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The size of the increase in electricity prices will depend on the details of the energy legislation. If utilities are able to use natural gas to meet the mandate, prices might not change much, says Kevin Leahy, managing director of climate policy at Duke Energy, a major utility. That’s because natural gas is becoming the cheapest option anyway for new power plants, since prices for this resource are currently low and strict pollution controls are increasing the cost of coal power (which emits about twice as much pollution as natural gas). Even without a clean-energy requirement, Leahy says, “it’s likely the industry will default to selecting natural-gas plants. There’s probably a very large new wave of gas builds coming on because of the completely new world that we’re in with the reserves of natural gas in this country.”

Any legislation, however, is likely to give only partial credit for natural gas, which is still a significant contributor of greenhouse gases to the atmosphere. Initial figures from the White House imply that if all the power from a utility comes from natural gas, the utility will get just half credit toward meeting the clean-energy mandate. To meet the 80 percent goal, utilities will need to draw on sources that will increase electricity costs more. In the most expensive scenario, the legislation would require utilities to use a certain amount of power from each source. That could prevent them from choosing the least costly option.

In the long term, it’s not likely that the policy will decrease unemployment. The real question, Borenstein says, isn’t whether the policy will result in more or fewer jobs, but whether it will create better jobs. “It may,” he says. “But making energy more expensive is going to make it more difficult to create other good jobs that rely on energy. Pursuing good environmental policy because it’s a good jobs policy is on pretty shaky ground. The best argument for pursuing a good environmental policy is the environmental argument.”

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Credit: Technology Review

Tagged: Energy, energy, renewable energy, solar, Obama, coal, wind, energy policy, government, gas

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