Utilities warn political opposition may undermine Obama’s clean energy target

2 February 2011
Utilities can get behind US President Barack Obama’s proposed clean energy standard (CES), but the devil is in the details and the political obstacles may be insurmountable, executives said.


In his State of the Union address last week, Obama proposed a target that 80% of US electricity should come from ‘clean energy’ sources by 2035, including nuclear, natural gas and clean coal, as well as renewable resources. Secretary of Energy Steven Chu said the US is already halfway toward meeting that goal, with the other half achievable through targeted R&D and spurring investment in clean energy projects.

Xcel Energy is “intrigued” by the president’s proposal, Frank Prager, vice-president of environmental policy and services at the firm, told attendees of the Energy, Utility & Environment Conference in Phoenix, Arizona this week.

“We support and think a clean energy standard has a lot of value,” he said. “The details matter a lot and how it’s designed matters a lot. We’ll see how those types of things develop.”

Former senator’s proposal could provide a blueprint - Xcel
“It’s a great opportunity for us to promote clean technology and emission reductions by providing a role for a variety of clean technology options,” Prager continued. “We think it will ultimately prove to be a very cost-effective approach.”

Xcel worked with the then-senator Norm Coleman in 2006-07 on his clean energy portfolio standard, an idea that had “a lot of promise”, Prager said. Coleman’s proposal would have required electricity suppliers to increase their share of sales generated using clean energy resources such as non-hydro renewable resources, new hydroelectric or nuclear resources, fuel cells and fossil-fired plants that capture and sequester carbon dioxide emissions. The requirement would have started at 10% for the 2010-14 timeframe, gradually rising to 60% in 2025-30.

Coleman’s proposal would have also allowed electricity suppliers to comply by purchasing tradable clean energy generation credits from other sellers or by buying credits from the federal government at a price of 2.5 cents per kilowatt per hour.

“We hope folks will take a look at that as the debate goes forward in Washington,” Prager said.

Pursuing a broader CES including nuclear, natural gas and clean coal has several advantages, observed Linda Whelan, senior director, energy and environment policy for generator Dynegy.

“This widens the spectrum, it eliminates some of the regional divides you have over a renewable energy standard and it makes it more palatable to a broader group of states,” she said.

Electricity price worries, climate change deniers to block CES?
But implementing any type of mandate will be difficult in the new Congress, particularly when one third of the freshmen members do not believe climate change is a problem, Whelan said.

“There’s sensitivity to the cost impacts that consumers will bear,” she said. “We’re also seeing new emphasis on reducing the size of government and reducing government mandates, so the whole concept of a clean energy standard is at odds with those folks that feel strongly about reducing government.”

“Irrespective of whether or not you think [Obama’s goal is] realistic, it appears ... that it’s unlikely they are going to make a hell of a lot of progress in getting a clean energy standard out in this Congress,” said David Hunter, US policy director for the International Emissions Trading Association (IETA).

But IETA is examining potential ways to incorporate market-based mechanisms to create regulatory flexibility, such as accepting offsets into a CES or linking between a California cap-and-trade programme and a nation-wide CES.

Gloria Gonzalez