Christopher Martin on Efforts to Roll Back State RPS Laws

A recent Bloomberg article by Christopher Martin points out that a majority of states that currently have Renewable Portfolio Standards (16 of 29 states) are considering legislation to weaken or repeal these standards.  The efforts are being spearheaded by the American Legislative Exchange Council (ALEC), which believes that 2013 will “be the most active year ever in terms of efforts to repeal” state renewable portfolio standards.  The push is being driven by conservative groups and lawmakers who seek to lower the cost of electricity (ignoring externalities such as public health and climate-related damages).  Energy producers and utilities, including Duke Energy, Pacific Gas and Electric, ExxonMobil, and Peabody Energy Corp, have provided funding to groups pushing for RPS repeal.

A renewable portfolio standard is a requirement that utilities procure at least a certain percentage of their power from renewable sources.  Renewable portfolio standards are unusual among policy tools in that they are largely unaffected by technology prices, fuel prices, or economic swings.  Thus, they provide a level of long-term certainty for utilities and energy project developers that is not provided by subsidies, a carbon tax, or other economic tools.  That, of course, assumes the RPS isn’t unexpectedly altered or repealed!

The ongoing push against renewable portfolio standards highlights one of the challenges of using a state-by-state strategy to accomplish energy and climate policy goals.  As billionaire and advanced energy advocate Tom Steyer noted in a recent interview, if the Federal legislature remains dysfunctional, the American people will “work through the states” to achieve their aims.  On the upside, this can be a way to make progress advancing smart energy and climate policy when the federal legislative apparatus is paralyzed.  However, states are also more likely to undo progress that has been made when political or economic conditions change.  (Filibuster rules and the great difficulty of attaining a Senate supermajority make such back-sliding unlikely at the Federal level.)

This may be relevant to the design of certain state-level policies.  For example, a state green bank (an agency that provides funding for renewable energy and efficiency projects) could be structured as an arm of state government or as an independent entity.  The latter approach may offer more resilience in the face of a future legislature that does not support the green bank’s mission.

Featured image: NY State Senate. Used under Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License. Creator: Cliff Weathers. http://goo.gl/t16Ea