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When Renewable Energy Isn’t

Jeffrey CarlsonCascade Commentary

Summary

By defining the state’s most abundant energy resource, running water, as “non-renewable,” Oregon’s new renewable energy portfolio standard proves to be arbitrary and punitive. Furthermore, the law excludes many renewable energy power plants in Oregon from counting towards the renewable energy goal for no environmentally significant reason.

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At first glance, Oregon’s new renewable energy portfolio standard (RPS), passed by the legislature in June 2007, might seem like a sound policy. By requiring most electric utilities in the state to obtain 25% of their power from “renewable” energy facilities such as solar, wind and biomass by 2025, the RPS could promote diverse energy sources and a better environment.

Or so the thinking goes. In reality, the renewable energy standard is arbitrary and punitive by punishing the early entrepreneurs in this growing business sector. The law actually excludes many power plants in Oregon from counting towards the goal, defining the renewable energy they produce as “non-renewable.” It also hamstrings the state’s most abundant energy resource—running water—by not counting it towards the standard.

“The abundance of hydroelectric energy has kept Oregon among the cheapest states for electricity costs, which has made the state attractive to a number of manufacturing firms.”

By far the biggest hurdles in the RPS apply to Oregon’s clean and biggest source of power, hydroelectric facilities. RPS supporters assert that hydropower is included in the RPS, but the truth is only a portion of this electricity can count. Only 50 average megawatts total for an electric utility from only “certified low-impact” hydropower facilities built before 1995 are RPS-eligible. Only two facilities in Oregon are certified, with a combined capacity of 401 megawatts. The law does allow facilities built after 1995 full contribution if they are outside state and federal scenic waterways. This provision is practically useless, however, because the last significant hydro plant in Oregon was built in 1993.

Thirty-six hydropower facilities with a capacity totaling 7,134 megawatts in Oregon do not qualify under these rules. Only small energy increases from efficiency improvements made after 1995 from these facilities can count towards the RPS, and efficiency improvements to Bonneville Power Administration facilities are further restricted.

The abundance of hydroelectric energy has kept Oregon among the cheapest states for electricity costs, which has made the state attractive to a number of manufacturing firms. According to the U.S. Bureau of Economic Analysis, Oregon’s economy relies more on manufacturing than most other states.

The long-term effects of renewable energy standards on future electricity rates in RPS states remain to be seen, but the fact is non-hydro renewable energy is costlier than conventional power. Therefore, Oregon’s RPS could detrimentally affect its manufacturing sector by forcing up electricity rates. This is the reason why Intel, Oregon’s largest private employer, joined other industrial customers in opposing the RPS legislation.

The RPS also discriminates against other facilities based on their age: Those built before 1995 cannot qualify, even though they are already up and running on resources other than fossil fuels. Nine biomass facilities in Oregon that burn wood waste and combustible debris at lumber mills to produce steam and power together have a nameplate capacity of over 167 megawatts. Generally 40 to 50 percent of this capacity, if utilized, could put power on the electrical grid.

“If the rationale here was to establish technological requirements, the legislation simply could have specified the standards to determine which facilities would qualify.”

Biomass One in White City, built in 1986, actually was the first biomass plant in Oregon built for grid power, with a capacity of 25 megawatts. Another establishment, Short Mountain Power Plant near Springfield, harvests and filters landfill gas (LFG) from decomposing garbage to power its 5.5-megawatt facility. Though these plants are in no significant way different from younger facilities, they are excluded from fulfilling the state’s new goals.

This 1995 cutoff date makes no sense. 18 other states with renewable standards include existing facilities regardless of age. If the rationale here was to establish technological requirements, the legislation simply could have specified the standards to determine which facilities would qualify.

LFG plants like the Short Mountain facility created after 1995 do qualify as renewable, but projects that incinerate garbage to make electricity are excluded. Trash is still a fact of modern life, and something has to be done with it. Many communities limit landfill waste by establishing waste-to-energy (WTE) facilities to dispose of many tons of garbage daily. These facilities must meet EPA standards for emissions and remnant toxicity. Oregon’s only WTE facility, near Salem, actually received approval for membership in the EPA’s National Environmental Performance Track. The facility has had no reported environmental problems in its 20 years of service.

Why would such an economical solution to waste be disqualified? It could be argued that WTE facilities are not clean because they still produce a small level of air pollution. But if the goal is to promote clean, “green” power, then why include any biomass combustion? Any combustion produces carbon and particulate emissions.

The renewable portfolio standard is a bureaucratic hodge-podge of mandates that are Byzantine, even Orwellian: Hydropower and biomass are renewable, except when they’re not. Efforts to diversify our region’s sources of electricity should be dictated by current market demands and the future needs of our residents, not by politicians and bureaucrats whose actions jeopardize consumer access to the most economical energy sources.

Jeffrey Carlson is a research associate at Cascade Policy Institute, Oregon’s premier free market public policy think tank. To read other publications on energy and environmental policy, visit www.cascadepolicy.org.

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