Democrats in Congress are huddling in their low-carbon-footprint backroom in search of a compromise energy bill, and all eyes have been on the issue of raising fuel-economy standards. But there’s a lot more to worry about here than whether so-called “Cafe standards” rise to 32 miles per gallon, or 35, from 27.5 today.
The House version omitted Cafe standards altogether to mollify Michigan House baron John Dingell, but that doesn’t make it the better piece of legislation. The bill runs to 1,000 pages and bears the vaguely Orwellian title of “New Direction for Energy Independence, National Security, and Consumer Protection Act.”
In fact, the bill undermines energy independence by raising taxes on domestic production and throwing up new barriers to exploration. It’s hard to see how it has any effect on national security, and we’re at a loss about its consumer-protection claim too, unless you think Americans need “protecting” from the incandescent lightbulb. The bill bans those, effective 2012, on page 601.
But its worst (and little noticed) provision may be a requirement that 15% of U.S. electricity be generated from “renewable” sources by 2020. Utilities that can’t meet these goals are fined – taxed, really – based on how far short of this Eden they fall. Currently, only about 3% is provided by such renewables as wind, solar or “biofuels.”
One obvious problem is that some states have better prospects for renewable energy than others. Hydroelectric power is easier to generate in the mountainous West than back East. So what, supporters might say. If it’s more expensive for some to generate electricity through renewables, those utilities can either buy excess credits from others (as permitted in the bill) or pay the fines.
But the fines amount to a tax on low-cost energy producers without generating any environmental benefits. And whether credits are purchased or fines are paid, those added costs will go into the utilities’ rate bases, driving up consumer electricity bills. At the same time, utilities would be forced to pour money into pursuing the mandate, rather than investing in badly needed upgrades to the nation’s electrical grid.
In any case, as we’re all discovering with corn-based ethanol, renewables have their own problems, both substantive and political. Liberals are all for wind power – as long as it doesn’t obstruct their oceanfront views off Nantucket. Hydro power is dandy – except it kills fish and disrupts their habitat. Solar requires acres and acres of real estate. There’s plenty of land for solar arrays in the middle of the country, or at least there was before the land was turned over to grow corn for heavily subsidized ethanol. And, by the way, using farmland for energy means using less to grow food – which means higher prices at the kitchen table, or more food imports, or both. The House Members who voted for this must figure all of this will be some other Congress’s problem.
Earlier this year, Mr. Dingell suggested that if Congress were really serious about global warming, it would impose a carbon tax. At least that’s being honest about the costs. The “renewables” mandate in the House energy bill, by contrast, is a multibillion-dollar stealth tax on electrical utilities, and ultimately on electricity users. The danger is that, with all eyes on car-mileage standards, this tax could become law without many people even noticing.
25 October 2007
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