Carney on the Big RPS Ripoff

In his Examiner column today, 2005-2006 CEI Brookes Fellow — and Big Ripoff author — Tim Carney highlights the rent-seeking potential of renewable portfolio standards (RPS) in the current (anti-) energy bill. Mandating use of “green” energy technologies that would not likely prove competitive otherwise simply circumvents the market. For those who benefit from this, there are big bucks to be made.

One particularly controversial provision in the Democrats’ current energy bill would require all utility companies to buy 15 percent of their electricity from renewable sources such as wind and solar, but excluding hydroelectric dams and nuclear.

Similar laws, called renewable portfolio standards (RPS), exist in many states, but not the South, and Southern senators have led the charge against a federal RPS. Many media outlets have pointed out the relevant fact that Southern Co., a huge firm that generates, distributes and sells electricity, has spent millions lobbying against the mandate.

When these same press accounts look for balance, they usually pit these industry objections opposite the arguments of environmentalists. More helpful and revealing would be to contrast the utilities’ anti-regulation arguments with the pro-regulation arguments of the solar and wind industries, which are no mom and pop outfits. Indeed, Goldman Sachs is among the pro-RPS lobbyists looking to cash in on its investments in wind and solar.

The solar energy industry is lobbying especially hard.

The Solar Energy Industries Association (SEIA) has high-priced real estate in downtown D.C. a block from the White House and the Council on Environmental Quality and not far from the Environmental Protection Agency. The company’s home page this week calls on visitors to lobby for solar tax credits in the energy bill.

At a recent press conference, SEIA President Rhone Resch praised the Democrats’ energy bill and its renewable mandates. Resch conceded that his industry’s recent boom “was spurred by the federal tax incentives for both residential and commercial solar in the 2005 energy bill.” Resch said, “We’re looking to get the federal government to expand their support for solar energy.”

Rewarding this kind of political predation above the wishes of consumers is bad enough. By subverting the price signals that allow for the most efficient use of resources, it is also very bad policy.