The U.S. Environmental Protection Agency projects renewable energy sources like wind, solar and biomass will generate just 9% of U.S. electricity by 2020 under the Waxman-Markey renewable electricity standard (RES). This contrasts with the bill's nominal 20% combined efficiency and renewable electricity standard due to numerous exemptions in the standard. Total renewable electricity generation under EPA's modeling of Waxman-Markey with the renewable electricity standard is just 41 terawatt-hours (or 7%) higher than the Agency's business as usual projections.
Yesterday, the Breakthrough Institute examined several of the surprising assumptions and projections underlying the EPA's "core scenario," which projects the impacts of the Waxman-Markey bill's efficiency and cap and trade provisions. This core scenario's conclusions about the likely cost impacts of the Waxman-Markey bill have been widely cited, and Breakthrough delved into this scenario in our last post.
As we reported, EPA concludes that the expansion of new wind farms, solar arrays and other renewable energy power plants will actually be somewhat slower under their core scenario for Waxman-Markey than under their BAU projections [p. 27]. Total renewable electricity generation under their core scenario is somewhat higher (3%) in 2025 under Waxman-Markey than in their BAU scenario, but this extra generation comes in the form of biomass co-firing at existing coal-fired power plants, EPA predicts [p. 26].
However, EPA's core scenario does not attempt to model the impacts of the Waxman-Markey bill's RES. EPA apparently decided they were not confident enough in their results to include the effects of the RES in their core scenario and chose to model it instead as a "sensitivity analysis" for the power sector only. Here we look at their projections for the impacts of the bill's RES.
EPA projects that 375 terawatt-hours (TWh) of renewable electricity generation in 2020 and 395 TWh in 2025 under the Waxman-Markey RES [p. 29]. This compares to 351 TWh in 2020 and 375 TWh in 2025 in their core scenario (i.e. just the cap and trade program) and 334 TWh in 2020 and 364 TWh in 2025 in their business as usual (BAU) scenario [p. 26].
That means EPA actually predicts less renewable electricity generation under the Waxman-Markey RES than the U.S. Energy Information Administration predicts in it's own business as usual (BAU) forecast, both in percentage terms (9.5% under EPA RES scenario vs. 10.2% under EIA's BAU) and total generation (375 terawatt-hours under EPA RES scenario vs. 443 terawatt-hours under EIA's BAU).
EIA's business as usual assumptions are widely considered to be a conservative estimate of future renewable energy deployment, because their BAU scenario assumes critical clean energy deployment incentives (the federal production tax credit and investment tax credit) expire and are not renewed after their current sunset dates (2012 and 2018 respectively). If direct incentives for clean energy deployment are extended or expanded, total renewable electricity generation is likely to exceed either EIA or EPA's forecasts with or without an RES like the one being considered in the Waxman-Markey bill.
The Breakthrough Institute's analysis of the Waxman-Markey RES estimated that renewable electricity generation would be 10.1-12.6% of U.S. electricity supply in 2020 and would amount to 438-547 TWh. That's a generous conclusion compared to EPA's own projection that renewables would be just 9.5% of U.S. electricity sales in 2020 and amount to 375 TWh. EPA assumes a lower overall electricity sales than BTI did in our own analysis, since they attempt to model the impacts of the Waxman-Markey bill's efficiency titles.
The Union of Concerned Scientists has conducted perhaps the most comprehensive examination of the full range of potential exemptions under the RES and concluded that between 8.3% and 11.5% of U.S. electricity would come from renewable sources in 2020, relative to a business-as-usual projection of 9.9%. EPA notes that it does not model the full exemptions in their own scenario [p. 29] - notably the ability of governor's to allow utilities in their state to meet more of the combined standard with efficiency savings instead of renewable energy and the potential for double counting of renewables driven by state RES policies - while UCS examines both of these key potential exemptions in their analysis.