Last December, I wrote about Gus Mayer, my loyal bagel (half beagle, half basset), and his carbon footprint as described in the book, Time to Eat the Dog? A Guide to Sustainable Living. A year later, Gus Mayer and I are again sitting here talking about the day’s issues.
Gus Mayer is a fine companion and a patient listener. Today, I was lecturing him on the elections and the changes that are likely – in particular, climate change and renewable energy standards (RES). He was more interested in what we would have for lunch, but was still concerned that climate change will result in him being eaten, or possibly more disturbing, a change in his diet.
With an overwhelming Republican victory in the U.S. House, conventional wisdom dictates that cap and trade legislation to tax and limit carbon dioxide emissions will not pass for at least two years. However, with the change of power in Congress, progressives (they don’t like to be called liberals) have shifted their focus and plan to use EPA regulation and RES to increase the price of energy. Their goals remain the same: increase the price of energy, reduce energy usage and thereby reduce carbon dioxide emissions. The results will be the same as well: increase electricity costs and lose millions of U.S. jobs.
Renewable energy is popular among Americans, and the progressives give great weight to that support. But that support is limited. The same polls that show support for a national RES also show that 57 percent of Americans are opposed to paying even 5 percent more for electricity from renewable resources. That limitation in support is where the progressives’ plans meet hard economic fact.
The Energy Information Administration (EIA) says that renewable energy costs at least twice as much as traditional fossil-fired generation. For example, EIA estimates the cost per megawatt hour from conventional coal resources is $78.10, but the cost of onshore wind is $149.30; the cost of off-shore wind is $191.10; the cost of thermal solar is $256.60; and the cost of solar photovoltaic is $396.10. All those costs are without the benefit of federal and state government subsidies, but coal and natural gas generation receive no subsidies, either. Additionally, natural gas generation will be equal to or cheaper than the EIA’s quote on conventional coal if natural gas costs remain in the $4 per MBTU range.
If the federal government mandates that 22 percent of electricity come from renewable resources, energy costs will increase substantially. A Heritage Foundation analysis predicted household electricity prices would increase 36 percent, industrial electricity prices would increase 60 percent, national gross domestic product would decline $5.2 trillion between 2012 and 2035, and the U.S. would lose more than 1,000,000 jobs.
If renewable energy was cost-competitive, there would be no need for a RES mandate. As the most critical input to our economy, forcing higher electricity costs will increase the cost of production. However, as opposed to a normal tax, the government will obtain no revenue from that increase. The costs go up and only the renewable energy providers – electric utilities – will benefit. In the end, our economy will suffer when industrial production is shifted off-shore where renewable mandates are not in force. We will gain nothing from the shift, and the progressives’ efforts to save the world will again be in vain.
After a while, Gus Mayer lost interest and went to sleep in the sun, dreaming of juicy cheeseburgers. When I woke him up, he wanted to know if there will be a requirement that a minimum amount of food come from the magic windows at fast food restaurants. They are his favorites, and he would hate for renewable mandates to put them out of business.
