This week, the American Wind Energy Association (AWEA) welcomed a report by the U.S. Department of Energy’s Energy Information Administration (EIA) showing that a national renewable electricity standard (RES) would reduce fuel prices for all sectors, have minimal cost impact on power prices and reduce carbon dioxide emissions immediately.
“This is one more independent study finding that a national RES is a no-regrets down payment policy with immediate benefits on three national priorities–economic growth, energy security, and environmental stability,” said Denise Bode, AWEA’s CEO. “A strong RES enacted swiftly will help the Obama Administration waste no time in reaching its dual goals of a 14% reduction in greenhouse gas emissions by 2020 and doubling renewable energy use in three years.”
The EIA study, requested by Rep. Edward Markey (D-MA), analyzes his proposed RES bill, which would require that 25% of the U.S. electricity supply come from renewable generation by 2025. EIA’s analysis found that the impact on power prices would be negligible (increase less than 1% by 2030) while natural gas and coal prices would be reduced as much as 4%. Natural gas is used for one-fifth of U.S. power generation and is also used in other sectors, particularly home heating and industrial processes, meaning that cost savings would extend into many sectors of the economy as natural gas prices come down.
Over the last five years, EIA has released four other studies that come to the same conclusion: A national RES would decrease fuel prices across all sectors and would have minimal impact on power prices, often resulting in a net savings to consumers on the order of hundreds of millions of dollars. Similarly, emission reductions occurred on the magnitude of 4%-20% below business-as-usual scenarios in these additional studies.
A 25% RES by 2025 would reduce power sector carbon dioxide emissions by 56 million tons, roughly 4.7% below 2005 levels, according to EIA. Currently proposed climate legislation includes emission reductions of 6% to 20% below 2005 levels by 2020. It is clear that the RES will be a critical, low-cost, and immediate part of reaching emission reductions goals. At the same time, the RES will provide consumers a reprieve from volatile fuel prices and help stabilize electricity costs.
A recent study by the Union of Concerned Scientists found that a 25% RES by 2025 would generate cost savings on the order of $95.5 billion by 2030, repeating the same strong cost savings results from their two previous studies in 2007.