Last week, the EPA released its modeling for the cost of a cap and trade under WM/ ACESA (with the assumption of 40% going back to consumers, I think Lisa Jackson said in her testimony). In the words of the WSJournal, the findings were that a cap and trade would cost consumers “pennies a day.”
Yesterday, the EIA (Energy Information Administration) released its modeling on the cost of the federal RES currently proposed in that legislation.
High points from EIA’s Executive Summary:
- The baseline for the analysis is based on the economic/ renewable energy impacts of the America Recovery and Reinvestment Act (ARRA, ie, recovery funds from the economic stimulus package) – the ARRA policies and funds basically jump start the RES.
- While the RES target is officially 25% by 2025, various exemptions will actually lower this target:
- Exemptions for small retailers = 22% by 2025
- Hydro and muni solid waste removed from targets = 21% by 2025
- Energy efficiency credits (similar to RECs) = 17% by 2025
- Wind and biomass will be key fuels in meeting RES, solar and geothermal will ramp up significantly. The projected increase in wind development is actually due to ARRA incentives and state level RES’s (amazingly). Increased renewables will lead to lower coal and gas generation, and lower carbon dioxide emissions from the electricity sector.
- The national RES will not affect electricity prices until after 2020, and the peak effect will be less than 3% nationally. By 2030, this increase will go back down to less than 1%.
- Regionally, electricity prices will vary – the Great Plains (us!) and the northwest states will see price declines, and other regions could see price increases of 1-6%.
- NOTE: The RES modeling did not take into account other provisions of ACESA, such as the cap and trade or the Energy Efficiency Resource Standard (EERS).
- Cap and trade could decrease compliance costs of the RES
- If an EERS led to significant decrease in demand, that might make it hard to build new renewable capacity
- Unknowns in the analysis: Future prices of fossil fuels (high prices = good for renewables, low prices = bad), the future for biomass conversion at existing coal-fired power plants, and how fast developers can build transmission lines to get renewables to market.
— Maril Hazlett, www.climateandenergy.org
