CBO Analysis Affirms American Tradition Institute Findings That a National Renewable Energy Mandate Would Be Costly

WASHINGTON, July 27, 2011 /PRNewswire-USNewswire/ -- The Congressional Budget Office yesterday issued a new report about the effects of a potential national renewable energy mandate, and not surprisingly, the agency's findings affirm research published earlier this year by American Tradition Institute.

Of course the "devil is in the details," and CBO analyzed seven potential scenarios for either a national Renewable Energy Standard (RES, which is more restrictive on permitted electricity generating sources) or a Clean Energy Standard (CES, a more broad mandate which would allow nuclear and natural gas as electricity generators). But the findings were unmistakable, as CBO asserted on page 24 of its report.

"Either an RES or a CES would raise the overall cost of producing electricity in the United States," CBO reported. "Without such a standard, generators in competitive electricity markets would choose the mix of sources that maximized their profits, and in regulated markets, regulators would tend to require a mix that minimized the cost of electricity production. An RES or CES would induce them to alter that mix and produce electricity in a more costly manner (not accounting for any environmental or other benefits of changing the mix)."

In January American Tradition Institute published a study by Beacon Hill Institute, an economics research think tank based at Suffolk University in Boston. The ATI report, issued immediately after President Obama proposed a CES of 80 percent by the year 2035, examined potential RESs of 15 percent, 20 percent, and 30 percent by the year 2021. Under all scenarios BHI found the increased costs of electricity — and hence, the economy — would be astronomical.

See ATI's two-page summary of the Effects of Federal Renewable Portfolio Standard Legislation on the U.S. Economy. (http://www.americantraditioninstitute.org/wp-content/uploads/2011/04/National-RPS-Quick-Findings.pdf )

See ATI's Study of the Effects of Federal Renewable Portfolio Standard Legislation on the U.S. Economy: (http://www.americantraditioninstitute.org/wp-content/uploads/2011/04/ATINationalRPSReport.pdf )

"The CBO analysis only states the obvious: That forcing electric utilities to replace cheap, reliable power generation with inefficient, costly sources such as wind and solar will cause more harm to the U.S. economy," said Paul Chesser, executive director of ATI.

Chesser noted, however, that unlike ATI's comprehensive analysis, CBO failed to review the impacts a national RES or CES would have on jobs, household and businesses electricity costs, disposable income, and public health. Also, while CBO attempted to guess at the effects on carbon dioxide emissions, it did not consider how wind energy actually has the effect of increasing emissions and other pollutants because it requires backup generation from coal or natural gas. Finally, CBO did not address what has historically been the stated reason for the implementation of greenhouse gas reduction policies in the first place: the effects on global temperatures.

CBO did attempt, however, to temper the harshness of its findings about rising electricity costs by claiming they would be mitigated by the implementation of an emissions cap-and-trading system. That assessment is undermined, however, by presidential candidate Obama's now-famous statement in January 2008: "Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket." Other economic analyses of such plans have confirmed President Obama's understanding of how cap-and-trade increases costs.

"No matter how you scheme it, so-called renewable mandates will leave all Americans poorer," Chesser said. "Even worse, it is a useless policy in pursuit of an unattainable goal. Why bother?"

See ATI's two-page summary of the Effects of Federal Renewable Portfolio Standard Legislation on the U.S. Economy. (http://www.americantraditioninstitute.org/wp-content/uploads/2011/04/National-RPS-Quick-Findings.pdf )

See ATI's Study of the Effects of Federal Renewable Portfolio Standard Legislation on the U.S. Economy: (http://www.americantraditioninstitute.org/wp-content/uploads/2011/04/ATINationalRPSReport.pdf )

For an interview with American Tradition Institute executive director Paul Chesser, call (202)670-2680 or email paul.chesser@atinstitute.org.

Follow ATI on Twitter: http://twitter.atinstitute.org
Facebook: http://facebook.atinstitute.org

SOURCE American Tradition Institute



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