U.S. Chamber of Commerce Forecasts No Growth in Renewable Energy. We Disagree.

March 25, 2016 | 12:03 pm
Mike Jacobs
Senior Energy Analyst

In the debate over the potential role of renewable energy in decreasing carbon pollution, the U.S. Chamber of Commerce (tagline: “Standing Up for American Enterprise”) has considerable trouble with that ubiquitous advisory ‘past performance is not an indicator of future outcomes.’ Analyses by the Union of Concerned Scientists and others, including business interests, forecast growth for renewable energy, while the Chamber does not.

The Chamber continues to promote its flawed review of the EPA’s projections of renewable energy growth in the U.S. used in the Clean Power Plan (“CPP”). It strikes me odd that this business group wants to belittle both the supply and demand for renewable energy, when Main Street and Fortune 500 companies continue to make major investments in renewables that greatly outpaces expectations.

U.S. Chamber of Commerce chart shows no growth in construction leading up to 2023

U.S. Chamber of Commerce chart shows no growth in construction leading up to 2023

The Chamber continues to promote its January critique of renewable energy growth while the data continues to come in pointing at greater growth. We are skeptical of the Chamber claim that it “remains a strong and steadfast supporter of continued efforts to advance renewable technologies to drive down costs and achieve parity with traditional electricity sources, the advancements that we aspire to someday realize should not be relied upon as the present-day basis for sweeping regulations.”

This perspective collides with the reality of the present-day, where wind and solar cost-reductions mean that utilities and home and business owners throughout the country are buying more and more renewable energy.

Let’s test the Chamber’s claims against the present

The U.S. Chamber of Commerce says that renewable energy deployment in 2012 was an “anomaly” because the 13,131 MW of wind construction was stimulated by a policy, the expiration of a federal tax credit. In my earlier blog, I suggested the Chamber exaggerated. Now the results for 2015 are in, with wind industry adding 8,600 MW of new capacity in the United States. Combined with the record-breaking 7,300 MW of new solar capacity, and small amounts of geothermal, hydro, and biopower, the U.S. construction for renewables was more than 16,600 MW, far exceeding the U.S. Chamber’s expectations and slightly below the U.S. record of 17,600 MW of total renewable capacity added in 2012.

In fact, renewable energy provided more than two-thirds of all new electric generating capacity in the U.S. in 2015, with wind and solar each providing more new capacity than natural gas.

Furthermore, while I’ve included solar in describing the present, the Chamber has very little to say about solar. Given that this is a debate over the EPA using a renewable energy building block to support its targets for reducing carbon emissions, and solar can be built in more places and more configurations than wind, what does it mean for the Chamber to choose to focus on predictions of wind and omit solar?

Growth projections

The EPA’s business is to project into the future the emissions from polluters, and establish a regulatory framework that provides a means to comply with limits on future emissions. The option of adding renewable generation (not only wind) is a key tool, or building block, to meeting future compliance requirements. As Yogi Berra did not say, it is tough to make predictions, especially about the future.

The Chamber ties its claims about EPA predictions to arguments about the proper use of either the average of past years’ growth, or the maximum of past years’ growth, of renewable energy deployments.

Looking forward, the Chamber says the compliance targets should use lower projections of growth than were used by the EPA, picking out the 6,315 MW difference between the two best years for wind construction in the period 2010-2014 (13,131 MW vs 6,816 MW), and a 260 MW discrepancy for geothermal construction (407 MW vs. 147 MW).  From there, the Chamber takes every opportunity to magnify these differences in their comparison to selected facts, and to illustrate the impact on the calculation of emission reductions targets required in years 2022-2030.

In the Chamber’s extended fuss over the impact of using these higher numbers over their preferred lower projection, they appear to agree with EPA’s numbers in the end. Projecting the available generation over the course of the CPP compliance period using their rejection of the 13,131 MW reference point, the Chamber “reduces projected RE generation from 706 million GWh to just 544 million GWh” by 2030 (See page 15.) What the Chamber does not say, when repeating the drama and outrage they set out on page 10, is that the lower number, 544 million, is almost identical to what the EPA actually relied on to count toward compliance (actually 540 million GWh).

The EPA and Chamber are ultimately in disagreement over the available energy from renewable generation in the years 2022-2030. The Chamber’s omission of solar and wind industry activity, let alone growth, in the years between now and 2021 is insulting to American enterprise. The Chamber seems unaware of the market forces that are rewarding businesses for continuing to deploy wind and solar. Two examples:

  • Starbucks purchased more 50 percent of its electricity from renewable energy in 2011, and has a goal of 100 percent renewable energy by 2015.
  • Mars recently purchased a 200 MW wind farm in Texas that will generate enough electricity to make 13 billion Snickers bars, and provide 100 percent of their power.

In fact, EPA’s projection of renewable energy growth is conservative because it does not include the recent 5-year extension of the federal tax credits for wind and solar passed into law last December, well after EPA had completed their modeling. Analysis of the tax credit extensions by the National Renewable Energy Laboratory shows 48,000-53,000 MW additional renewable energy will be built by 2022. This projection, showing renewable capacity additions will grow at 18,900 MW per year on average between 2016 and 2020, assumes the same gas price scenario as the widely used EIA Annual Energy Outlook 2015 Reference case.

A business-community analysis of the tax credit extension from Bloomberg New Energy Finance forecasts that 32,800 MW of utility-scale solar will be built by the end of 2021 and a total of 66,500 MW of solar by 2021. This solar, combined with the projected wind construction, will provide nearly 67% of the renewable generation projected by EPA as needed for compliance using Block 3. With that built prior to the compliance period, the annual solar and wind additions needed in years 2022 – 2030 is only 7,000 MW or less.

The Union of Concerned Scientists examined the clean energy growth spurred by the CPP, and the likely economic and environmental impacts of achieving the emission reductions required by the CPP. Unlike the Chamber, we found the EPA’s modelling is reasonable, without including the tax credit extension. Newly extended federal tax credits for wind and solar can work together with the CPP to generate even greater near-term consumer, economic, and health benefits.

Even more renewable potential available

A more arcane aspect of the Chamber’s claims addresses the potential amount of renewable resources available. This works two ways: the Chamber numbers are either out-of-date, or deceptive. With its usual bombast about broken promises, the Chamber compares estimates of how much wind might be available inside each state (from the 2012 resource assessments), with the wind energy implicit in states’ targets set by the EPA. The Chamber rejects a variety of facts that make its carefully assembled Table 5 irrelevant:

  • The Chamber refers to the 2015 DOE Wind Vision document with more up-to-date data on wind resources at 90 and 100 meter heights, but doesn’t use that data.
  • The Chamber belittles the idea that states would trade with other states for renewable energy, despite the current prevalence of interstate trading of renewable energy credits, electricity, and every imaginable category of goods.
  • The Chamber acknowledges solar and other in-state renewable resources, just to reject them.

The Chamber of Commerce may claim that is “standing up for American business,” but it is misunderstanding the business case for renewable energy and carbon reductions.