Dem energy tax just won’t die

October 21, 2010 11:59

All they did was pick a new a set of government mandates and repackage it as Renewable Electricity Standards (RES). Don’t be fooled.


Cap and trade legislation is dead. The left abandoned the policy this summer when it became clear it was a liability. Sen. George Voinovich (R-OH) told Politico: “You can’t use cap and trade anymore because it is like manure on the trough. It’s defined, and people are opposed to it.” But that doesn’t mean the left has abandoned plans to hike up our nation’s energy costs in a vain attempt to save the world. All they did was pick a new a set of government mandates and repackage it as Renewable Electricity Standards (RES). Don’t be fooled. The goal (reducing emissions) and mechanism (raising energy prices) are still the same. As is the result: millions of lost jobs at a time when unemployment already is hovering around 10%.

According to a Financial Times/Harris survey conducted this month, most Americans favor an expansion of renewable energy. But that support is very weak. When asked if they would be willing to pay as little as 5% more for electricity, only 32% of Americans answered yes. On the other hand, a full 57% of Americans said they would be opposed to paying for more than a 5% increase in electricity prices for renewable energy. And that is where the left’s RES dreams hit cold hard economic reality. Here are the prices that President Barack Obama’s  Energy Information Administration (EIA) projects for various sources of electricity per megawatt hour in 2016 (in 2008 dollars):

• Conventional coal power: $78.10
• Onshore wind power: $149.30
• Offshore wind power: $191.10
• Thermal solar power: $256.60
• Photo-voltaic solar power: $396.10

As you can see, the prices for alternative energy are at a minimum almost double the cost of conventional coal power. So what would happen if Congress mandated that utilities obtain growing percentages of their power from renewable sources of energy? A Heritage Foundation analysis of 22.5 % RES by 2025 found: 1) household electricity prices would jump 36%; 2) industry prices would rise by 60%; 3) national income (GDP) would be cut by $5.2 trillion between 2012 and 2035; and most importantly 4) RES would kill more than 1,000,000 jobs.

Renewables like hydro, wind, solar energy and biomass account for only 6% of our nation’s electricity generation. But when was the last time you saw a dam built? Take hydro-power out and renewables account for only 3% of our nation’s power. And this is after decades of existing generous renewable subsidies. If electricity created by wind and other renewables was cost competitive, consumers would use more of it without a federal law to force consumption. But renewable energy is not cost competitive, hence the need for government coercion to force the American people to buy it.

There simply is no upside to a RES. In fact, in some ways it is even worse than cap and trade. Heritage analyst David Kreutzer explains: “Electric power is one of the most critical inputs to a modern economy. Thus, it is no surprise that forcing the cost of electricity to rise dampens economic activity. The cost increase for electricity can be viewed as a particularly damaging energy tax, because a renewable mandate, unlike the case of a normal tax, provides no revenue to at least partially offset the higher cost. By way of comparison, the highway use tax on gasoline raises the price of gasoline, but it also generates revenues for building and maintaining roads and bridges. On the other hand, a renewable energy standard raises costs in the form of less efficient production, which provides no economic benefit.”

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