2 March 2012

Clean energy standard wakes up U.S. energy policy

For too long, the United States has lacked a clear, national energy policy. A step in that direction was taken on Thursday as Senator Jeff Bingaman proposed the Clean Energy Standard Act of 2012. The act would create certainty for investments, diversify the U.S. power mix and yield meaningful carbon emissions reductions, writes WRI Insights.

© Songquan Deng

The Clean Energy Standard Act of 2012 (CESA) is the first legislative proposal in this Congress aimed at creating a path toward a comprehensive national climate and energy policy.

The bill is similar to, but more stringent than, other “clean” or “diverse” energy standards floated separately in the last Congress. It also aligns with the national energy policy “all of the above”  proposed more recently by President Barak Obama.

CESA would require electric utilities to supply up to 84 percent of their electricity sales from qualifying energy resources by 2035. In addition, it would be revenue-neutral to the federal budget.

Consistent with prior clean energy standard (CES) bills, electricity generated by all fuel types could be eligible to earn credits under CESA, including wind, solar, nuclear, and natural gas, as well as coal that uses carbon capture and storage technology.

In the bill, crediting is based on greenhouse gas emissions intensity: zero-carbon generators would receive full credit, while low-carbon generators would receive partial credit based on how carbon intensive they are compared to today’s most efficient coal-fired power plants.

“I don’t entertain the illusion that the proposal will sweep through Congress and get signed into law this year, but it’s an important discussion to have,” noted Senator Jeff Bingaman, a Democrat from New Mexico and Chair of Senate Committee on Energy and Natural Resources.

"And we expect that there will be a lively debate on the details of this proposal. While time will tell if this bill gains traction, it’s already clear that the Clean Energy Standard Act of 2012 provides a useful vehicle to resume this important policy discussion."

'Strong standard would be a very good start'

Several modeling studies conducted by government and independent researchers have explored how a potential CES would impact the U.S. electricity resource mix, greenhouse gas emissions, and consumer electricity rates. However, at the request of Senator Bingaman, the EIA published detailed analyses of several variations on this bill and found that a CES policy would create a more diverse, less carbon-intensive U.S. electricity mix.

For example, EIA estimates that a CES would result in a five-fold increase in U.S. wind power production, more than double what would be achieved without this policy in place. Importantly, modeling studies consistently find that an 80 percent CES by 2035 would deliver meaningful greenhouse gas emissions reductions.

For example, the EIA estimates that power sector carbon dioxide emissions in 2035 would be 43 percent lower than without a CES; that’s a 20 percent absolute reduction relative to 2008 levels.

“We’ll have to wait a few weeks for the independent Energy Information Administration (EIA) to model CESA specifically,” say James Bradbury, Senior Associate in WRI’s Climate and Energy Program, and Kevin Kennedy, Director, U.S. Climate Initiative, WRI in their article.

As the Committee began to consider this legislation last year, WRI weighed in about how to build a ‘good’ CES program. In the coming days, WRI will publish a detailed summary of CESA, plus estimates of the economy-wide emissions that this proposal could achieve if enacted into law.

"We recognize that much more is needed to rein in U.S. greenhouse gas emissions across all sectors of the U.S. economy. But evidence to date suggests that a strong CES would be a very good start," the authors say.

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