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The ‘Clean Energy’ Stalking Horse

A carbon tax by any other name . . .

Apr 2, 2012, Vol. 17, No. 28 • By ROBERT BRYCE
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By pushing legislation aimed at reduced carbon dioxide emissions, the Democrats and the president are clearly trying to appeal to the environmental lobby and the left. But for the vast majority of consumers, the key energy issue isn’t carbon content, it’s price. And the Energy Information Administration has made it clear that a national “clean energy” mandate will mean higher electricity costs.

Last October, the agency released a report on the likely impact of such a measure. The agency predicted that by 2035, the average price would exceed what it calls the “reference case average”—i.e., the status quo—by 29 percent. But the average numbers do not tell the entire story. The EIA analysis found that by 2035, the mandate would result in price hikes of at least 40 percent in 7 regions, with the biggest impact seen in coal-dependent areas. By 2035, electricity prices would rise by 42 percent in Texas, 46 percent in Oklahoma, 47 percent in Tennessee and Kentucky, 48 percent in Colorado, 50 percent in eastern Pennsylvania, Delaware, and New Jersey, 51 percent on Long Island, and by 61 percent in southern Illinois and eastern Missouri.

Furthermore, EIA pricing data show that renewable-electricity mandates—which are now in place in 29 states as well as the District of Columbia and Puerto Rico—are already driving electricity rates upward. I recently completed a study for the Manhattan Institute on these mandates. In 2010, residential electricity prices in states with renewable-electricity mandates were 31.9 percent higher than in nonmandate states. Commercial electricity rates were 27.4 percent higher, and industrial rates were 30.7 percent higher. Of the 10 states with the highest electricity prices, 8 have renewable mandates. Of the 10 states with the lowest electricity prices, only 2 have such mandates.

In an effort to compare states with similar profiles, I looked at seven coal-dependent states with renewable mandates and seven coal-dependent states without mandates. Between 2001 and 2010, electricity rates in the coal-dependent states with mandates increased by an average of 54.2 percent, more than twice the increase seen in the coal-dependent states that don’t have mandates.

Those numbers, along with the EIA’s analysis of the costs of a national mandate, should convince policy-makers that these types of regulations are bad policy. Indeed, they are particularly onerous now, when nearly 19 million American households are so financially strapped that they are relying on federal food stamps.

Nevertheless, the Democrats—who like to claim that they represent the poor and the working class—are pushing a tax-and-trade, anti-carbon-dioxide agenda that will inevitably hurt those very same people. If the Democrats (or the Republicans) were truly interested in pro-growth, pro-consumer energy policies, they would be promoting a simple agenda: Make energy cheap, abundant, and reliable.

Robert Bryce, a senior fellow at the Manhattan Institute, is the author of Power Hungry: The Myths of ‘Green’ Energy and the Real Fuels of the Future. His report on renewable mandates can be found at www.manhattan-institute.org/html/eper_10.htm.

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