Clean-Energy Requirements Targeted by ALEC, Norquist

Small-government groups including the American Legislative Exchange Council, whose advocacy for Florida’s Stand-Your-Ground law and other measures have drawn calls to revoke its tax-exempt status, are taking aim at state mandates requiring renewable energy use.

While environmentalists view the clean-energy standards as vital to reducing the country’s reliance on fossil fuels, groups like ALEC and the Grover Norquist-run Americans for Tax Reform say the mandates are a hidden tax on consumers and a drag on state economies.

“Enough time has passed that it’s clear that these laws have failed and have an economically adverse impact,” said Patrick Gleason, who lobbies state legislatures for Washington- based Americans for Tax Reform, in an e-mail.

Targeting the mandates extends a debate in Washington to state legislatures, where incentives to develop solar, wind, geothermal and other alternate energy sources have had bipartisan support.

Twenty-nine states and Washington, D.C., now have mandates, which, by requiring utilities to purchase energy derived from renewable sources, have helped provide a market for clean-energy technologies.

End of Stimulus

Opposition to the mandates coincides with the expiration of some federal incentives for renewables -- many contained in the 2009 stimulus legislation. The repeal or weakening of state standards puts at risk an industry still dependent on government aid to compete with dirtier but cheaper fossil fuels, advocates say.

Wind accounted for about 6.4 percent of Texas's power in 2012, and is home to several wind energy manufacturers. Photo: Eddie Seal/Bloomberg Close

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Wind accounted for about 6.4 percent of Texas's power in 2012, and is home to several wind energy manufacturers. Photo: Eddie Seal/Bloomberg

State standards have “really helped get the market started for renewable-energy technology,” said Dylan Sullivan, a Chicago-based staff scientist with Natural Resources Defense Council in New York, in an interview.

Americans for Tax Reform, famous for its no-tax pledge candidates sign to win its endorsement, is urging its members to speak out against the state mandates, Gleason said.

ALEC, a group of state lawmakers and corporations recently criticized for its support of Stand-Your-Ground laws highlighted in the Florida shooting of Trayvon Martin, may write model legislation for state lawmakers to repeal or weaken the mandates later this year, said Todd Wynn, energy, environment and agriculture task force director for the group, in an interview. Stand-Your-Ground laws allows citizens to use force when threatened, even when they can retreat.

Energy Freedom Index

The group may also develop an “energy freedom” index that ranks states based on regulation, market intervention and taxes.

Members of the group have “expressed concern on the cost of renewable energy,” Wynn said in an interview.

Common Cause, a Washington-based group that says it promotes open government, filed a complaint April 20 with the Internal Revenue Service alleging ALEC’s advocacy violates its tax-exempt status. Alan Dye, ALEC’s counsel, said in a statement the claims were “patently false” and politically motivated.

A governing board of state legislators chooses what ALEC promotes as model legislation, Kaitlyn Buss, a spokeswoman for the group, said in an interview. A separate private enterprise board, including representatives from Peabody Energy Corp. (BTU), the largest U.S. coal producer, and Exxon Mobil Corp. (XOM), the largest U.S. oil and gas company, serves in an advisory capacity, she said.

“The concern over state renewable energy standards is being driven by state legislators themselves,” Wynn said in an e-mail.

Energy Cost Debate

A February report from the Manhattan Institute, a New York- based group that says it promotes policies that “foster economic choice and individual responsibility,” found that seven coal-dependent states with clean-energy mandates had rate increases of more than 54 percent from 2001 to 2010.

That was twice the average increase in seven other coal- dependent states without mandates, according to the report, written by Manhattan Institute fellow Robert Bryce.

The Center for American Progress, a Washington-based group that advocates for progressive public policies and is often aligned with Democrats, rebutted those findings and defended state renewable mandates in an April 11 report as a way to reduce pollution and create jobs.

The rate of electricity price increases in 12 states slowed after a renewable standard was adopted, in some cases dropping below the national average, the report found.

Jobs Created

“There’s no systematic evidence that these do increase rates for consumers,” said Richard Caperton, director of clean- energy investment at the center, in an interview.

Instead, renewable standards have helped drive investment and created jobs, clean-energy advocates say.

“For each one, it has a direct economic development benefit,” said Joel Serface, a clean-tech investor, in an interview.

Texas’s renewable energy standard, for example, passed when Republican George W. Bush was governor, created a wind-energy industry there, said Serface, a managing director at Clean Range Ventures, a Colorado-based firm that supports early stage clean- energy technologies who has invested in some companies in Texas. Wind accounted for about 6.4 percent of Texas’s power in 2010, and is home to several wind-energy manufacturers, according to the American Wind Energy Association.

Clean-energy standards typically call for an escalating percentage of the state’s energy to come from clean sources until a final target is reached. There is a wide variety of standards. Some count energy efficiency gains, while others include power produced from the methane gas emitted from waste landfills.

Solyndra Fallout

California, for example, will require that 33 percent of its electricity come from renewable energy by 2020. Oregon set a 25 percent mark for large utilities by 2025 and from 5 percent to 10 percent for smaller power generators.

Energy costs have been a major issue in the presidential race as Republicans and allied groups try to tie President Barack Obama to high gasoline prices.

Since Solyndra LLC’s collapse after winning a $535 million U.S. loan guarantee, Republicans in Congress have accused Obama of trying to pick winners and losers among energy companies.

Gleason, of Americans for Tax Reform, said Republican gains in state elections means that the “composition of state legislatures is now more conducive” to repealing the renewable requirements. Republicans control the legislatures and governorships of 24 states.

Repeal Efforts

So far, a handful of bills have been introduced in state legislatures seeking to repeal the mandates altogether or to expand the definition of renewable energy in ways that environmentalists say weaken the environmental benefits.

Lawmakers in Michigan and Ohio -- two states that may prove crucial to presidential race -- are pushing repeal bills. A bill in West Virginia would repeal the state’s goal of 25 percent mandate by 2025.

Legislation was introduced in 2011 in Colorado, Montana and Washington state to eliminate the renewable standards or reduce their impact, according to the National Council of State Legislatures. None of the bills have passed.

Ohio’s law requires 25 percent of the state’s electricity come from alternative sources, which includes nuclear and cleaner coal, by 2024. Half of that total must come from renewable energy sources like wind and solar power.

‘Buyer’s Remorse’

Ohio State Senator Kris Jordan, a Republican who introduced the repeal bill, said the state can’t afford to keep such a “warm and fuzzy” law, which was passed in 2008 before the economic crisis.

“There is a little buyer’s remorse among my colleagues, because it’s not going to be best for consumers and because the economy has changed,” Jordan, a Republican elected after the law passed in 2008, said.

A Senate committee held a hearing on the repeal measure without a vote.

Brian Kaiser, director of green jobs and innovation for the Ohio Environmental Council, said the state standard has broad bipartisan support and has made clean energy among the fastest growing segments of the economy in the state.

Jordan’s bill “does not represent the mainstream of the political landscape in Ohio,” Kaiser said.

To contact the reporter on this story: Jim Snyder in Washington at jsnyder24@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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