Research & Commentary: New Analysis Estimates Cost of Transition to 100 Percent Renewables Would Be $4.5 Trillion
Decarbonization Of U.S. Economy By 2030 Would Cost American Households At Least $35,000
A June 2019 analysis from Scottish consulting firm Wood Mackenzie estimates the cost of transitioning the United States to 100 percent renewable energy by 2030, as recommended by the “Green New Deal” and other overzealous climate change plans, would cost at least $4.5 trillion over that time period.
“For any country to embrace a nationwide transition to 100 percent renewable energy … or zero carbon … emissions constitutes a massive disruption with far-flung economic and social repercussions,” the analysis states. In the United States, that means a $35,000 cost to each household, around $1,750 per year for 20 years.
“The total price of transition,” the analysis states, “includes everything needed to reliably produce and deliver clean energy to consumers. This price includes building and operating generation facilities, making capacity payments, investing in transmission and distribution infrastructure, delivering customer-facing grid edge technology and more.”
This is not the first analysis to show the high cost of radical plans to decarbonize the economy in a single generation. 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. A 2019 brief from the Institute for Energy Research estimates 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.
As James Taylor of The Heartland Institute notes in a recent Policy Brief, “Building the wind turbines and solar facilities needed to power the United States under the provisions of the Green New Deal [or any other decarbonization plan] would result in the destruction of tens of millions of acres of habitat for countless species across the country, including some endangered species.” To replace one conventional natural gas or coal plant with a wind farm capable of generating similar capacity requires approximately 300 square miles of land. Taylor notes replacing every conventional power plant in the United States with wind and solar facilities would require an amount of land about the size of California.
Unfortunately, several states are adopting renewable energy mandates (REMs) of 100 percent. These include California, Hawaii, Nevada, New Mexico, New York, and the District of Columbia. Twenty-three other states have passed REMs, also known as renewable portfolio standards, of a smaller scale. However, even these smaller plans are extremely costly to electricity consumers.
A 2019 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 1.8 percent. The authors also found REMs raise retail electricity prices by 11 percent. After 12 years and a 4.2 percent increase in renewables’ share of generation, these prices rise by 17 percent. Altogether, the total extra electricity costs of REMs to consumers in the states that have enacted an REM are $125.2 billion.
The study also reveals reducing carbon dioxide emissions through an REM costs $130 - $460 per ton of carbon dioxide abated. These increased costs are, at the low end, almost three times 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.
Unsurprisingly, in states with REMs, energy rates are rising twice as fast as the national average and states with renewable mandates had electricity prices 26 percent higher than those without. The 29 states with renewable energy mandates (plus the District of Columbia) had average retail electricity prices of 11.93 cents per kilowatt hour (cents/kWh), according to the U.S. Energy Information Administration. On the other hand, the 21 states without renewable mandates had average retail electricity prices of just 9.38 cents/kWh.
Renewable energy mandates 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. State legislators should not mandate the use of renewable sources in electricity generation. Such mandates raise energy costs and disproportionally harm low-income families. Instead of trying to increase renewable mandates, legislators should repeal them.
The following documents provide more information on 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 1-4 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.
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.
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.
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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