Governor Davis Announces Support For Renewables Bill

CALPIRG-Backed Energy Bill, SB 532, Will Improve Economy And Air Quality

By California Public Interest Research Group

On Monday Governor Gray Davis held a press conference announcing his strong support for SB 532, the California Renewables Standard. The bill, authored by Senator Sher of Palo Alto, will increase California's use of renewable energy significantly, ensuring that by 2010, a full 20% of the energy California uses will come from renewable sources like solar, wind and geothermal.

"We applaud Governor Davis for his strong support of SB 532, legislation that will benefit California's environment and its economy," said Susannah Churchill, CALPIRG's Energy Advocate. "Renewable energy is a growth industry, and Davis is showing he has a vision of California as a clean energy technology leader of the future."

SB 532 was approved by the California State Senate in the 2001 legislative session, but failed passage in Assembly Utilities and Commerce Committee in the last week of session, where it will be brought up for reconsideration in coming weeks. Its supporters include: California Power Authority Chairman David Freeman, air quality management districts and dozens of religious, public health, consumer and environmental organizations. If passed, SB 532 will make California the nation-wide leader in renewable energy use. "Studies have shown that doubling our renewable energy use by 2010 will reduce pollution as much as taking 3.7 million cars off the road, as well as generating tens of thousands of new jobs and boosting revenues to the state budget by as much as $4.8 billion," Churchill said. "The California State Assembly should make it a top priority to get SB 532 to the Governor's desk."

Below are the benefits that SB 532 will bring to California:

Numerous benefits to the state economy

By increasing renewable power generation in California, the RPS will boost the economy by creating thousands of high-paying, non-polluting jobs and boosting tax revenues- the Electric Power Research Institute (EPRI), in a report commissioned by the California Energy Commission, recently showed that if we double our renewable energy use in the next decade, we will create 18,000 new in-state jobs and over $4.8 billion in state tax revenues. By shifting our power use towards renewable energy, California will also attract renewable energy investment dollars. Financial experts at investment research firm Clean Edge Inc. estimate that worldwide investment in clean energy technologies will grow from $7 billion today to over $82 billion by 2010.

Fuel diversity in California's energy portfolio

Currently, California depends on a single fuel source-natural gas-for over a third of its electricity supply, and over 95% of new electricity production under development in-state will also come from natural gas. As shown by CALPIRG's September 2001 report, Predictably Unpredictable, this over-dependence on natural gas as a power source is likely to lead to slowly rising power prices mixed with periodic price spikes, as nation-wide natural gas production slows and nation-wide demand grows at an estimated 2.3% per year through 2020, and as periodic supply disruptions occur (Dept of Energy 2001). By diversifying our energy portfolio with clean renewable resources like wind, solar and geothermal power, we reduce our vulnerability to natural gas price increases and fluctuations; renewable fuel costs nothing and renewable power generation costs are predicted to decline or remain stable as technologies improve.

Environmental benefits

Doubling California's renewable energy use would avoid the need to burn enough fossil fuels to fuel over 15 new gas fired power plants by 2010. As a result, a California RPS will reduce California's global warming emissions; the Union of Concerned Scientists has estimated that adopting the measure would reduce carbon dioxide emissions by more than 23.7 million metric tons per year by 2010, the equivalent of taking 3.7 million cars off the road in that year, as well as reducing smog-forming nitrogen oxides.

Lower electricity bills for California consumers

The RPS will save consumers money on their electric bills, as the cheapest renewable energy replaces more expensive fossil fuel power. The effect of the RPS on consumers' electricity bills will vary depending on wholesale natural gas costs over the next decade. It is virtually certain that natural gas costs will be unstable and will spike periodically during that time; however, estimating an average cost of $4 per million Btu over the next decade-the average cost for natural gas in California over the last two years-consumers will save $918 million on their electricity bills in the next decade if the RPS is implemented, or about $3.50 per household in the year 2010. If natural gas prices fall to an average of $3 per million Btu, the conservative estimate of the Energy Information Administration, the RPS will still save California consumers $360 million by 2010. Additional money will also be saved on consumers' electric and gas bills as the reduction in demand for natural gas lowers gas prices.

SB 532 directs the California Energy Commission to create and implement a system for ensuring that retail sellers of electricity in California (investor-owned utilities and energy service providers) get 20% of the power they sell in-state from clean renewable resources by 2010 (eligible resources are wind, solar, geothermal and landfill gas), with percentage increases required between 2003 and 2010. Retail sellers who do not meet the standard would be fined twice the cost of compliance.

SB 532 establishes a cost cap of $0.015 per kilowatt hour of renewable energy generation-or a maximum annual cost of $10.44 per California household-- to prevent manipulation of the market for renewable energy and to limit overall potential cost of the measure.

This column originally appeared in March 2002 in the Chico Examiner.