High-Voltage Debate Over Renewable Electricity Mandate

The U.S. Congress is getting closer to passing a renewable electricity mandate, which could mean dramatic growth for the biomass industry. Ironically, the Southeastern states-the region most likely to benefit from the development of the biomass industry-are resisting such a mandate.
By Anduin Kirkbride McElroy
Illinois and North Carolina recently enacted renewable electricity standards, which mandate that a certain percentage of the state's electricity must come from renewable sources. With those additions, 25 states and the District of Columbia have passed some form of this policy, most commonly referred to as a renewable portfolio standard (RPS).

With this kind of support, one would think that a federal RPS would be just around the corner. And indeed, it has been-since 2001. The Senate has passed a version of an RPS in three different Congresses, but each time it was struck down by House Republicans, according to Leon Lowery, professional staff for the Senate Committee on Energy and Natural Resources. Now that the Democrats are in control of Congress, an RPS might be closer to reality.

This summer, both houses of Congress passed major bills meant to promote efficiency and wean the country from fossil fuels. Though the Senate bill didn't include an RPS, the House did approve a measure that would require 15 percent renewable energy by 2020. This is the first time the House has ever passed an RPS.

If an RPS becomes law, the biomass industry could see significant growth, as it follows in the footsteps of other renewable mandates. The policy can be compared with the renewable fuel standard (RFS) passed by Congress in the 2005 Energy Bill. The RFS mandated that an increasing percentage of the motor fuel pool must be renewable fuel. This mandate spurred incredible growth in the ethanol and biodiesel industries by guaranteeing a market for the product. Many Washington policy experts agree that a national RPS has the potential to do the same thing for various renewable industries, including biomass. "According to the [Energy Information Administration (EIA)], our portfolio standard would result in a 50 percent increase in wind generation and a 300 percent increase in biomass generation," Lowery says. "There's already twice as much biomass generation in the country as there is wind generation."

The Union for Concerned Scientists (UCS) is an avid supporter of the RPS. "I think [the biomass industry is] going to enjoy the benefits of a new and unexplored market that's going to develop as a result of this legislation," says Marchant Wentworth, legislative representative for clean energy for the UCS. "Whether it would achieve the stratospheric growth of the ethanol industry, it's hard to say. But it would furnish a stable, long-term market, and that's the point of the legislation."

The legislation would spur various renewable industries within regional markets, according to George Sterzinger, executive director of the Renewable Energy Policy Project, a renewable energy policy think tank. "If it passed, I think people feel that, in terms of biomass, the impact will open potential markets, especially in the Southeast where biomass is the greatest potential resource," he says. "In the Southwest it's solar, in the West it's wind and the Southeast it's biomass."

An RPS also has the potential to save electric consumers money. A 2005 EIA study determined that the price of natural gas would go down with a 10 percent RPS. "Think about it, you just reduced the demand for natural gas by substituting something else for generation," Lowery says. He cited a 2005 study by Ryan Weiser of the Lawrence Berkeley Lab, where 15 separate modeling exercises of different portfolio standards each came to the same conclusion that the price of natural gas goes down. A UCS study on a 20 percent RPS confirmed these findings, Wentworth says. "During the life of the program, we compute that it would save $49 billion, although less under a 15 percent RPS," he says.

Not only would an RPS save money, but it would also generate jobs. "When you create a requirement/standard for renewable energy, you generate jobs," Wentworth says. "In the case of biomass, it would be the jobs building the equipment to handle the biomass to sell it to market. All of this is about furnishing a reliable, long-term market for renewable energy."

It's All Politics
Even though political support for all-things "green" is at an all-time high, the RPS has trailed behind other such policies. "Many elected officials who supported the RFS object to the RPS," Wentworth observes. "There is an essential contradiction. Why do you support the mandate in one area and oppose the mandate in another?" Wentworth credits this contradiction to the big political powerhouses on Capitol Hill, and Lowry agrees. "There's real strong opposition on the part of a lot of electric utilities to having a requirement," he says. "There's real strong support from a lot of farmers for having a fuel requirement. The politics are different, that's all. Both are mandates."

This opposition is a reason previous Congresses haven't passed the measure. Some argue an RPS would favor regions of the country that have more abundant renewable resources. This argument comes primarily from the Southeastern states. Sterzinger says there is some validity to the claim. "It's extremely likely that a national RPS would have a provision to allow trading," he says. "Hypothetically, the example that everyone throws out is that a state like North Dakota with enormous wind resources would develop in excess of their requirements. The electricity wouldn't necessarily go to the South, but they could sell over-compliance credits to someone who needs them."

"The biggest political opposition and the loudest arguments come from southerners who claim that they don't have any renewables-that the portfolio standard is all about wind," Lowery says. "They say there aren't good resources in the Southeast and it would cost to transport the electricity. The truth is, according to the EIA, the big winner from the portfolio standard is biomass. The report says that wind would increase by 50 percent and biomass would increase by 300 percent. When you understand that there's twice as much biomass as there is wind, you do the arithmetic: there is four times as much biomass generation as wind. There's enormous biomass potential in the Southeast."

The Southern Alliance for Clean Energy (SACE) has found that the Southeast, as a region, can meet a 20 percent RPS, according to John Bonitz, who does farm outreach and policy advocacy for the SACE. "Tennessee, North Carolina and Georgia are rich in biomass. North Carolina and South Carolina have considerable off-shore wind resources. Florida has excellent solar power resources and possibly wind. And all of the Southeast can do tremendous amounts with energy efficiency." Arguments that an RPS is inequitable are flawed, according to Jennifer Rennicks, federal coordinator for the SACE. "Renewable energy is more equitably distributed than fossil fuel energy," she says. "That is such a crucial point in this debate. Every state has renewable energy potential. Some states could meet well more than 20 percent simply from one source. Why we are so in favor of an RPS is because it levels the playing field."

Nevertheless, Sterzinger says it's important to ensure that the RPS is written so it benefits all regions of the country and doesn't end up being a drain on certain parts of the country to the benefit of others. Additionally, he says it's important that the policy support the manufacturing industries that supply the parts and technology for the renewable projects. Finally, he says a good RPS policy must also include the ability to stabilize carbon emissions. Good policy, however, is just part of the answer. The regional playing field can only be leveled if the biomass industry can develop to meet the demand. If an RPS is enacted, it will be important for the biomass industry to quickly develop so it can compete with other renewables. Depending on how aggressively biomass energy technology is developed, Sterzinger says the biomass industry can prevent regional disparity with an RPS. "The trick would be if it were cheaper to buy credits than to buy local biomass power in the South," he says. "If biomass could get to where a kilowatt is under 5 cents, and the price of new generation is 4.5 cents, that would be a good scenario for the biomass market. That would leave only one-half a cent for the extra credit, which would probably not support development in other regions."

Unfortunately, Sterzinger says the biomass industry is far behind the wind and solar industries that have seen great technological advances. "There's been work on the feedstock side, but generation technology, there really hasn't been any change, he says. "That's the great challenge going forward for the industry, to get out of the 1940s generation technology to much more advanced generation and conversion techniques."

Though rationale seems sound and political support is probably the strongest it's ever been, it will be an uphill journey to get an RPS enacted this year. There are a lot of difficult procedural steps to take to get an Energy Bill in front of the president, who has threatened a veto. The first challenge is to get the same numbered bill to the conference committee. The House and Senate have introduced separate pieces of legislation. The House originally passed H.R. 6 in January as a placeholder bill. In June, the Senate passed its version of the bill, which included new corporate average fuel economy (CAFE) standards. The bill requires automakers to hike fuel efficiency by 40 percent to a combined fleet average of 35 miles per gallon by 2020. It did not include an RPS.

In August, the House passed another Energy Bill-H.R. 3221-that includes a 15 percent RPS. "Our position, along with the rest of environmental community, is to take the best of both bills-include the CAFE and the renewable electricity standard," Wentworth says. "That's the simple version of where we're going."

But before those discussions can take place in conference committee, the bills must be the same number. This brings it back up for discussion and opens the opportunity for a filibuster. "If someone wanted to prevent it from moving forward, there are a lot of hurdles that they would make us go over," Lowery says. Although he doesn't know when the procedural jumps will begin, he says the committee staff members are working on it. If the bill makes it to conference committee, Lowery thinks there's a high likelihood that an RPS will be included. "It's an extremely high priority for [U.S. Sen. Jeff Bingaman, D-N.M.]," he says of the committee chair. Additionally, support for the measure is strong in both houses, he says. In the House, the vote was 220-190 in favor of an RPS. On the Senate side, he says the measure would have had 60 votes if it had come up for a vote. This support may bring the bill, with the RPS, forward yet this fall.

Anduin Kirkbride McElroy is a Biomass Magazine staff writer. Reach her at amcelroy@bbibiofuels.com or (701) 746-8385.