Reaping the Rewards How State Renewable Electricity Standards Are Cutting Pollution, Saving Money, Creating Jobs and Fueling a Clean Energy Boom U.S. PIRG Education Fund Reaping the Rewards How State Renewable Electricity Standards Are Cutting Pollution, Saving Money, Creating Jobs and Fueling a Clean Energy Boom U.S. PIRG Education Fund Written by: Tony Dutzik, Frontier Group Elizabeth Ridlington, Frontier Group Rob Sargent, U.S. PIRG Education Fund September 2007 Acknowledgments The authors wish to thank the following individuals who reviewed or provided input for this report: Jeff Deyette of the Union of Concerned Scientists, Jennifer DeCesaro of the Clean Energy States Alliance, Matthew Brown of InterEnergy Solutions, Ryan Wiser of Lawrence Berkeley National Laboratory, Anna Aurilio and Kate Johnson of U.S. PIRG, Amy Gomberg of Environment Ohio, and Travis Madsen of Frontier Group. Thanks also to Susan Rakov and Elizabeth Ridlington of Frontier Group for their editorial support. U.S. PIRG Education Fund thanks the Energy Foundation for making this project possible. The authors bear responsibility for any factual errors. The recommendations are those of U.S. PIRG Education Fund. The views expressed in this report are those of the authors and do not necessarily reflect the views of our funders or those who provided editorial review. Copyright 2007 U.S. PIRG Education Fund With public debate around important issues often dominated by special interests pursuing their own narrow agendas, U.S. PIRG Education Fund offers an independent voice that works on behalf of the public interest. U.S. PIRG Education Fund, a 501(c)(3) organization, works to protect consumers and promote good government. We investigate problems, craft solutions, educate the public, and offer Americans meaningful opportunities for civic participation. Frontier Group conducts research and policy analysis to support a cleaner, healthier and more democratic society. Our mission is to inject accurate information and compelling ideas into public policy debates at the local, state and federal levels. For more information about U.S. PIRG Education Fund, or for additional copies of this report, please visit www.uspirg.org. Cover photos (clockwise from top left): Solar panels, Robb Williamson, DOE/NREL; Solar dish, DOE/NREL, Stirling Energy Systems; Switchgrass, U.S. Department of Agriculture; Cielo Wind Power, DOE/NREL. Graphic Design: Harriet Eckstein Graphic Design Table of Contents Executive Summary 1 Introduction 5 Renewable Energy in the States 7 Renewable Energy on the Rise 7 The Role of Renewable Electricity Standards 10 RES States Are Leading the Way 17 RES Policies Are Spurring New Renewable Energy Development 17 RES States and Their Utilities Are Responsible for Most New Renewable Energy 17 Renewable Energy Is Addressing a Greater Share of New Energy Needs in RES States 22 The RES Is Supporting a Variety of Clean Energy Technologies 22 Benefits of the RES 26 Environmental Benefits 26 Economic Development 28 Cost Savings 34 Conclusion and Recommendations 37 Methodology 39 Notes 41 Appendix 46 Executive Summary enewable energy in the United States The 25 states that have adopted an is on the rise. America now generates RES are leading the nation in renewable Rtwice as much electricity from the energy development.1 wind and the sun as we did just four years ago, and 2007 promises to be another year • Approximately 54 percent of the elec- of record growth. tricity consumed in the United States is The renewable energy boom is the in states with RES policies.2 States with result of a series of federal and state poli- RES programs, however, account for 75 cies designed to promote cleaner sources percent of America’s renewable energy of electricity, as well as technological generating capacity.3 improvements that have reduced the cost of renewable energy over the last three de- • In 2006, more than two-thirds of all new cades, rising fossil fuel prices, and increased renewable electric generating capacity concern about global warming. Renewable in the United States was built in RES electricity standards (RES), which require states. The same is likely to hold true increasing percentages of the electricity in 2007, with more than 70 percent of supplied to consumers to come from re- planned renewable generation capacity newable resources, have been among the expected to be built in RES states. (RES most important factors in encouraging the policies also spur renewable energy de- development of renewable energy. velopment in nearby states, while some Twenty-five states and the District of renewable energy built in RES states is Columbia have adopted an RES. And while spurred by other public policies.) many of those policies are in their infancy, RES states have already begun to reap the • Renewable energy will make up a larger benefits in increased renewable energy de- proportion of new power generation in velopment, reduced pollution, cost savings RES states in 2007 than in states with- and economic growth. out RES policies. In 2007, renewable Executive Summary Fig. ES-1. State Renewable Electricity Standards electricity generators account for about • While many public policies have con- 38 percent of planned capacity additions tributed to the growth of renewable en- in RES states, compared to just 12 per- ergy, the RES has played an important cent in non-RES states. role. The U.S. Department of Energy estimates that RES policies contributed • Of the top 20 utilities with long-term to the construction of about half of the contracts for wind power in the United wind energy added in the United States States, 17 of them are covered in whole between 2001 and 2006, with the share or in part by RES policies. increasing to 60 percent in 2006. Fig. ES-2. Proposed New Electric Generating Capacity Additions, 2007 RES States Non-RES States Renewable 12% Renewable 38% Non-Renewable 62% Non-Renewable 88% 2 Reaping the Rewards State RES policies are reducing pol- accounting, engineering and a wide va- lution and saving natural resources. riety of services. While the benefits of renewable energy are strongest in local • Renewable energy sources built after the economies near manufacturing facili- adoption of state RES policies reduce ties and renewable energy installations, America’s global warming emissions by every state in the nation has at least one approximately 8.4 million metric tons business that participates in the renew- per year, the equivalent of taking more able energy economy and benefits from than 1.5 million cars off America’s roads. its growth. • Renewable generators in RES states • Renewable energy has had particular also produce fewer emissions of health benefits for rural economies. Texas threatening pollutants that contribute landowners, for example, now receive to the formation of smog and soot than an estimated $9.5 million in royalty pay- fossil fuel generators. Renewable energy, ments from wind farm operators, while therefore, can reduce the overall cost of one town in rural Colorado saw its tax complying with federal limits on these base increase by 29 percent as a result pollutants and make it more possible to of a wind farm development there. set tighter limits that are more protec- tive of human health in the future. State RES policies also have the potential to save electricity consumers • Renewable generators in RES states also money. save vast amounts of water—approxi- mately 1.2 billion gallons per year. • A 2007 analysis by the energy research firm, Wood MacKenzie estimated that Renewable energy development in adoption of a 15 percent federal renew- RES states is boosting local economies. able electricity standard would save more than $100 billion in electricity • Over the last two years, several of the costs by 2026, largely by driving down world’s leading manufacturers of wind the cost of natural gas. turbines and solar panels have either built new manufacturing facilities or ex- • In many states, such as Colorado and panded existing facilities in the United Washington, wind farms have proven States. RES policies play an important to be the least-cost source of electric- role in luring manufacturing facilities, ity, especially when all the likely future as they represent a long-term commitment costs of fossil fuel-fired power plants are to build the market for renewable energy included (such as the risk of energy price technologies. Colorado, Pennsylvania, spikes and the future cost of carbon Oregon, Texas, and Massachusetts are dioxide emissions). among the RES states that have expe- rienced increases in renewable energy • Solar power, while currently more manufacturing activity in recent years. expensive than other forms of power generation, can play an important role • Renewable energy development in RES in reducing demand for power at peak states has had ripple effects that extend periods, when it is most expensive. across the nation. Increased demand for renewable energy creates increased • Renewable energy development reduces demand for raw materials, construction, upward pressure on natural gas prices. Executive Summary A 2005 study by researchers at the Law- • States that have not yet adopted RES rence Berkeley National Laboratory policies should consider doing so, while estimated that the 18 state RES policies those that have adopted RES policies then in effect would produce savings should consider strengthening them of approximately $10 billion in lower by increasing the required percentage natural gas bills as a result of reduced of renewable energy, excluding non- demand for natural gas. renewable or polluting energy sources, and refining their policies to ensure that Adoption of a national RES would in- renewable energy targets are met. crease the benefits of renewable energy to the environment and the economy. • The state and federal governments should also adopt complementary • The United States should adopt a re- policies to hasten the deployment of newable electricity standard that calls renewable energy along with policies for 25 percent of America’s electricity to improve the energy efficiency of the to come from new renewable sources American economy.