Energy efficiency savings offset cap-and-trade costs

By Susanne Retka Schill
As the Obama Administration and Congress consider approaches to promote clean energy and reduce greenhouse gases (GHG) in the electricity sector, a coalition of advocacy groups released a report in late April countering industry claims that carbon cap-and-trade legislation will be too costly for consumers. The report suggested energy efficiency improvements and renewable energy standards will make cap-and-trade legislation affordable, create 300,000 jobs by 2025 and save consumers more than $200 billion.

"This report shows that the doomsday predictions utility companies are making don't take into account the consumer benefits of this bill," said Rob Kelter, senior attorney at the Environmental Law and Policy Center. "This legislation will be good for the economy and good for the environment." The Environmental Law and Policy Center was joined by the American Council for an Energy-Efficient Economy, the Energy Future Coalitions Environment NorthEast, Natural Resources Defense Council and the Union of Concerned Scientists in releasing the analysis titled, "A Comprehensive Approach to Setting Clean Energy Standards for the Electricity Sector."

The report supports proposals contained in the Waxman-Markey (Reps. Henry Waxman, D-Calif., and Edward Markey, D-Mass.) draft of the American Clean Energy and Security Act of 2009 before Congress, which combines energy and climate legislation in one bill taking a three-pillar approach. An Energy Efficiency Resources Standard would reduce electricity usage by at least 15 percent and natural gas usage by at least 10 percent by 2020. A renewable electricity standard would increase renewable energy production to at least 20 percent by 2020. And a global warming cap would cut GHG emissions by at least 35 percent below current levels by 2020 and by at least 80 percent by 2050.

Opponents say the EERS and RES are overly ambitious and would increase costs to utility companies trying to meet emission reduction targets. The report argues that eliminating the standards or combining them in order to weaken both would be a mistake for the following reasons:

›Weakening or eliminating the EERS or RES results in fewer new jobs, lower utility savings for consumers and businesses, and fewer opportunities for new economic development-at a time when jobs and economic growth are top national priorities.

›Energy efficiency and renewable energy investments can help lower the cost of electricity under cap-and-trade legislation, saving consumers money. Energy efficiency reduces energy demand, providing utility bill savings and making the RES target easier to meet while renewable energy sources provide energy without the carbon dioxide emissions associated with traditional generation sources. Energy efficiency and renewable energy sources reduce the need for expensive new power plants, which in turn reduces the cost of generating power and cuts GHG emissions.

›An American Council for an Energy Efficient Economy analysis shows that electricity prices under cap-and-trade legislation will be 15 percent less if an EERS and RES are in place. In other words, investing in energy efficiency and renewable energy will help minimize the cost of complying with climate legislation.