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May 17, 2012 

Bingaman Clean Energy Standard Turns on New Renewables and Reduces Carbon, But Needs Improvement

WASHINGTON (May 17, 2012) – The Senate Energy and Natural Resources Committee holds a hearing today on the Clean Energy Standard Act – a bill that the Union of Concerned Scientists (UCS) describes as “needing improvement, but providing a path forward toward a low-carbon energy future.”

“Senator Bingaman’s bill is a welcome first step to reopen the conversation about increasing renewables and reducing carbon emissions,” said Angela Anderson, director of the Climate and Energy Program at UCS. “But there is every indication that we could do much better. For comparison, this level is well below previously introduced Senate proposals, such as the Udall bill that would not only have increased renewable energy to 25 percent of U.S. electricity by 2025, but would have done so at only small costs to consumers.”
 
A recent analysis by the Energy Information Administration (EIA) indicates that under the bill, renewable energy generation (not including hydro) will increase to only 13 percent of total U.S. electricity use by 2025, compared to 9 percent under business as usual, and 15 percent by 2035.  EIA also projects that the proposed CES would reduce total U.S. energy-related carbon emissions by 8 percent in 2025, and 18 percent in 2035.

“We believe that with minor improvements to the bill, we could expect even more truly clean energy to be turned on,” said Anderson. “For example, reducing the number of credits awarded to mature technologies like natural gas and nuclear power would increase the amount of renewables and reduce the cost of the CES.  All economic reports indicate that the natural gas industry is wildly prospering and does not need the incentives in this bill that are better awarded to true clean renewables, such as wind, solar, and geothermal. While the magnitude of the risks around hydraulic fracturing and fugitive methane emissions remain largely unknown, there remain plenty of reasons to reconsider provisions that needlessly provide credits for natural gas.”

UCS disputes the cost assumptions that EIA used in its estimate of how much nuclear power and renewable energy might be deployed under the bill. For example, the EIA overestimated the costs of wind and solar in their computer model and greatly underestimated costs for nuclear. EIA's capital costs for wind are more than 20 percent higher than the average cost of several actual projects installed in 2011, according to a 2011 report by renewable energy experts at Lawrence Berkeley National Lab.  Ryan Wiser, the lead author of that report, recently projected the costs to fall by another 8-18 percent in 2012 and 2013, which is consistent with two projects under development in Oklahoma.

“In addition, EIA’s cost estimates for solar photovoltaics don’t capture the dramatic cost reductions occurring in the industry,” said Anderson. “The cost of solar PV panels declined by more than 50 percent in 2011, while installed costs have dropped by 35 percent over the past two years.  These trends should continue as global investment continues.”

In contrast, EIA’s cost estimates for new nuclear power plants is significantly lower than recent estimates from proposed projects. For example, EIA’s overnight capital cost estimate of $5,250 per kilowatt in 2016 is less than half of the all-in cost of $24 billion, or $10,900 per kilowatt (including financing costs), of Progress Energy’s proposed Levy nuclear plant in Florida. Georgia Power (a subsidiary of Southern Company) also recently announced a $900 million increase in the cost of its Vogtle project in Georgia. In addition, EIA projects the cost of new nuclear plants to fall significantly over time, which is the opposite of what is happening with Levy, Vogtle and other projects, and historical experience. 

“If EIA used more realistic cost assumptions for these technologies, its analysis would likely show a much greater increase in renewable energy, far fewer new nuclear power plants, and lower costs to consumers,” said Anderson.

Energy efficiency is the cheapest and most readily available energy source. For technical reasons, the legislation could not accommodate the full suite of energy efficiency measures.  While including combined heat and power systems is a good first step, this legislation should be accompanied by strong energy efficiency resource standards that numerous studies have shown can work to reduce the cost of the program.

 

 

 

The Union of Concerned Scientists puts rigorous, independent science to work to solve our planet's most pressing problems. Joining with citizens across the country, we combine technical analysis and effective advocacy to create innovative, practical solutions for a healthy, safe, and sustainable future.

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