In the context of Japan's recent nuclear crisis, the U.S. Senate's Committee on Energy and Natural Resources (ENR) is taking a serious look at the reforms and policy goals that are needed in the U.S.' energy sector and considering whether the enactment of a federal clean energy standard (CES) could help achieve them.
In his recent State of the Union address, President Obama proposed a CES that would require 80% of the nation's electricity to come from clean energy technologies by 2035.
Because a CES would involve numerous sources of generation, several questions remain about the formulation of the CES – namely, the types of energy generation that such a bill should include.
The ENR is soliciting comments from energy stakeholders to determine the best course of action. However, there are several complex questions that will not be easy to answer. For example, should a CES include nuclear energy, despite concerns about its safety?
According to the Energy Information Administration, the U.S.' total domestic electricity generation portfolio consists of about 20% nuclear power, 10% renewable energy (hydropower, wind, solar, geothermal and biomass), 25% natural-gas power and 45% coal power.
If clean energy were defined as renewable and nuclear energy only, then the U.S. would currently be obtaining 30% of its electricity from clean sources. If efficient natural gas (combined cycle) were included as well – and awarded ‘half credits’ in accordance with the president's CES proposal – the U.S. would be obtaining 40% of its supply from clean sources.
The ENR's white paper on a CES – authored by committee chairman Sen. Jeff Bingaman, D-N.M., and ranking member Sen. Lisa Murkowski, R-Alaska – considers key questions: ‘Is the goal to reduce greenhouse gas emissions, lower electricity costs, spur utilization of particular assets, diversify supply or some combination thereof?’
The ENR further asks, ‘Depending on the goals, is a CES the right policy for the nation at this time? If so, is 80 percent by 2035 the right target? If not, should alternatives to reach similar goals be considered?’
Congress has debated renewable portfolio standards and renewable electricity standards (RES) for the past decade. For instance, during the 111th Congress, the ENR included a 15% by 2021 RES in S1462, the American Clean Energy Leadership Act of 2009.
Although a number of proposals have been introduced or discussed in past Congresses, the concept has not yet been seriously considered or analyzed.
For some, the primary focus of an RES has been to enhance the competitiveness of renewable technologies in the short term, in order to allow them to become economically competitive with fossil technologies. Other proposals have focused on diversifying electricity generation in order to guard against possible resource constraints, and some have highlighted the emissions-reduction potential of these technologies.
An important question relates to how a CES would affect the deployment of specific technologies – each of which faces different economic and financing issues. Some, such as nuclear energy, face significant up-front capital costs but low ongoing fuel costs. Others, such as natural-gas power plants, may be deployed relatively inexpensively but with a higher percentage of ongoing costs coming from fuel.
So, in large part, how clean energy credits are ultimately valued will influence the economics of each technology and, in turn, what technologies will likely be deployed.
Although the white paper was designed to highlight key questions and potential design elements of a CES, some industry watchers questioned the committee's timing, particularly against the backdrop of the nuclear power situation in Japan.
‘This is a long process,’ explains Bracewell Giuliani's Frank Maisano, adding that timing is a factor, particularly for Bingaman, who is retiring in 2012. ‘If the committee doesn't begin this process now, it doesn't happen.’
Recently, Bingaman, a champion of renewable energy, surprised some when he agreed to work with Murkowski on a clean energy bill that would include nuclear and natural gas. However, even if a CES passes the Senate, it is likely to meet a lukewarm reception in the House, according to Maisano, who explains that House leadership is more focused on budgetary matters than energy.
Interested parties can submit responses to the committee at energy.senate.gov by 5 p.m. on Monday, April 11.
