US vs. Europe: Comparing different approaches to renewable energy
Friday, January 24, 2014
Let's assume this statement is true: The world is running toward a huge climate crisis. Temperatures will rise by about 11 degrees F , if we do nothing, and the impacts of such a rise can be fatal — floods, droughts, food insecurity, migration, just to name some.
Now, what should we do, and what is the best approach of creating the right policy in a fight against time? The common assumption, when comparing the European Union and the U.S., is that the U.S. approach to renewable energy is lagging behind the EU.
Not only are some European countries world leaders in the use of renewable energy,* but the EU also has a common renewable energy policy, the so-called Renewable Energy Directive. This directive creates binding obligations to all of its members with the aim of reaching the EU target of consuming 20 percent of its energy in form of renewables by 2020.
The U.S., instead, has different policies state by state and issues a National Energy Plan on a semiannual basis. And that plan is nothing more than "an essay by the energy experts in the federal government that few read and no one follows," according to E. Donald Elliott, professor of law at Yale and energy policy specialist.
Against this tide of arguments, however, there are several points that speak for the U.S. approach. For instance, why should a national energy policy be necessarily better, if a fragmented policy can also lead to equally good results?
Currently, 29 U.S. states have successfully adopted so-called Renewable Portfolio Standards (RPS) — state laws that require local utilities to supply a certain percentage of the electricity they distribute from renewable sources. A further six states have agreed to a set of voluntary renewable goals. Standards vary from as much as 33 percent of electricity provided from renewables by 2020 (California) to an average 7 percent in Massachusetts by 2020.
Elliott equates the possible success of this approach to portfolio theory in economics, the idea of diversifying risk by investing in many different investment options. By not having a binding renewable energy policy on a federal level, but many different policies on a state level, the U.S. can reduce the risk of taking the wrong energy route, and thus threatening its energy security and a possible future energy independence.
In this way, California decides to put 33 percent of its options on renewable energy, Arizona only 15 percent while South Dakota sets a goal of 10 percent, overall not putting too many eggs into the renewable basket and thereby creating a balance portfolio. Altogether, the outcome is also comparable to the EU approach given that these 35 states currently generate about 70 percent of total U.S. net power and their overall target averages 20 percent of electricity from renewables by 2020.
Additionally, while the U.S. does not have a common renewable energy policy, some other measures might have been successful in setting the country on the green road. For instance, the Federal Renewable Energy Production Tax Credit (which expired in December) set a tax incentive for renewable energy production.
Also, cheap and competitive natural gas production (with gas being a much less threatening greenhouse gas) and measures like the Mercury and Air Toxics Standards have provided incentives to move away from fossil fuels, like coal, that are much more harming to our climate than others.
So, maybe its difficult to say what the right approach is.
*Portugal produced 70 percent of its energy consumption from renewable sources in the first quarter of 2013, whereas the EU-28 consumes on average 13 percent of its energy in form of renewables (as of 2012) and the United States 10 percent (as of 2013).
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