Democrats have announced their intent to pass a federal clean energy standard — a landmark climate initiative that would increase the use of fossil-fuel-free energy across the country and could save consumers money in the long run — through budget reconciliation.
About 60% of the nation’s electricity is generated by fossil fuels. President Joe Biden has promised to create an 80% clean energy grid by 2030 and 100% clean by 2035. A federal standard would be a crucial catalyst to reaching those goals.
It would require utility companies to gradually convert their energy sources from ones that rely on carbon-generating fuels like coal and natural gas to greener ones like wind or solar power, which don’t emit carbon dioxide. The federal government would offer money to utilities that comply, and fine those that don’t meet clean energy goals.
More than one-third of the country lives in a region that has already committed to using 100% clean energy in the future, with at least 30 states already setting some kind of renewable or clean energy standard.
Renewable energy refers to power that naturally regenerates, such as wind or solar. Clean energy include s those, as well as carbon-neutral sources such as nuclear, geothermal or fossil generation with carbon capture and sequestration.
That could mean steady costs for consumers. In 1983, Iowa became the first to set a renewable portfolio standard. A representative from Iowa’s Economic Development Authority told CBS News that Iowans today are paying slightly less for electricity than they were 20 years ago when accounting for inflation. Iowans paid 6.14 cents per kilowatt-hour for electricity in 2001, the first year the Energy Information Administration collected that data. At that time, 1.2% of the state’s electricity was generated by wind power versus 85.2% by coal. Last year, Iowans paid 9.28 cents per kWh for electricity — when 57.5% of their power was generated by wind, versus 23.8% by coal.
Virginia’s governor signed a bill last year that established a 100% carbon-free clean energy standard for Dominion VA Power by 2045. Dominion has forecasted that compliance with that regulation could cause residential bills to increase by an average 2.9% annually through 2030 — keeping costs on pace with historic levels of annual inflation.
Researchers found utility costs in states with clean energy standards have remained consistent over time — neither ballooning nor cratering. However, that state data cannot forecast what a federal clean energy standard would mean for utility costs, said Jenny Heeter, a senior energy analyst at the National Renewable Energy Laboratory.
“The costs and benefits of a federal policy will depend on how the policy is defined,” she said. “Which types of generators are considered clean? How quickly those generators need to come online. Is it a 100% clean energy target? Is it 90%? Is it by 2035? Is it by 2045?”
While the White House has an emissions goal, it is up to Congress to pass any kind of clean energy legislation. Democratic Senator Tina Smith of Minnesota and House Energy and Commerce Committee Chairman Frank Pallone of New Jersey have both have introduced legislation that would set a goal of 100% clean electricity by 2050, 15 years behind Mr. Biden’s target.
A bill introduced by Representatives David B. McKinley, a Republican from West Virginia, and Kurt Schrader, a Democrat from Oregon, would reduce power sector emissions by 80% by 2050. The bill’s compliance goals would not begin for utilities until 10 years after the legislation passed.
Leah Stokes, author and associate professor of political science at University of California—Santa Barbara, said passing a federal clean energy standard would be “transformational,” without having to increase energy costs to consumers.
Earlier this year, a study from University of California—Berkeley, GridLab and Energy Innovation found that achieving an 80% clean electricity grid by 2030 is technologically feasible without having to raise utility costs. That research also found popularizing clean energy would save $1.7 trillion in health and environmental costs, and avoid 93,000 premature deaths.
“People aren’t going to see this in your taxes. They are not going to see this in their electricity bills. It’s going to be an investment that is borne by the federal government,” Stokes said.
Mr. Biden has said his administration would not raise taxes on anyone making less than $400,000 a year. It is unclear how Democrats plan to pay for the incentives utilities would receive if a clean energy standard were passed.
Coal plants are expensive to run and many operate in debt, typically a cost assumed by ratepayers. Stokes said federal incentives that encourage all utilities to move toward carbon-free power, especially those that rely on coal, could untangle the “Gordian knot” of consumers having to pay for dirty electricity.
A clean electricity standard “is an investment program which says, ‘If you increase your clean electricity, you get federal resources,'” said Stokes.
Describing a federal standard as an “investment program,” as Democrats do, is crucial for its legislative future.
Because Democrats are hoping to push a clean energy standard through budget reconciliation, bypassing the need for Republican support and threat of the filibuster, any legislation in that package must be related to taxes, spending or debt policy — requirements known as the “Byrd Rule.” The rule also mandates that any legislation cannot add to the national deficit after 10 years. The Senate parliamentarian will have to determine if implementing a federal clean energy standard meets that criteria, as Stokes believes.
But Sam Thernstrom, chief executive officer of the bipartisan, nonprofit Energy Innovation Reform Project, said energy standard legislation would not qualify for the reconciliation plan, and even if it did, he’s skeptical— a swing vote Democrat who represents coal-rich West Virginia — would support it. Democrats hold a 50-seat majority in the Senate, and need a unified party and Vice President Kamala Harris’ potential tie-breaking vote to pass a reconciliation package. Manchin, an advocate for the coal companies in his state, is a linchpin vote for any climate or energy policy.
Thernstrom is optimistic about the more moderate, bipartisan McKinley-Schrader bill, which he helped craft, seeing it as the more pragmatic approach: Because reconciliation limits a bill’s reach to 10 years, a clean energy standard passed through budget reconciliation could be scrapped after a decade.