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Executive Summary
Oregon’s current reliance
on coal, oil, gas, and nuclear power for electricity generation has left the
state with a legacy of environmental and public health problems. This legacy
also includes volatile price fluctuations, costing consumers dearly on electricity
bills. We can help solve these problems by reducing demand through energy efficiency
and diversifying our electricity mix with renewable energy sources. Fortunately,
investing in clean energy policies also would generate new high-paying jobs,
save consumers and businesses billions of dollars, and boost Iowa's economy
while reducing power plant pollution.
Over the past 50 years, the federal government has provided more than $500 billion
in subsidies to the fossil fuel and nuclear industries, investing a fraction
of that in energy efficiency and renewable sources of energy such as wind, solar
and geothermal. As a result, coal, nuclear power, oil and gas provide more than
95 percent of Oregon’s electricity. This dependence on fossil fuels carries
severe public health consequences, including asthma attacks, respiratory disease,
heart attacks, and premature deaths. Moreover, fossil fuels, such as coal and
oil, pollute the environment from the point of extraction to combustion in the
form of global warming, acid rain, oil spills and runoff pollution. At the same
time, nuclear power has left us with a nuclear waste problem for which no safe
solution exists.
Despite the environmental and public health implications of relying on fossil
fuels and nuclear power to meet our energy needs, the federal government continues
to push energy policies that would offer more of the same. Last year’s federal
energy proposals included billions of dollars in new and extended tax breaks
for oil and gas drilling, loan guarantees and federal subsidies for building
new coal plants, and incentives to build the first new nuclear power plants
in 30 years. In total, the 2004 federal energy proposals provided more than
$35 billion in new subsidies for fossil fuels and nuclear power, which would
have cost Iowa’s taxpayers $265 million. These proposals offered $125 million—half
as much—to fund energy efficiency and renewable energy programs.
This continued investment in fossil fuels and nuclear energy ignores recent
research documenting the potential to meet more of our electricity needs with
energy efficiency and renewable sources of energy. In fact, the technical potential
of wind, clean biomass, and geothermal resources in the United States is four
times greater than our current total electricity consumption. Here in Oregon,
we could generate 17 times our current electricity usage from renewable energy
sources such as wind and clean biomass. Additionally, conservative estimates
suggest that energy efficiency programs could reduce our electricity use in
Oregon by 28 percent.
Why then does the federal government continue to subsidize fossil fuels and
nuclear power and leave renewable energy sources as peripheral contributors
to the country's electricity mix? Proponents of the status quo contend that
investing in fossil fuels and nuclear power are essential for a healthy and
vibrant economy and that diverting investment to renewables and efficiency will
cost us jobs and increase costs to consumers. A growing body of literature,
however, shows that investing in energy efficiency and technologies such as
wind and solar power boosts local economies and creates jobs. Moreover, investing
in renewables and energy efficiency helps to diversify the electricity market
and reduces consumer dependence on coal and natural gas, thereby saving consumers
money and shielding them from fluctuations in market prices.
This brings us to the central question of this report: what would be the economic
and consumer impacts of pursuing clean energy policies? How would a shift in
federal policy away from fossil fuels and nuclear power and toward renewable
energy and energy efficiency affect the economy, consumers, and the environment
in Iowa?
Specifically, we examined the economic and consumer impacts of pursuing two
policies:
- Enacting a 20 percent national renewable energy standard, commonly referred
to as a renewable portfolio standard or RPS, which would require the U.S. to
generate 20 percent of its electricity from clean energy by the year 2020; and
- Shifting the amount it
would cost Iowa to subsidize fossil fuels and nuclear power under last year’s
federal energy proposals, $265 million, toward renewable energy and energy efficiency.
We found that implementing these two policies would greatly benefit the economy
and consumers in Iowa while reducing air pollution from power plants.
In Oregon, investing in these clean energy policies would:
- Create 1,347 net jobs in 2020 and a net annual average of 1,014 jobs between
2005 and 2020;
- Increase wages by $33 million in 2020;
- Increase Oregon’s
gross state product (GSP) by an annual average of $51 million between 2005 and
2020;
- Save all consumers—residential, commercial, and industrial—$139 million on
natural gas bills in 2020;
- Save consumers $109 million on electricity bills in 2020;
- Reduce global warming carbon dioxide emissions from power plants by 19 percent
of 2002 levels; smog-forming nitrogen oxide emissions by four percent of 2002
levels; and soot-forming sulfur dioxide emissions by five percent of 2002 levels,
all by 2020.
Moreover, the clean energy policies evaluated in this report would create more
jobs, raise wages higher, and save consumers in Iowa more money than last year’s
federal energy proposals.
The findings of this report—and hence the title— underscore the benefits of
Redirecting Oregon’s Energy. Strong support for energy conservation and efficiency,
coupled with increased emphasis on the development of renewable energy, can
help solve our current energy problems, provide a significant boost to the economy
and move us towards a safer, healthier energy future.
These findings lead us to the following three recommendations:
1. Implement a Renewable Energy Standard
The federal government
should implement a national clean energy standard, known as a renewable portfolio
standard, to increase the amount of electricity generated from renewable sources
of energy to 20 percent of power generation nationally by 2020. In Oregon, rather
than waiting for federal action, we should set a strong enforceable standard
of 20 percent renewable electricity generation by 2020.
2. Strengthen Energy Efficiency Standards
To save consumers and businesses money and reduce our reliance on fossil fuels
and nuclear power, the federal government should raise efficiency standards
for key appliances. Minimally, regulators should implement stronger federal
standards for residential furnaces and boilers, commercial air conditioners,
and distribution transformers.
3. Shift Energy Subsidies Away from Fossil Fuels and Nuclear Power Toward
Renewables and Energy Efficiency
Policy-makers should shift federal subsidies toward renewable energy and energy
efficiency in order to provide the necessary market incentives to stimulate
development and implementation of these technologies.
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