Monday, May 16, 2011

The Baltimore Sun's Unintended Argument Against State Renewable Portfolio Standard

Looks like more than one post went down the Google Blogspot memory hole.



In arguing for Governor Martin O’Malley (D) to veto a bill qualifying energy derived from waste incineration a Tier 1 source under Maryland’s renewable portfolio standard, The Baltimore Sun inadvertently made the case against O’Malley’s offshore wind bill it supported during the past legislative session, and reveals the shell game that is the RPS program.

But relatively high prices for Tier 1 renewable credits could make the difference in whether other projects, such as wind farms, get built because they help guarantee investors would get a sufficient return. That's similar to the theory behind Governor O'Malley's failed wind bill this year, which would have forced the Public Service Commission to require that power companies enter into long-term contracts for wind energy. Including incinerators as Tier 1 renewable resources would dilute the value of the credits and, effectively, push energy policy in the opposite direction of the wind bill.

The proponents of the legislation are right to point out the problems with landfills — both in terms of methane emissions and in the sustainability of continuing to store so much trash in them. But this bill is not about landfills, it is about increasing subsidies for an environmentally ambiguous activity that would have occurred anyway, while at the same time reducing the incentives to create other, cleaner power sources…

The Sun editorialist leaves out the fact that the law’s graduated percentage increases automatically builds in higher prices for Tier 1 renewable energy credits. As the mandate increases over time so does the price of credits, which is why the Public Service Commission found that renewable energy facilities were banking 90 percent of their renewable energy credits for sale in future years. Like the would be wind barons pushing for O’Malley’s wind mandate, renewable energy generators are already chasing the subsidies, the costs of which, the Sun admits are passed on to ratepayers.

Also, O’Malley has manipulated the law over the last three years to ensure higher prices for renewable energy credits for his favored forms of energy.

The 2010 Public Service Commission report on the RPS program revealed that O’Malley’s increase in of the RPS mandate to 22 percent by 2020 and geographic restrictions on energy sources when he first took office, increased demand and reduced supply and therefore put upward pressure on the price of renewable energy credits.

Even though solar constituted less than 0.2% of the renewable energy credits used to satisfy the mandate in 2009, O’Malley backed a successful bill the next year increasing the RPS solar requirement, even though PSC reports indicated that alternative compliance payments were “the predominate compliance method used by electricity suppliers” to satisfy the solar carve out.

O’Malley’s wind farms aren’t the “cleaner” power source the Sun fell all over itself to support during the legislative session. Wind power is intermittent by nature and utilities must continually cycle their coal and gas fired plants for backup. Bentek Energy’s analysis of Colorado and Texas power plants showed that use of wind power in fact, increased carbon dioxide emissions due to the constant cycling of fossil fuel backup generation.

Furthermore, Maryland utilities have been satisfying RPS requirements with “dirty” sources of energy like black liquor mixed with diesel (which paper mills burn to get even more lucrative federal subsidies) and waste wood projects. Where's the Sun's opprobrium for this violation of the spirit of the RPS law?

If the Sun thinks subsidy chasing for a form of polluting energy it does not like is bad policy, then where is the virtue in supporting subsidies for a polluting energy source it favors?



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