A number of states that have laws requiring utilities to use renewable fuels to produce a specific amount of electricity are considering scaling back their mandates — or even repealing them altogether — given the prolific supply of natural gas that has caused prices to plunge.
Analysts and politicians saw renewable fuels as the wave of the future just a few years ago, but that was before the exploitation of shale basins across the United States, which contain low-priced natural gas to fuel power generators. Analysts expect that natural gas prices will remain at affordable prices for at least the next decade. Renewables have not been able to compete.
Sixteen of the 29 states with renewable portfolio standards are considering legislation that would reduce the need for renewable fuels, such as biomass, wind and solar, according to reports. More states could reform their mandates by the end of the year. North Carolina became the first southern state to enact renewable power mandates in 2007, and it may be the first to repeal them, wrote Bonner Cohen, a senior fellow with the National Center for Public Policy Research last month.
“North Carolina is more primed to pass something like this [repeal of renewable fuel mandate]” because of lower gas prices, and the fact that the state has the “political will to do something like this,” said Todd Wynn, director of the Energy, Environment and Agriculture Task Force for the American Legislative Exchange Council.
“States all across the country are taking a second look at these mandates which foist higher-cost, intermittent electricity on the backs of ordinary citizens,” Wynn noted. A “number of state legislatures are rethinking mandates because of the hydraulic fracturing revolution,” which has resulted in bountiful supplies of cheap gas.
While the inexpensive supply of gas is the main reason states are rethinking their renewable fuel mandates,Wynn noted that other factors are coming into play — conservative lawmakers object to being ordered by the federal government as to the amount of renewable fuels their utilities must purchase, and the high price of renewable fuels. “Natural gas is only one piece of the puzzle as to why people oppose this program.”
In late April, a measure in the North Carolina Legislature sought to end the state’s six-year-old policy of providing subsidies for renewable energy, but it failed in the House committee. A divided Senate finance committee resurrected the bill a week after the House panel turned the measure back.
The Affordable and Reliable Energy Act (H 298) would have capped utilities’ required purchases of renewable energy at 6% of demand in 2015, half the current target, and eliminated the requirement in 2021. The vote in Raleigh was closely watched by national conservative organizations. The state was seen as the first test of whether renewable fuel mandates at the state level would survive.
Sixteen conservative organizations, including the American Conservative Union, Americans for Tax Reform and The Heartland Institute, had backed the repeal mandate. Wynn further noted that Maryland had introduced legislation to include natural gas as a renewable fuel, but it failed.
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