Hearing hashes out national clean energy standard

By Anna Simet | May 22, 2012

The U.S. Senate Committee on Energy & Natural Resources held a hearing May 17 to gather testimonial regarding S. 2146, the Clean Energy Standard Act of 2012, as introduced by U.S. Sen. Jeff Bingaman, D-N.M, earlier this spring.

Among testifiers was Howard Gruenspecht, acting administrator for the U.S. Energy Information Administration. He discussed an EIA analysis performed at the request of Sen. Bingaman to examine the potential impact of the proposed legislation on the development of future electricity markets, and projected carbon dioxide emissions from electricity generation. Though they could vary significantly by region, he said, impacts on electricity prices over the next decade are minimal, the EIA found.  Projected national average electricity prices start to rise, however, after 2020.

Gruenspecht pointed out that the current CES proposal does not specify a credit value for generation from biomass resources and mentioned that while many analysts think the use of sustainable biomass fuels should result in net zero carbon emissions over a long period of time, there is disagreement in the literature about the impact and importance of near-term carbon emissions from these resources. Though the secretary of energy will determine appropriate credit values for biomass feedstocks based on a proposed study from the National Academy of Sciences, without the ruling, EIA assumed biomass would earn a full CES credit for each megawatt hour of generation, according to Gruenspecht. “This assumption is consistent with prior EIA reports and analysis that assumes biomass to be a net-zero carbon resource,” he said. “Sensitivity analysis of scenarios with a half or zero credit for biomass indicate that biomass-based compliance would shift to natural gas and other renewable resources, with little impact on credit prices."

Testifying electric utilities were not in agreement of the overall impact of the CES. Keith Trent, group executive and president of commercial businesses at Duke Energy, commended the committee for pursuing a CES and expressed support for it. “I have heard the concern that a Clean Energy Standard is the wrong policy because it picks winners and losers,” he said. “I believe this claim is a fallacy.”

Trent pointed out that a standard would set targets for how much power must be derived from a basket of clean energy technologies and also specify qualifying criteria for those technologies. So if it is structured correctly, utilities working with the states will decide how best to meet their obligations using the resources that are most appropriate. In deregulated states, technologies would be selected based solely on their relative competitiveness, he added. “…the winners or losers allegation is only accurate if the Clean Energy Standard determines carve-outs for each technology, or it selects which company will supply the technology.”

On the other hand, James Dickinson, managing director and CEO of JEA, a municipally owned electric, water and sewer utility located in Jacksonville, Fla., said JEA is very concerned that the CES is too aggressive and too costly to electric consumers across the country, especially in the JEA service area. “The CES further isolates our country’s abundant coal resources from being a viable source of energy production,” he said. “It would require that large capital assets not only be scaled in over a mere 20-year period, but would also require existing capital assets to be retired or abandoned before the end of their useful economic lives. All this cost would be borne by electric consumers—our customers, your constituents—in uncertain economic times. The ever-changing focus of environmental concerns and the long-term uncertainty of fuel availability and pricing impact a basic life resource that in part defines our quality standard of living.”

To read S. 2126, the Clean Energy Standard Act of 2012, click here.