Energy Bill: RPS And The Coal Problem
One of the more interesting proposals for the national energy legislation Congress is considering is called a Renewable Portfolio Standard (RPS). The basic idea is that electric utilities would be required to purchase or obtain some fixed amount – New Mexico’s Senator Bingaman has proposed 15 percent by 2020 — of their electric energy from “renewable resources,” such as solar, wind, geothermal and biomass. Currently, we get only about 2 percent from renewables, if you exclude power from hydroelectric plants built decades ago.
More renewable energy sounds like a good thing, and over 20 states have adopted some version of an RPS for their own utilities. Some states (e.g., Massachusetts) combine the RPS with a renewable credit trading program, so that areas with more renewable resources can sell credits to areas that have less. The trading helps efficiently allocate costs between areas, so that we get a lower total cost for the overall RPS goal. So far, however, Senator Bingaman has been dissuaded by the threat of a filibuster on his national RPS proposal, so it’s not yet in the Senate energy bill. But more important, the national discussion of RPS’ merits and other measures aren’t grappling with the underlying problem that alternative electricity generation needs to solve.
Some 30 years ago, California (like a few other states) began pushing for renewable energy sources as a response to California’s excessive reliance on oil. At that time, California’s utilities relied heavily on very old, very dirty, and very inefficient oil-fired plants, in addition to some nuclear, some out-of-state coal and lots of hydro in rainy years. We pushed money into R&D, tax credits and other subsidies for renewables as hard as we could, and California made some progress in getting renewable energy power plants into California’s energy mix. There are literally thousands of wind generators in California’s hills today, a few (mostly experimental) solar thermal plants, more solar photovoltaic appllications, lots of geothermal (much of it developed by a utility, PG&E, before we pushed for more). And we made a sustained effort to improve efficiency to reduce the growth in electricity demand from an expected 7 percent per year to less than 2 percent — a huge success. But after all that effort, some of which slowed when Republicans were California’s governors, non-hydro renewables still account for less than a few percent of California’s energy mix. Now they’re committed to do more.
California is not like the rest of the country. While it has lots of potential for renewable development, many areas of the country don’t have the wind or geothermal resources California does. There’s lots of wind in some regions; less in others. And the fuel mix in others states is very different from California’s. We got some of our power from out-of-state coal plants, but because coal is dirty, and California was focused on air emissions, there were essentially no coal plants in California; we simply didn’t rely on coal nearly as much as other states in the West, South, Midwest and East. And that’s the problem when we think about a national renewable energy policy.
If you want to use a renewable energy strategy to reduce reliance on oil, foreign or otherwise, it’s a bad fit, because most regions of the country do not rely on oil for much of their electric generation. The country relies heavily on coal, some nuclear, and increasing amounts of natural gas as a power plant fuel. While the newest gas-fired plants are efficient and run more often, older natural gas plants tend to operate on the margin: they are often the last plants dispatched (instructed to produce energy) and thus the first plants displaced when new alternative energy plants come on line.
This means that when renewable plants like wind or solar operate, they tend to displace energy from gas-fired plants, rather than coal plants. The coal plants are cheap to operate, so they’re dispatched essentially 24/7, except when down for maintenance. Nukes are operated the same way. While there are some newer gas plants that also operate “base-load,” they’re basically just keeping up with growing consumer demand, and there aren’t enough of them to displace the existing coal plants. Yet the coal plants are the ones that produce, by far, the most emissions that harm the environment, public health and global climate change.
If we want to tackle these problems, we need to be thinking about what it would take to displace tens/hundreds of thousands of megawatts of existing coal plants, or find some way to clean them up. The costs will be enormous, including the social and economic impact on those who earn their living from coal and the effect on their communities. We have a massive, multifaceted industrial policy problem to solve.
Replacing subsidies and tax breaks for the oil industry with subsidies and tax breaks for renewables is worth doing on its own, just to restore some balance, and that’s what the Senate was up to yesterday. But nothing being contemplated so far — about $10 billion in tax breaks for renewables, plus susidized financing — comes even remotely close to the scale needed. And renewables can’t do the job alone.
To replace and/or clean up hundreds of existing coal plants, we’re going to need generation technologies we don’t yet have (or accept ones we may not like, e.g., nuclear) and/or pollution controls that are not yet proven, before we can make a sizable dent in the problems created by our huge reliance on conventional coal-based technologies. While some tax breaks in the Senate bill would go to “clean-coal” efforts, the Senate showed it’s skepticism yesterday by voting down proposals for tax breaks for coal-based liquid fuels for the transportation sector. We’re not sure about “clean coal” techniques, we don’t know how well carbon sequestration will work and we still haven’t solved the nuclear fuel disposal problem.
The Senate previously defeated efforts to define “clean-coal technologies” or nuclear plants as “renewables,” an effort to allow them to tap into the renewables tax subsidies and qualify under the RPS goals. That keeps the RPS mechanism focused on what its advocates view as genuine “renewable” resources, but it also creates opponents in regions heavily reliant on coal and upsets the pro-nuclear group. But of course, new “clean coal plants” (still unproven) and new nuclear plants actually do displace the older coal plants that are the underlying problem.
All this means that Congress is not yet facing the magnitude of the coal problem that needs to be addressed. An RPS approach may be worthwhile on its own, and stronger financial support for renewable development is overdue. Efforts to improve energy efficiency are even better and should, in my view, be given the highest priority for now. But we’re going to need much more than these approaches before we’re done. This is a really hard problem.
Update, 3:30 p.m. EDT: The Senate voted to include a weaker RPS in the Energy Bill. The approved version sets the goal at 10 percent, rather than 15 percent, and exempts Federal Power Marketing Agencies, such at TVA and Bonneville Power Administration from its coverage.
(Photo via an archival shot from the Charleston Daily Mail via the West Virginia State Archives, Circa 1940s.)