PDF _ RL34116 - Renewable Energy Portfolio Standard (RPS): Background and Debate Over a National Requirement
6-Sep-2007; Fred Sissine; 15 p.

Abstract: Under a renewable energy portfolio standard (RPS), retail electricity suppliers (electric utilities) must provide a minimum amount of electricity from renewable energy resources or purchase tradable credits that represent an equivalent amount of renewable energy production. The minimum requirement is often set as a percentage share of retail electricity sales. More than 20 states have established an RPS, with most targets ranging from 10% to 20% and most target deadlines ranging from 2010 to 2025. Most states have established tradable credits as a way to lower costs and facilitate compliance. State RPS action has provided an experience base for the design of a possible national requirement.

RPS proponents contend that a national system of tradable credits would enable retail suppliers in states with fewer resources to comply at the least cost by purchasing credits from organizations in states with a surplus of low-cost production. Opponents counter that regional differences in availability, amount, and types of renewable energy resources would make a federal RPS unfair and costly.

In Senate floor action on H.R. 6 in the 110th Congress, S.Amdt. 1537 proposed a 15% RPS target. The proposal triggered a lively debate, but was ultimately ruled non-germane. In that debate, opponents argued that a national RPS would disadvantage certain regions of the country, particularly the Southeastern states. They contended that the South lacks a sufficient amount of renewable energy resources to meet a 15% renewables requirement. They further concluded that an RPS would cause retail electricity prices to rise for many consumers.

RPS proponents countered by citing a study by the Energy Information Administration (EIA). The report examined the potential impacts of the 15% RPS proposed in S.Amdt. 1537. It indicated that the South has sufficient biomass generation, both from dedicated biomass plants and existing coal plants co-firing with biomass fuel, to meet a 15% RPS. EIA noted further that the estimated net RPS requirement for the South would not make it “unusually dependent” on other regions and was in fact “below the national average requirement....” Regarding electricity prices, EIA estimated that the 15% RPS would likely raise retail prices by slightly less than 1% over the 2005 to 2030 period. Further, the RPS would likely cause retail natural gas prices to fall slightly over that period.

In House floor action on H.R. 3221, an RPS amendment (H.Amdt. 748) was added by a vote of 220 to 190. The bill subsequently passed the House by a vote of 241 to 172. The RPS amendment would set a 15% target for 2020, and would allow up to 4 percentage points of the requirement to be met with energy efficiency measures. Key points and counter-points of the Senate debate were repeated. On the House floor, RPS opponents also contended that biomass power technologies were not yet ready for commercial use and that certain usable forms of biomass were excluded. Proponents acknowledged that there is a need to expand the definition of biomass resources, and offered to do so in conference committee.

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Topics: Energy, Government, General Interest

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