NCPA - National Center for Policy Analysis

Reject All Energy Mandates: It's Just another Subsidy

December 15, 2010

With cap and trade out of the realm of possibilities, Congress has turned its attention to mandating so-called clean energy, says Nicholas Loris, a research associate at the Heritage Foundation's Roe Institute for Economic Policy Studies.

  • Some members hoped for a lame duck vote on a renewable electricity standard (RES), which would require that a certain percentage of our nation's electricity production come from wind, solar, biomass and other government-picked renewable energies.
  • With that looking less likely, Department of Energy Secretary Steven Chu mentioned a clean energy standard that includes other carbon-free sources of energy as a possible compromise between Democrats and Republicans next year.

Chu proposes a mandate for utilities to use 25 percent clean energy by 2025 and 50 percent by 2050.  While a more flexible clean energy standard is less onerous than a specified renewable one, it's still a subsidy that carves out a guaranteed share of the market for certain energy industries.

The mandate may reward certain energy producers in the short term but will hurt both producers and consumers in the long run because it eliminates competition, drives prices higher and encourages government dependence, says Loris.

Furthermore, a clean energy standard wouldn't significantly reduce emissions.

  • The Energy Information Administration estimates that mandating that 25 percent of our energy come from renewables would reduce emissions by only 4.9 percent by 2030.
  • To put this in perspective, the cap-and-trade target was to reduce carbon 80 percent by 2050.
  • To put that number in perspective, climatologist Paul C. Knappenberger says that an 80 percent reduction would moderate temperatures by only hundredths of a degree in 2050 and no more than two-tenths of a degree by the end of the century.

Source: Nicolas Loris, "Reject All Energy Mandates: It's Just another Subsidy," Heritage Foundation, December 7, 2010.

For text:

http://blog.heritage.org/?p=47861

 

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