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Federal standard would more than double US renewables capacity, report says

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Six trends shaping the industries and sectors we cover in 2021

Six trends shaping the industries and sectors we cover in 2021

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Essential Energy Insights - January 2021


Federal standard would more than double US renewables capacity, report says

A federal renewable energy standard that includes compliance payments and penalties, plus a nationwide price on carbon, is the best way to help the U.S. expand renewable energy to meet climate benchmarks, the American Council on Renewable Energy said in a white paper released Oct. 16.

Democratic lawmakers in states across the country have succeeded in passing ambitious renewable energy standards in recent years. But a nationwide renewables mandate has failed to pass both chambers of Congress in the decade since former President Barack Obama first advocated for one.

The report defined a federal renewable energy standard as a federal law that requires a high percentage of renewable energy, generally over 50%, in electricity utilities' sales, generating capacity or purchases. This policy, the paper argued, would increase demand for renewable energy directly and generate investment, as well as drive commercialization, cost reductions and innovation for renewable technologies. That approach has proven effective on the state level, the authors argued.

Qualifying technologies should include, at a minimum, solar, wind, hydropower, ocean, tidal, hydrokinetic and geothermal energy, the report said. Carbon pricing, meanwhile, is already in place in 11 states and in more than 40 countries and subnational jurisdictions.

"By putting an appropriate price on carbon in combination with a federal high-penetration [renewable energy standard], policymakers could internalize the external costs of carbon pollution and further catalyze market forces to deploy carbon-free and low-carbon electricity at the lowest possible cost," the paper said. "Additionally, to prevent regressive impacts and build durable political support for carbon pricing, members of Congress from both parties have proposed using revenue from carbon pricing to create a 'carbon dividend' that would provide a new source of income for all Americans during the renewable energy transition."

In June Sen. Tina Smith, D-Minn., Rep. Ben Ray Lujan, D-N.M., and Sen. Tom Udall, D-N.M., introduced the Renewable Electricity Standard Act of 2019. It would put the U.S. on track to get at least half of its electricity from renewable sources by 2035, nearly triple the current share of about 18%. The Committee on Energy and Natural Resources is now considering the bill.

Congress should also consider additional policy questions, the report said. These include stranded costs of retiring power plans, grid reliability and resilience, transmission and related infrastructure, and benefits to communities hit hard by energy transitions.