Why We Need a Federal Renewable Portfolio Standard
In the past year, Oregon and Washington joined the District of Columbia and 22 states that have enacted state renewable portfolio standards (RPS). Oregon’s Renewable Energy Act (SB 838), signed by Gov. Ted Kulongoski June 6, 2007, requires Oregon’s largest utilities to acquire 25 percent of their electricity from renewable sources by 2025, with more modest targets for smaller utilities.
Washington’s voters passed Initiative 937 in November 2006, making theirs the second state after Colorado to enact an RPS by initiative. The initiative requires Washington’s 17 largest utilities to obtain 15 percent of their electricity from renewables by 2020.
The Union of Concerned Scientists estimates Washington’s Initiative 937 will create $2.9 billion in new capital investment, nearly $167 million in new property tax revenues, $30 million in lease and royalty payments to landowners, 2,000 new jobs and a $148 million increase in the gross state product in Washington alone. Oregon’s SB 838 is expected to stimulate development of 1,500 megawatts (MW) of new renewable energy in the state, according to the Renewable Northwest Project.
Against the backdrop of increasing state support for renewable portfolio standards, Congress is debating HR 969, which would create a national renewable portfolio standard that compels utilities nationwide to generate or buy 20 percent of their electricity from renewable sources by 2020.
A federal RPS would be good for the renewable energy industry as a whole, providing long-term predictability, attracting more investment capital and allowing manufacturing of renewable energy technologies to achieve economies of scale. Contrary to claims of anti-RPS industry groups, most legal observers and HR 969’s sponsors in Congress are confident a federal RPS would not pre-empt more stringent state standards, such as those of Oregon and Washington. In fact, Oregon and Washington are poised to take particular advantage of the benefits of a federal standard. Both states can quickly capitalize on increased market demand for renewable energy.
This robust growth is based on simply serving increased demand from Washington and Oregon utilities for renewable energy. If a federal standard is enacted, utilities in states not subject to a state RPS will clamor for even more renewable resources. Many will look out of state, especially utilities in states that do not have abundant renewable energy resources or an established renewable energy industry of their own. HR 969 would establish a tradable, national renewable energy credit to facilitate this new national marketplace.
Posted by David J. Petersen, partner practicing in the Sustainability and Real Estate & Land Use Practice Groups.
