NCPA - National Center for Policy Analysis

Getting Rid of Renewable Energy Mandate Would Benefit Consumers

February 2, 2015

The Buckeye Institute has a new report on the negative impact of its renewable energy mandate. While the report is specific to Ohio, the principles it articulates apply to any renewable energy policy.

In 2008, the state of Ohio mandated that electric utilities get 12.5 percent of their electricity supply from renewable sources by 2024, with half of that generation from companies in Ohio and 0.5 percent from solar power. It also required a 22 percent reduction in energy use by 2025.

In 2014, the state backtracked on its 2008 mandate, pushing deadlines back by two years and doing away with the requirement that electricity come from Ohio-based companies. This bill has been criticized by groups who contend Ohio's economy and renewable energy industry will be hurt by the bill.

Not so, says the Buckeye Institute:

  • The 2008 bill did nothing more than require Ohio residents to purchase unwanted, expensive electricity. Consumers did not benefit from the law -- renewable energy companies did.
  • Even if the 2014 bill cuts back on investment in the renewables sector, those funds will shift into more efficient industries that can grow and develop based on market principles, not government mandates. More investment in productive industry means more jobs and growth.  
  • If renewable energy companies move to other states, it's because other states are better suited to renewable energy production -- meaning lower costs for consumers who use renewable energy.
  • Getting rid of renewable energy standards will reduce costs for Ohio residents, because mandating the use of inefficient, renewable fuels sends electricity prices up. The report notes that this has the largest impact on poor households, who spend more of their income on electricity.
  • Businesses also pay electricity costs, so reducing their energy bills will free up money for new jobs and can allow them to lower prices.

Without government involvement, businesses are forced to compete based on the value of their products. Getting rid of the renewable energy mandate, says the Buckeye Institute, will allow the most efficient companies to thrive, creating value for Ohio consumers.

Source: "Why Ending the Renewable Energy Mandate Is Good for Ohio Families and the Economy," Buckeye Institute, January 29, 2015. 

 

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