The Trump administration has done its best to promote coal, oil and gas at the federal level, but individual U.S. states continue to step up their ambition on renewable energy.
A wave of clean energy policies have recently washed through state capitols across the country, a trend that has come despite, or because of, the federal deregulation effort.
Washington State just passed a bill requiring 100 percent clean and renewable electricity by 2045, while also completely eliminating coal-fired power by 2025. New Mexico passed a similar bill that calls for 100 percent clean energy by 2045. Along with previously passed 100 percent clean energy mandates in California and Hawaii, there are now four states with such laws on the books.
There are countless policies at the municipal level that also push the envelope. Notably, New York City just passed a law aiming to slash emissions from buildings by 40 percent by 2030. Buildings are responsible for nearly three-quarters of the city’s emissions. New York’s effort targeting commercial buildings has been called “unprecedented.”
Most states have renewable portfolio standards in some form, requiring utilities to generate or procure a portion of electricity from renewable or otherwise low-emissions sources. At the start of the year, there were 29 states plus the District of Columbia that that had renewable portfolios in place, according to the EIA. States with legally binding requirements accounted for 63 percent of electricity retail sales in 2018, the agency said. At present, there is no federal requirement for renewable energy, although that is something that is gaining a bit of traction in Congress.
There is quite a bit of debate about the efficacy and cost of renewable portfolio standards. A working paper just out from the University of Chicago says the policies are expensive, although there has been quite a bit of pushback about the methods of that study. Economists consistently prefer carbon taxes to mandated requirements as a way to reduce greenhouse gas emissions, but carbon taxes are political kryptonite.
A carbon tax proposed in green-tinged Washington State failed a voter referendum last year. While the oil industry poured money into the state to defeat that vote, politicians still took note of the defeat. Changing course, the state just passed its 100 percent clean energy standard. Related: Saudi Oil Minister: We Won’t Ramp Up Oil Production Soon
For all the ink spilled promoting carbon taxes, it has been the array of energy mandates that have actually put solar and wind on the grid. About half of the growth in renewable energy since 2000 can be attributed to these state level policies, according to the Lawrence Berkeley National Laboratory.
Moreover, deploying clean energy helps drive down costs. The levelized cost of solar fell by 85 percent between 2010 and 2018. Renewable portfolio standards have played a big role in driving down these costs, which in turn, makes the policies less expensive.
Looking forward, the battle between fossil fuels and clean energy on the U.S. grid is already won. Solar and wind will capture the majority of new capacity additions for at least the next two years, according to the EIA, a trend that should only accelerate over time. Utility-scale solar will grow by 10 percent this year and another 17 percent in 2020, while wind will expand by 12 percent and 14 percent in 2019 and 2020, respectively. Natural gas generation will also grow, but coal-fired power plants will continue to close, as they have for the last decade.
For years, renewables fought with coal and gas over which was cheaper in terms of new additions. But renewable energy is increasingly the cheapest option even when compared to existing coal-fired power plants. In other words, it is increasingly cheaper to build new solar and wind than it is to simply operate an existing coal plant. Related: Saudi Arabia’s Dream Of $85 Oil Is Closer Than Ever
“Today, local wind and solar could replace approximately 74 percent of the U.S. coal fleet at an immediate savings to customers,” Energy Innovation, a non-partisan think-tank, wrote in a March report. “By 2025, this number grows to 86 percent of the coal fleet.” The report argues that “local-decision makers should consider plans for a smooth shut-down of these old plants.”
For all the hand-wringing about how solar and wind are an expensive luxury that few communities can afford, it seems that the opposite is now true. Fighting to keep coal online is a costly exercise.
It’s also increasingly an uphill battle. Former EPA administrator Scott Pruitt found this out the hard way when he turned up in Indiana recently – hired by a coal producer – to lobby the state regulators to block utilities from shutting down a series of coal plants. The utilities involved are seeking to build natural gas, solar and wind as cheaper options. Pruitt’s effort has proved unconvincing.
A similar tale unfolded earlier this year, with President Trump himself pressuring the Tennessee Valley Authority to keep some aging coal plants alive. The TVA’s board, like Indiana officials more recently, concluded that coal was the costlier option. The TVA voted to shut down the plants.
The energy transition, in many respects, is inevitable. The question is just how quickly it will unfold. The ratcheting up of renewable portfolio standards will accelerate the changeover.
By Nick Cunningham of Oilprice.com
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