P. 1
KMT - RPS Aff Supplement

KMT - RPS Aff Supplement

|Views: 116|Likes:
Publicado porAffNeg.Com

More info:

Published by: AffNeg.Com on Jan 08, 2009
Direitos Autorais:Attribution Non-commercial


Read on Scribd mobile: iPhone, iPad and Android.
download as DOC or read online from Scribd
See more
See less


[Ben and Chris, research fellow @ Centre for Asia and Globalization and
Exec Dir of Network for New Energy Choices, “Big Is Beautiful: The Case for Federal Leadership on a National
Renewable Portfolio Standard”, ELECTRICITY JOURNAL, May, lexis/ ttate]

Framing the debate as a choice between a perfectly functioning, undistorted energy market and a clunky, artificial federal intervention, opponents of a national RPS tend to
ignore the unique drawbacks associated with a complex web of state-based mandates.4 Indeed, the most compelling argument for federal action is
that a national RPS may help correct many of the market distortions brought about by a patchwork of inconsistent
state actions. Not only does reliance on state-based action make for an uncertain regulatory environment for
potential investors, it creates inherent inequities between ratepayers in some states that are paying for "free riders"
in others. Ultimately, federal legislation can help create a more just, more diverse and more predictable national
market for renewable resources without significantly increasing aggregate electricity prices. A national RPS may
help correct many of the market distortions brought about by a patchwork of inconsistent state actions.

[Ryan, “The Experience with Renewable Portfolio Standards in the US”, THE
ELECTRICITY JOURNAL, May, lexis/ttate]
Though the concept appears simple and direct in theory, in practice, RPS designs vary substantially from one
another; so much so, that there is some debate over what exactly constitutes an RPS, and whether certain states
qualify as having an RPS. Illinois, for example, has established voluntary renewable energy targets; New York has
established a policy that it calls an RPS, but that involves ratepayer collection of funds and incentive payments
from a state energy authority. Above we have identified New York as a state with an RPS, and Illinois as one
without such a policy: we readily acknowledge that such classifications are subject to debate.

, research fellow @ Energy Governance Program @ Centre on Asia and Globalization, 2008
[Ben,“A Matter of Stability and Equity”, ENERGY AND ENVIRONMENT, p. 241+/ttate]
A federal RPS would maximize administrative efficiency. Since an RPS lets the market decide where best to
deploy renewable energy technologies, it removes the need for market distortions in the form of subsidies and tax
credits. For instance, subsidy levels in California, Illinois, Pennsylvania, and Rhode Island range from 0.59 to 1.95 cents per kWh for wind and hydroelectric projects
and 0.11 to 0.57 for landfill gas projects. [27] In contrast, an RPS minimizes government involvement and encourages customers to pay producers directly for RPS benefits.
The selection of winning technologies and bids is left to market forces and competition, rather than government
evaluation. [28]
A national RPS consequently avoids direct funding by multiple state agencies that can become administratively
burdensome, time consuming, and inefficient. Under a federal RPS, renewable energy projects must continually
compete to ensure an adequate volume of power and credits, creating a continuous incentive for utilities to seek
cost reductions in the price of their renewable systems. Such competition is lacking with current state mandates
that dispense one time monetary awards to individual renewable generators. [29] Moreover, it is much more
effective and efficient to have one centralized RPS program instead of dozens of separate, inconsistent state
programs. [30]


SDI 2008


RPS Aff – Supplement


, research fellow @ Energy Governance Program @ Centre on Asia and Globalization, 2008
[Ben,“A Matter of Stability and Equity”, ENERGY AND ENVIRONMENT, p. 241+/ttate]
However, Kirsten Engel and Susan Rose-Ackerman note that a race to the bottom can occur for multiple reasons: (i) enforcement
actions are subject to economies of scale, but most state-by-state approaches create diseconomies of scale; (ii)
state officials may have been captured by regulatory interests; (iii) state officials may be unwilling to bring
enforcement actions against their own agencies or local governments or companies; (iv) state officials may
want to lure industries to relocate or construct new facilities within the state. Contrary to the five reasons advanced above by
advocates of decentralization, empirical evidence seems to support a race to the bottom rationale. Kirsten Engel notes that
competition between states for industry is extremely intense, and that competition between firms for sites for new plants is limited (and sometimes nonexistent).
Statistics show that the number of new plants looking to be built in the United States at a given time in a given [*440] state is very few. The demand for
new plants or relocating existing ones is extremely high relative to supply, especially since the United States
continues to lose manufacturing jobs to foreign locations and outsource labor. Interstate competition for new industrial plants
has even been deemed "a second war between the states," in which most throw up a "dizzying array" of incentives to keep or lure plants. Engel argues that because
"the usual number of states competing against each other for the location of all but the largest plants is small," the extent that states compete with each other in setting
environmental standards to attract business is limited to only a few states at a time. Industrial "firms looking to site new plants have disproportionate market power ...
, and the small number of actors on both sides of the plant site market indicates that interactions in this market are more likely to resemble a strategic game than a
perfectly competitive neoclassical market." Ultimately, Engel found that that industry generally considers the stringency and scope of
state environmental regulation in its decision to locate plants, and that it consistently exploits state standards to
choose the most favorable location. The excessive market power held by industries over states allows them to "exert considerable influence" over
state regulatory regimes "to relax existing environmental standards or adopt less stringent standards in the first place." "I ultimately conclude," Engel clarifies, "... that

the preponderance of the evidence indicates that states engaged in interstate competition for industry are also
engaged in a race to the bottom in environmental standard-setting, and that the general direction of the race is
toward more lax standards." [*441] Engel's conclusions complement those of Rena I. Steinzor, who found a race to the bottom in the manner in
which states issue permits for major industrial sources that discharge waste into the nation's surface waters and air, as well as the fact that many states have chosen not
to comply with federal statutes. Steinzor found, in terms of water quality permits, that "in twenty-seven states, more than twenty percent of "major sources' regulated
under the Clean Water Act's National Pollutant Discharge Elimination System ("NPDES') were operating under expired permits." The problem was so acute that in
Pennsylvania and Maryland, about one-fifth of the files reviewed in a study of daycare centers and schools showed that those facilities' drinking water contained
excessive levels of lead. One school's water supply contained so much pollution that it had four times the levels permitted under federal standards. Neither state
reported such violations to the federal government. Steinzor also documented that roughly one out of every six major industrial facilities in the United States had
committed significant violations of their NPDES permits. More than sixty percent of these violations in 1998 involved excessive discharges. In terms of air
pollution, the responsibility for enforcing violations of ambient air quality standards under the Clean Air Act falls to the states. The New Mexico Air Pollution Control
Program, however, inspected only fifty-three percent of its 199 major sources of air pollution, with the result that more than one third of their facilities had not been
inspected in at least seven years. Texas did not even have any procedures in place to assess the economic costs or benefits of compliance concerning air pollution for
most of the 1990s, meaning that many polluters released toxic substances into the surrounding environment with impunity. Due to this lack of state enforcement, it
was estimated that in the mid-1990s the country was "spending $ 1,850 per household annually on pollution control." "This figure represents only the direct costs of
pollution control in terms of capital equipment and operating costs," and excludes undoubtedly more expensive effects [*442] of pollution such as environmental
damage and human health. Another study estimated that for most of the 1990s "major discharging facilities [across the nation] were in violation of the Clean Water
Act no less than 58% of the time." When the General Accounting Office reviewed state implementation of federal environmental policies related to hazardous waste,
water pollution, and drinking water supply in 1995, they found that "many states have difficulty performing key functions, such as monitoring environmental quality,
setting standards, issuing permits, and enforcing compliance ... EPA and state officials uniformly acknowledged that resource limitations are a major cause of these
problems." Clearly, because states have different interests, resources, and industrial bases, a race to the bottom is occurring in at least some circumstances.


Wiser et al, scientist at Berkeley National Lab, 04 (Ryan Wiser, Kevin Porter, Robert Grace,
“Evaluating Experience With Renewables Portfolio Standards In The United States” Migration and
Adaptation Strategies for Global Change, 1/04,
http://www.springerlink.com/content/v53920r96726341q/fulltext.pdf Yoder)
Insufficient Enforcement: We find that some states have inadequate enforcement of their RPS
policies. Arizona perhaps provides the best example. With no penalties for non-compliance, and
with specified ratepayer surcharges being collected to help fund the RPS, the utilities appear to
have largely opted to comply with the policy only up to the amount of funds that have specifically
been collected for that purpose; full compliance has not been achieved. In other cases, the
implications of non-compliance are left vague or unspecified: this is the case in Maine, Minnesota, Nevada, New
Jersey, New Mexico, and Pennsylvania. In electricity markets that remain tightly regulated, such as Minnesota, Nevada, and Wisconsin,


SDI 2008


RPS Aff – Supplement

we find that such vague enforcement standards may be sufficient: as long as obligated utilities know that the regulator is serious, they
will comply. In restructured markets, however, a more clear non-compliance penalty such as that used in Texas may be preferred (Texas
applies a penalty of as much as 5 cents/kWh for any shortfall in compliance).

You're Reading a Free Preview

/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->