In his 2011 State of the Union address, President Obama proposed a Clean Energy Standard (CES) requiring that 80 percent of the nation’s electricity come from clean energy resources by 2035. Over the past decade, Congress has debated renewable electricity standards, typically allowing energy efficiency to meet a portion of the target. For example, in 2009, an RES was included in the American Clean Energy Leadership Act of 2009, requiring 15% renewables by 2021, and 27% of this target could be met by energy efficiency. What happened to energy efficiency in the President’s proposal?

A well-designed CES policy would enable better decarbonization pathways.

  • A CES could achieve multiple goals: reduce air pollution and greenhouse gas emissions, spur green technology manufacturing, and diversify the electricity supply.
  • Critics rightly complain that a poorly designed CES could end up picking winners and losers among competing technologies and could cause a transfer of wealth from those regions of the country with less abundant qualifying energy resources.
  • A more inclusive CES could address these issues while simultaneously achieving its goals: energy efficiency should be an allowable resource and existing nuclear and hydro should receive clean energy credits.

In late 2011, the Energy Information Administration evaluated two versions of a CES, one proposed by Chairman Ralph Hall (R-TX) of the House Committee on Science and Technology and another by Chairman Jeff Bingaman (D-NM) of the Senate Committee on Energy and Natural Resources. The EIA analysis of these standards shows similar impacts – e.g., significantly less coal, more natural gas and at least a doubling of wind generation by 2035 compared to the EIA reference case projections. The Bingaman standard results in less nuclear power because existing nuclear and hydro do not earn clean energy credits; in contrast, nuclear generation grows by 30% in the Hall version of the standard. Thus, the likelihood of a nuclear renaissance in the U.S. could depend on the CES rules for allocating clean energy credits.

What’s missing from these two proposals? In both cases, CO2 emissions decline significantly, but GDP and employment are negatively impacted. Both standards fail to take advantage of the benefits of promoting greater energy efficiency, which can offset electricity price escalation, improve employment figures, and further reduce CO2 emissions. Because of this omission, both standards prescribe a future energy pathway that would expand the bias of existing policy towards new capacity, without the complementary and equally important objective of managing demand.