in front of environmental corrections merely steers the conversation into unproductive waters. Saving the world is going to be a very painful affair. We need to stop pretending that it won't be.
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Sean Casten Posted 5:29 am
02 Aug 2007
My usual rant...
It's not time.
RPS is a dumb path to a noble goal. Clean energy good. Lower fossil use good. But why stipulate that we must take a specific path as delineated in the technologies that happen to make the cut as "renewable?" Indeed, this is precisely why there is so much difference between the states. Connecticut calls fuel cells renewable because they have lots of fuel cell manufacturers. Maine calls all flavors of biomass renewable because they have lots of papermills. In Pennsylvannia, "waste coal" is renewable!
Is that bad? Not entirely. Indeed, a significant part of the objection from southern states - namely, that they would be net importers of power - is legit on that count. If they had their own, state-specific standard they might tailor it to the resources they have rather than buy wind power from the Dakotas. (And make no mistake, there is a wealth transfer inherent in an RPS based on wind + solar.)
But I am not suggesting that we simply punt to the states. Rather, the differences between the states point out the central problem with an RPS that defines success by the path rather than the goal - and so long as we pursue this course, we are going to (a) create political constituencies to get on the official renewable list, independent of cleanliness and (b) perpetuate a fight between winners and losers.
My prediction is that this RPS will not pass, nor will one like it for the simple reason that if more than 26 states are net purchasers of power, you won't get through the Senate. And wind+solar doesn't get you 26 votes. But look what you could do: If you instead said that anyone who produces a kWh without increasing carbon emissions gets a credit, you open the floodgates. Suddenly, Louisiana can look at all the waste heat coming off their industrial base which could be converted into power and find themselves exporting RECs. The lumbermills throughout the SE could recover their sawdust to make power. Every state that uses natural gas could recover waste heat off their pipeline compressor stations to make power. And of course, tons of technologies that no one's thought of. Presto, you're through the senate. Presto, we're no longer quibbling about whether all those presently-non-monetized-benefits are sufficient to offset costs. Presto, we're not depending on costs of solar falling fast enough to stay under the "circuit breaker" (most RPS's are supply constrained).
Bottom line - clean energy is good, but an RPS is simply a place to waste political energy that would be better focused on deploying clean energy.
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Sean Casten Posted 5:36 am
02 Aug 2007
Tod
You're right that at some point we have to pay the cost, but I don't think you've framed it right. The question is not whether or not an RPS creates benefits (reduced gas clearing prices, etc.) The question is whether or not it is the most cost-effective way to achieve those benefits. If I can save a dollar a year with a $2 investment and can also save a dollar a year with a 50 cent investment, there is no good reason to make the $2 investment so long as I've still got 50 cent opportunities. If we think of our returns being less carbon instead of dollars per se, then we can reframe this simple example in the context of limited wallets to say categorically that an RPS that compels me to make those $2 investments is implicitly a decision NOT to reduce the maximum amount of carbon. (Since my money runs out quicker on $2 investments.)
This is the crux of the problem with path-based RPS rules. If we reward anyone who gets to that goal, businesses will preferentially deploy the most cost-effective investments towards that goal. (And if we don't like what they invest in, then it is because we haven't properly articulated the goal, so lets' think carefully about the goal.) By contrast, if we simply reward anyone who invests in a particular path towards that goal, we virtually ensure that we haven't invested in the lowest-cost path, since we can't possibly think through every possibility before we pass the law.
So yes, at some point we may have to accept economic pain in return for environmental gain. But that doesn't mean that all economic pain is de facto beneficial, or that the particular pain we've taken on is even the best way to get the gain.
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Gar Lipow Posted 5:55 am
02 Aug 2007
RPS
This shows why it is sometimes important to pick winners. We have clean energy technology,but we need to deploy it. If just encourage a least cost approach then we don't develop and sun and wind sufficiently, and when the time comes to move to 100% renewable the technology will be more expensive than if we encourage development now. And note an RPS does not pick specific winners. It just specifies that 20% of power must be renewable within a certain length of time. The utility is free to choose sun, wind, geothermal, wave or whatever - or provide incentives for customers to install generators on their roof or in their backyard.
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Sean Casten Posted 6:56 am
02 Aug 2007
No, it's not
Gar - this is most definitely an exercise in picking winners, because the definition of renewable energy is stipulated in the bill. It therefore omits (a) energy sources that are comparably clean/renewable, but didn't happen to be included in the list and (b) technologies that are developed subsequent to the bills introduction but weren't included in the list of winners.
I will confess a personal bias towards waste heat recovery and use it as an example, but please note that the example is illustrative of a broader problem. We are aware of over 50,000 MW of power that could be presently generated from waste heat at US industrials. For comparison, we have about 100,000 MW of nuclear energy, but this stuff doesn't have the waste disposal problems and is a lot cheaper - and doesn't require any additional carbon release. It's not in the RPS. Meaning that if the RPS passes, we will preferentially direct scarce capital towards more expensive clean technologies that are included, and therefore reduce less overall carbon.
OK, you might say - so let's add that into the definition. But that only puts off one problem for another. I know about this technology, but others know of others. Pressure reduction stations on gas pipelines dissipate prodigious amounts of energy that could be recovered. Tidal energy systems might come on line. Or for harder issues, how do we feel about technologies that reduce carbon, but increase emissions of other species, like a biomass facility burning construction and demolition waste. Dirtier than a solar panel, but cleaner than coal. Should it be partially incentivized? Maybe - and a thoughtful policy would do so. An RPS does none of the above. It simply says "incentivize technologies X, Y, and Z".
Please note that I am not in any way suggesting that we do not incentivize clean technology, nor that we sit on our hands and wait. What I am suggesting is write this as a goal (say, 2 cents per clean kWh, with clean defined as 0 carbon/kWh) and then let markets chase.
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Sean Casten Posted 7:03 am
02 Aug 2007
One other point
What's not widely appreciated is that an RPS with a "circuit breaker" (e.g., "if you can't meet your % target at X c/kWh or less, you can simply pay the difference to an R&D fund that will use it to accelerate the development of green technologies") doesn't necessarily accelerate the deployment of clean energy. Moreover, ever RPS that I'm aware of has a circuit breaker AND defined renewable so narrowly to be always supply-constrained.
Thus, in Massachusetts, a renewable energy credit has been worth $50/MWH for a long time - not because this is the inherent value of renewable energy, but because that's where the circuit breaker is, and we can't deploy enough renewable - as so defined. OK, but that's OK because we accelerate the R&D, right? Not quite - because you now create a huge political constituency to ensure that those R&D dollars keeps flowing, which is in direct conflict with the desire to deploy more clean energy. And so the net result of the RPS structure is to compromise the deployment of clean energy.
I apologize for the length and rambling details, but hope you can appreciate the underlying frustration. The fact that we need more renewables - which is indisputable - does not ergo mean that we need an RPS, at least as they have been formulated.
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ChrisCooper Posted 7:25 am
02 Aug 2007
Casten's Confusion
First, thank you Dave for the accolades on our report. Believe me...we ran into the same "friggin hard" problem of boiling these issues down to a report that anyone would have the time to read (we could have written 1500 pages!).
Second, Sean Casten...you should follow Dave's advice and READ THE REPORT. Every single one of your objections is answered in detail.
YES, implementing an RPS stupidly results in a stupid RPS. That's why Dr. Sovacool and I spend an entire chapter discussing how the lessons learned from the states show us how to design a proper federal RPS statute.
In any event, the short and sweet answers to your rant are:
- States are already choosing winners. Most state RPS mandates list eligible technologies. So whatever damage that "choosing winners" causes is already being done.
- A federal statute can actually SOLVE this problem by adopting a fuel-based, not a technology-based definition of renewable energy. The statute shouldn't determine the winners. The market should (and can).
- The "fine" for non-compliance is that regulated utilities would have to buy renewable credits from suppliers developing renewable resources where they are most cost-competitive. By creating a national REC trading market, utilities actually SAVE money ($14 billion, actually) over complying with conflicting state mandates with their own set of irrational non-compliance mechanisms.
If you care about these issues as much as your passion here indicates, then READ THE REPORT. You might just find you're a closet RPS advocate. ;)Permalink
Sean Casten Posted 7:50 am
02 Aug 2007
Thanks, Chris
You're right. 150 pages is a lot - and my comments are broadly about RPS rather than about your specific report. But I don't think we're actually in substantial disagreement. If you'll humor me to only respond to your short and sweet summary:
- I think we're in agreement on this one. Unless you're arguing that "the states got it wrong, so it's OK if the feds get it wrong too" (which I don't think you are), then we are simply in agreement that we shouldn't repeat the states' mistakes at the federal level. To which - if I'm not putting words in your mouth - I completely agree.
- I think that may still be too narrow, since we have simply shifted the problem from picking technologies to picking fuels. Our goal ought not be "more solar" any more than it ought to be "more coal". Our goal ought be lower carbon power. (I will concede that most RPS constraints factor in more than carbon, from SOx/NOx impacts to issues of closed-loop biomass accounting. However, my experience is that once you frame it as a goal, smart, well intentioned people can generally agree on an acceptable definition, and usually agree that carbon trumps.) But stipulating fuel does not necessarily ensure that we maximally reduce carbon, since it could exclude fuels that weren't contemplated in the standard. MSW? Waste heat? Biomass? How about a cogen facility that only reduces 50% as much carbon as a solar panel, but does so for 1/10th of the cost? Should we choose to deploy finite resources to reduce less carbon simply because the solar panel has larger per kWh impacts? Each of these options, to greater or lesser degrees leads to a reduction in carbon emissions and ought be rewarded for doing so. Stipulating that the only acceptable fuels are wind, solar, geothermal - or even including the above on the list - only ensures that we're still forgetting to add something good. What am I missing?
- I may be misunderstanding this last point, but how does that work if the market is supply constrained? If we mandate 20% renewables, but the market only brings 15% on line, what happens to the price, and who pays?
I'm still not sure I'm a closet RPS advocate. I am an advocate of getting carbon pricing right so the market can respond, but the central and critical test of any carbon policy has to be that it treats all tons of carbon in the same way. The problem with an RPS (and, indeed much cap & trade) is that they start by constraining participation and therefore do not treat all carbon reductions equivalently, causing goofy, and inefficient economic outcomes. If you can convince me that there is any way to structure a path-based RPS to treat all tons equivalently, I will come out of my proverbial closet though...Permalink
profgoose Posted 8:43 am
02 Aug 2007
just fyi, the RPS (HR 969) is...
...now an amendment to HR 3221:
http://www.theoildrum.com/node/2840
This means it will go through the standard amendment process...not sure what that means re: the likelihood of passage.
profgoose, The Oil Drum
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JMG Posted 9:50 am
02 Aug 2007
Interesting
Where would this fit in?
http://www.scientificblogging.com/news/experimental_gas_t ...
Save the world: Reduce greenhouse gas emissions 5% annually.
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Tod Posted 10:41 am
02 Aug 2007
Also . . .
Would it not be maximally effective to mandate consumption reduction goals in ANY related legislation? That is, simply switching power sources and/or finding cheaper power is fine, but the FASTEST and most effective way to reach an 80% reduction by 2030 is to REDUCE consumption. It would be folly to not mandate usage reductions in any and all energy-related legislation.
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Gar Lipow Posted 11:48 am
02 Aug 2007
RPS not intended as sole policy
The idea of an RPS is not that it be the sole policy. It is a policy to encourage renewable sources. Although efficiency increase can actually supply greater emissions reductions than source substitution, the greatest emissions reductions will come from combining both - using renewable electricity urgently as David say.
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David Roberts Posted 3:44 pm
02 Aug 2007
Sean,
It's late at night in Chicago (see you soon!), so I can't add much, but I would urge you, in Chris's words, to READ ... ahem ... read the report. I think you'll find quite a bit of thought went in to addressing your objections, and many others like them.
Two points I'd like to emphasize:
- The question is not RPS vs. no RPS, but national RPS vs. existing patchwork of state RPSs. Your objections apply in spades to many of the state RPSs, so unless you think it's likely that they'll all be repealed, you might think of a national RPS, even if not optimal, as an improvement over the present state of affairs.
- An RPS is but one policy. It's not meant to be the only one.
Anyway, have a look at the report. It's good reading.grist.org
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JMG Posted 4:29 pm
02 Aug 2007
Ok, devil's advocate here
Where is the evidence that federal environmental standards like an RPS won't simply LIMIT the more aggressive states?
Save the world: Reduce greenhouse gas emissions 5% annually.
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ChrisCooper Posted 12:49 am
03 Aug 2007
RPS - Call in the Feds
JMG - Limiting states that want to go beyond the federal RPS mandate is, of course, a concern. But it is easily addressed with a "Savings clause" that makes the federal mandate a floor, not a ceiling.
Sean - I think you are getting lost in the assumption that a path-based RPS is intended as solely (or even substantially) a carbon-reduction mechanism. Frankly, I don't even think that is the main purpose of an RPS. It's a side-benefit. But, obviously, lawmakers would need to pursue other, more direct (and aggressive) emissions reductions efforts. In my view, the primary purpose of an RPS is to provide a larger, more predictable pool of investment capital for emerging technologies and to help diversify the nation's electricity fuels. Carbon is secondary.
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ChrisCooper Posted 12:54 am
03 Aug 2007
RPS Likelihood
Just an FYI - I give the likelihood of passage of HR 969 no more than a 10% chance. As it is, it's not a particularly good FORM of federal RPS as it duplicates some of the fatal flaws in state-based RPS that we outline in the NNEC report. But, more importantly, I'm not sure the Democrats want to take this issue off the table prior to the 2008 elections. So, I'd expect a lot of talk, but little action before the next congress.
HOWEVER, should the '08 elections go swimmingly for the Democrats...I would expect rapid movement on a federal RPS early in 2009. (That's my reading of the tea leaves...and probably just as accurate...). :-)
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Sean Casten Posted 7:16 am
03 Aug 2007
Chris - RPS goals
Chris,
I don't disagree that the RPS has been wrapped up in lots of other issues like job creation, tech development, etc., and in this sense I agree with you that they are not just about carbon.
But one must step back from this and ask why we are choosing to go this path. They are not about fuel diversity per se (since fuel diversity could be interpreted to mean coal-derived liquids). They are also not about job creation per se, since lots of other things do that. They have been held up (and in this respect, quite successful) as means to grow nascent renewables industry manufacturers and jobs - but this must be understood in terms of the benefits. Creating jobs at thin film solar manufacturers is only socially beneficial if we believe that the world would be better if we had more thin film solar. This is why I say that ultimately, carbon trumps. Yes, they are not explicitly written as being driven by carbon, but as a practical matter, they are designed to encourage carbon reduction. And it is on precisely this measure where they become politically inefficient, because this goal ought to be directly rewarded. Otherwise, it's just winner picking.
FYI: late breaking news from the House today is that they couldn't get the votes at 20% so they dropped to 15%. Couldn't get the votes there so they added energy efficiency to the mix. Appears to be close now, but they're closing up shop for the day. Will see what happens over the weekend.
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