Government Bytes


The Dirty Reality Behind Obama's Clean Energy Standard

by Brandon Greife / /

For the second year in a rowPresident Obama used his State of the Union to call for the creation of a “cleanenergy” standard (CES). Although various proposals have been knocking aroundCongress the past several years, the key feature is a requirement that electriccompanies generate a stated percentage of their electricity from certainenumerated “clean” sources.

President Obama hasn’t been shyabout his desire to create a green (or clean) energy economy. In fact, one ofhis oft-repeated campaign promises was to invest $150 billion and create 5million green jobs. Obama has been doing his best to make good on the promise byusing deficit financed loan guarantees, cash grants, and subsidy payments to tryand jumpstart the market for green energy.

The result, as one executive of agreen-energy company toldthe New York Times, “I have never seen anything that I have had to do in my 20years in the power industry that involved less risk than these projects. It isjust filling the desert with [solar] panels.”

States have also been chipping in,offering their own tax breaks and clean energy standards, but the results haveled many to reconsider. The New York Times reports:

Thesemandates often have resulted in contracts with above-market rates for theproject developers, and a guarantee of a steady revenue stream.

“It is likebuilding a hotel, where you know in advance you are going to have 100 percentroom occupancy for 25 years,” said Kevin Smith, chief executive ofSolarReserve. His Nevada solar project hassecured a 25-year power-purchase agreement withthe state’s largest utility and a $737 million EnergyDepartment loan guarantee and is on track to receive a $200 millionTreasury grant.

Because thepurchase mandates can drive up electricity rates significantly, some states,including New Jersey and Colorado, are considering softening the requirementson utilities.

Failing to learn from the exampleof such states, President Obama is now proposing to create a national standard.The result will be a windfall for clean energy companies and a serious hit fortaxpayers.

A clean energy standard “works”by taking lower-cost choices away from consumers. By requiring utilities to buycertain forms of energy, namely, wind, solar, biomass, and otherWashington-approved fuels, a stable, but artificial market is created. It’s theequivalent of trying to reduce car emissions by mandating that everyone getaround using roller-skates at least 80 percent of the time. Sure, it would takea lot longer to get to places, would be completely unworkable for many peoplewho regularly travel long distances, and would create an overnight market forroller-skate makers.

But whereas Americans wouldlargely pay for the roller-skate mandate in wasted time, a clean-energy mandatewould result in vastly more expensive electric bills. Those higher prices ariseby forcing providers to use costlier forms of energy than they would otherwiseuse. And those higher costs would go straight to the clean energy companies thatPresident Obama has been so keen on subsidizing.

You see, Obama made a promise tocreate 5 million green-energy jobs. And that’s a promise he intends to keep…evenif it just means shuttling money out of American’s wallets and into “clean”energy companies. Gives new meaning to the words money laundering.