NCPA - National Center for Policy Analysis

Environmental Harm of Renewable Energy Mandates

August 4, 2003

The renewable energy mandates in the bill passed by the U.S. Senate last week could cause environmental damage, says Jerry Taylor of the Cato Institute.

The Senate bill would require power companies to get 10 percent of their electricity from renewable fuels by 2020. Even with the cheapest renewable energy (excluding hydropower), this will be expensive:

  • The cheapest sources of renewable energy -- biomass (wood, plant fiber, and the like) and wind -- cost almost twice as much on average as gas or coal-fired electricity.
  • The Energy Information Administration projects about 80 percent of the renewable energy produced to comply with a 10 percent renewable energy mandate would come from biomass fed into existing coal plants.
  • Federal and state tax subsidies and preferences already, on average, reduce the cost of renewable energy about 50 percent -- but have been unable to close the gap.
  • The median finding of 22 separate studies concerning the environmental effect of biomass fuels is that they impose about 7 cents of environmental damage for every kilowatt of energy produced -- compared with about 4 cents per kilowatt for nuclear power -- and about the same as the environmental damage caused by natural gas-fired electricity, and only slightly less than that caused by coal-fired electricity (about 9 cents).
  • Accordingly, a renewable fuel mandate will worsen the environment because biomass co-fired with coal is clearly more environmentally problematic than is natural gas.

If the Senate were serious about promoting environmentally friendly energy technologies, says Taylor, it would simply impose a tax to reflect the unpriced environmental damages done by various fuels and let the marketplace work.

Source: Jerry Taylor (Cato Institute), "Not Cheap, Not Green," Washington Times, August 4, 2003; see also Thomas Sundqvist and Patrik Soderholm, "Valuing the Environmental Impacts of Electricity Generation: A critical survey, " Journal of Energy Literature, Vol. 8, No. 2.


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