Research & Commentary: Clean Energy Jobs Act Would Skyrocket Electricity Costs, Harm Low-Income Illinois Families
CEJA Would Set Up A 100 Percent Mandate By 2050
Legislation in the Illinois Senate, known as the Clean Energy Jobs Act (CEJA), would expand Illinois’ renewable energy mandate (REM), officially known as the Renewable Portfolio Standard, by forcing state utilities to produce 45 percent of their electricity generated from “renewable” sources by 2030 and 100 percent by 2050.
The Renewable Portfolio Standard, established as a voluntary goal for utilities in 2001 but made mandatory in 2007, currently forces utilities to generate 25 percent of their electricity from “renewable” sources by 2025–26.
Renewable energy mandates such as the Renewable Portfolio Standard force expensive, heavily subsidized, and politically favored electricity sources such as wind and solar on ratepayers and taxpayers while providing few, if any, net environmental benefits. Even worse, these mandates disproportionally impact low-income households by raising their electric bills as well as the cost of all goods and services.
A 2020 working paper from the Energy Policy Institute at the University of Chicago showed REMs are dramatically increasing retail electricity prices and are a very expensive way to try to reduce carbon dioxide emissions. According to the study, seven years after REMs are enacted, renewables’ share of electricity generation increases by only 2.2 percent, and only 5 percent after 12 years. The authors also found REMs raise retail electricity prices by 11 percent after seven years, producing roughly $30 billion annually in higher costs to consumers. After 12 years and a 5 percent increase in renewables’ share of generation, these prices rise by 17 percent.
The study also reveals reducing carbon dioxide emissions through an REM costs $58 - $298 per ton of carbon dioxide abated. These increased costs are, at the low end, 26 percent higher than the social cost of carbon estimated by the Interagency Working Group set up by the Obama administration, which is roughly $46 per ton for 2020. (It should be noted that whether there is a “social cost” to carbon dioxide emissions at all is debatable.)
In just 12 states, the total net cost of renewable mandates was $5.76 billion in 2016 and will rise to $8.8 billion in 2030, a 2016 study revealed. A 2014 study by the left-leaning Brookings Institution found replacing conventional power with wind power raises electricity prices 50 percent and replacing conventional power with solar power triples electricity costs. In the Land of Lincoln itself, the Illinois Chamber of Commerce estimated an earlier, nearly identical version of CEJA, introduced last session, would have increased electricity costs by at least $414 million in 2021–2022.
Unsurprisingly, in states with REMs, energy rates are rising twice as fast as the national average and states with renewable mandates had electricity prices 29 percent higher than those without. The 30 states with renewable energy mandates (plus the District of Columbia) had average retail electricity prices of 12.31 cents per kilowatt hour (cents/kWh), according to the U.S. Energy Information Administration, nearly 17 percent higher than the U.S. average retail price of 10.54 cents/kWh. On the other hand, the 20 states without renewable mandates had average retail electricity prices of just 9.62 cents/kWh. Only one state without an REM, Alaska, had average retail electricity prices higher than the U.S. average.
Shifting to 100 percent renewable energy would also, most likely, be an impossible endeavor. A 2019 study from the Institute of Energy Research declares getting to 100 percent renewable generation is “nothing more than a myth,” and attempting to do so would be an economic “catastrophe” for the United States. The American Action Forum estimates the costs of moving the entire country to 100 percent renewable sources would be $5.7 trillion, or $42,000 per household, while the Scottish consulting firm Wood Mackenzie estimates the cost of a 100 percent transition in the United States would be at least $4.5 trillion, or $35,000 per household.
The higher energy costs guaranteed by a switch from fossil fuels to higher-cost “renewable” electricity sources, such as wind or solar, would also lead to slower economic growth. Affordable energy is key to economic growth and the production of virtually all goods and services. Expansion of the Renewable Portfolio Standard under CEJA would make everything more expensive for working families in Illinois, raise costs for businesses, and have an insignificant effect on global carbon dioxide emissions. In the middle of the COVID-19 pandemic, when economic situations for many people are especially precarious, purposefully raising electricity prices is extremely foolish and hard-hearted. For the good of all Illinoisans, legislators should reject the Clean Energy Jobs Act and instead move to abolish the Renewable Portfolio Standard altogether.
The following documents provide more information about renewable energy mandates and fossil fuels.
Do Renewable Portfolio Standards Deliver?
This working paper from the Energy Policy Institute at the University of Chicago finds that average retail electricity prices in states after the passage of a renewable energy mandate are 11 percent higher after seven years and 17 percent higher after a dozen years, even though the increase in renewable electricity generation is a minimal 2.2 percent to 5 percent.
The 100 Percent Renewable Energy Myth
This Policy Brief from the Institute for Energy Research argues that a countrywide 100 percent renewable plan would put the U.S. economy in jeopardy. The brief investigates the intermittency, land requirements, capacity factors, and cost of transition and construction materials that limit the ability of the U.S. to adapt to 100 percent renewable energy.
Evaluating the Costs and Benefits of Renewable Portfolio Standards
This paper by Timothy J. Considine, a distinguished professor of energy economics at the School of Energy Resources and the Department of Economics and Finance at the University of Wyoming, examines the renewable portfolio standards (RPS) of 12 different states and concludes while RPS investments stimulate economic activity, the negative economic impacts associated with higher electricity prices offset the claimed economic advantages of these RPS investments.
Legislating Energy Poverty: A Case Study of How California’s and New York’s Climate Change Policies Are Increasing Energy Costs and Hurting the Economy
This analysis from Wayne Winegarden of the Pacific Research Institute shows the big government approach to fighting climate change taken by California and New York hits working class and minority communities the hardest. The paper reviews the impact of global warming policies adopted in California and New York, such as unrealistic renewable energy goals, strict low carbon fuel standards, and costly subsidies for buying higher-priced electric cars and installing solar panels. The report’s authors found that collectively these expensive and burdensome policies are dramatically increasing the energy burdens of their respective state residents.
The U.S. Leads the World in Clean Air: The Case for Environmental Optimism
This paper from the Texas Public Policy Foundation examines how the United States achieved robust economic growth while dramatically reducing emissions of air pollutants. The paper states that these achievements should be celebrated as a public policy success story, but instead the prevailing narrative among political and environmental leaders is one of environmental decline that can only be reversed with a more stringent regulatory approach. The paper urges for the data to be considered and applied to the narrative.
Policy Brief: How the Green New Deal's Renewable Energy Mining Would Harm Humans and the Environment
In this Heartland Institute Policy Brief, Paul Driessen, senior policy advisor with the Committee For a Constructive Tomorrow, argues expanding mining on the scale needed to meet the renewable energy requirements contained in the Green New Deal and other proposed renewable energy mandates would cause unimaginable harm to the environment, wildlife, and humans.
Policy Brief: Protecting the Environment from the Green New Deal
This Heartland Policy Brief by Paul Driessen, senior policy advisor with the Committee for a Constructive Tomorrow, reviews the largely ignored environmental damage that would result from the expanded use of renewable energy mandated under the Green New Deal.
Policy Brief: The Green New Deal: A Grave Threat to the American Economy, Environment, and Freedom
The Heartland Policy Brief argues the Green New Deal is a dangerous combination of environmental extremism and socialism. The tremendously expensive proposal would devastate the U.S. economy and cause more environmental destruction than protection. The provisions of the Green New Deal pose a dangerous threat to the American values of individual freedom and limited government.
The Social Benefits of Fossil Fuels
This Heartland Policy Brief by Joseph Bast and Peter Ferrara documents the many benefits from the historic and still ongoing use of fossil fuels. Fossil fuels are lifting billions of people out of poverty, reducing all the negative effects of poverty on human health, and vastly improving human well-being and safety by powering labor-saving and life-protecting technologies, such as air conditioning, modern medicine, and cars and trucks. They are dramatically increasing the quantity of food humans produce and improving the reliability of the food supply, directly benefiting human health. Further, fossil fuel emissions are possibly contributing to a “Greening of the Earth,” benefiting all the plants and wildlife on the planet.
Climate Change Reconsidered II: Fossil Fuels – Summary for Policymakers
In this fifth volume of the Climate Change Reconsidered series, 117 scientists, economists, and other experts assess the costs and benefits of the use of fossil fuels by reviewing scientific and economic literature on organic chemistry, climate science, public health, economic history, human security, and theoretical studies based on integrated assessment models and cost-benefit analysis.
Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Environment & Climate News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.
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