Policies now being considered to boost renewable electricity generation and efficiency at utilities will make it cheaper to comply with caps on greenhouse gas emissions, said members of the Energy Future Coalition, a group of business, environmental, and labor advocates.
Both the the House and Senate are expected to move ahead with energy and climate change bills in the coming weeks.
The Waxman Markey bill in the House combines both energy and climate regulations in a single bill, while the Senate is working on separate efforts. Committee markup meetings in the House and Senate are expected, starting as early as this week.
One of the key sticking points to passing a climate change bill is addressing the question of whether putting a cap on greenhouse gas emissions will raise prices for energy and by how much. Also, some utility industry executives have said that a limit on carbon is sufficient action on climate change without a renewable energy mandate.
During a conference call with reporters on Monday, members of the Energy Future Coalition argued that the best way to control the costs of complying with greenhouse gas caps is to set national standards on renewable energy and efficiency at utilities. (Click for PDF of analysis.)
"Energy efficiency and renewable energy are going to reduce the amount of carbon that a cap-and-trade system has to deal with," said Marchant Wentworth, the Washington representative for the clean energy program of the Union of Concerned Scientists, which is a coalition member. "In both cases (these standards) establish a market where was not a market before."
One of the provisions of the House energy bill is a national Energy Efficiency Resource Standard (EERS) where utilities would need to run efficiency programs to cut their customers' energy consumption. Nineteen states have already established efficiency standards. The House bill calls for utilities to save cumulatively 15 percent on electricity and 10 percent on natural gas by 2020
These sorts of energy efficiency measures are considered far less expensive than building new power plants--at three cents per kilowatt-hour versus seven to 17 cents per kilowatt-hour--to meet growing demand, while cutting utility bills.
Also proposed is a national renewable electricity standard--already mandated in 27 states--where utilities would need to get 25 percent of their energy production by 2025 from renewable sources, such as solar, wind, geothermal, and biomass.
Diversifying the energy mix with renewables acts a hedge against volatility in the energy markets for fossil fuels and softens demand for natural gas which is used in power plants, Wentworth said.
Under climate regulations, large polluters, notably utilities and heavy manufacturers, would need to ratchet down their carbon emissions in a cap-and-trade system over the coming decades.
Many coal-dependent utilities anticipate meeting caps on greenhouse gas emissions by installing carbon capture and storage technology at coal plants to pump carbon dioxide underground. That technology is still in the research and development phase and is not expected to be commercially available until about 2020.
Meanwhile, efficiency and renewable energy "are technologies that can make a difference between now and 2020," said David Gardiner, a senior adviser at the Energy Future Coalition, on the call.
Critical, too, is the installation of high-voltage transmission wires to carry wind and solar power from remote areas, according to the Energy Future Coalition.
The Energy Future Coalition recommends a high-voltage transmission network dedicated to transferring electricity from wind and solar farms in remote areas of the U.S. to where most of the electricity is consumed in city centers. Members propose that natural gas "peaker" plants that can meet baseload power be part of that grid "overlay" to ensure demand can be met, said Bill White an advisor to the Energy Future Coalition.
All three measures--efficiency, renewable energy, and a transmission lines--will help create jobs, they said. These policies would also help create demand for green technologies like renewable energy and smart-grid technologies.
This year is turning into a crucial year for legislative action on clean energy and climate change.
Although all the major provisions of a House energy and climate bill are now known, after four days of hearings last week, the House Energy and Environment Subcommittee is still seeking to rally enough votes for passage, according to Energy & Environment Daily.
Much of the pushback appears to focus on the cost of complying with greenhouse gas caps, particularly for states that rely on coal, which emits far more carbon dioxide than natural gas.
Under discussion is whether emissions permits, which could be bought and sold in a cap-and-trade system, will be auctioned or granted to utilities and other businesses. The timetable for emission target reductions and the how much renewable energy utilities need to generate is also being negotiated.
States in the south-east U.S. have resisted renewable electricity mandates because other regions have better wind and solar resources. With a combination of hydroelectric, solar, and wind, that region could meet 50 percent of its current needs, according to Wentworth.