Koch-onomics: On the march in NC

By: - May 20, 2015 5:00 am


The Right’s shameless, myth-based attacks on renewable energy

There are, of course, dozens of ways in which the current political powers-that-be in North Carolina are trying to roll back the hands of time in the world of government and public policy. From voting rights to reproductive freedom, public education to tax policy, gun violence to the social safety net, the war on modernity and progress is being waged on numerous fronts.

If there were an award for the “most outrageous and destructive, greed-based attack of 2015” however, it would be tough to top the ongoing effort of conservative legislators and their supporters in the right-wing, Koch Brothers-supported “think tanks” to scuttle North Carolina’s fast-growing solar energy industry.

The latest salvo in this particular assault was fired yesterday in the state Senate’s Commerce Committee when members took up a House bill sponsored by Rep. Mike Hager of Rutherford County.

Scuttling renewable energy requirements

Hager, a retired Duke Energy employee who has long championed the interests of the fossil fuel industry, has been pushing for some time to repeal or limit North Carolina’s “Renewable Energy Portfolio Standard” (or “REPS”) – a law that requires a small but rising percentage of the state’s electricity to be generated by renewable (i.e. non-fossil fuel) sources.

A few weeks ago, Hager succeeded in inserting a provision into a so-called “regulatory reform” bill in the House that would dramatically limit the REPS and other pro-renewables laws. Yesterday, senators joined him in his efforts as the provisions were added to a gas pipeline bill.

To understand what’s going on here, it helps to understand the current law on renewables. Here’s a description from a legislative staff summary distributed yesterday:

In 2007, the General Assembly enacted a Renewable Energy Portfolio Standard (REPS) requirement for electric power suppliers. REPS require electric power suppliers to provide a designated amount or percentage of power from renewable energy resources as a portion of their overall provision of electricity.

Types of Renewable Energy: Renewable energy resources that can be used to meet the REPS requirements are:

  • Solar electric, solar thermal, wind, hydropower, geothermal, or ocean current or wave energy resource.
  • A biomass resource, including agricultural waste, animal waste, wood waste, spent pulping liquors, combustible residues, combustible liquids, combustible gases, energy crops, or landfill methane.
  • Waste heat derived from a renewable energy resource and used to produce electricity or useful, measurable thermal energy at a retail electric customer’s facility.
  • Hydrogen derived from a renewable energy resource.

Renewable energy resource does not include peat, a fossil fuel, or nuclear energy resource.”

Current law places the REPS requirement at 6%, but it is scheduled to grow to 10% in 2018 and 12.5% in 2021. Current law also requires Duke Energy and the state’s other monopoly electricity providers to reimburse small solar farm producers at a specified rate for the energy they produce that is adequate to make the farms financially viable.

Together with some other provisions, these laws are a big part of the reason North Carolina has one of the nation’s fastest growing solar energy industries.

Under the bill approved in committee yesterday, however, all of this encouraging progress would come to a screeching halt. Not only would the bill enact a “permanent” freeze of the REPS requirement at 6%, it would also dramatically shrink the size of the solar facilities eligible to receive the “standard contract rate” – i.e. the reimbursement rate that makes modest size solar arrays financially viable. Under current law, facilities that generate up to five megawatts of electricity are eligible for the prescribed reimbursement rate. The legislation would limit such facilities to 100 kilowatts or one-fiftieth of the size.

Debunking the bogus, Koch Brothers excuses

The explanation for the anti-solar crusade is at once fascinating, simplistic and discouraging. Unlike so many other negative developments in the world of utilities, the main culprit does not appear to be Duke Energy – which is officially neutral on the bill. Instead the driving force appears to be the network of far right think tanks and advocacy groups (like the John Locke Foundation and Americans for Prosperity) with ties to the notorious fossil fuel barons, the Koch Brothers.

According to these groups, laws that promote solar energy violate “free market” principles and artificially drive up consumer electric rates because they force Duke and other providers to pay more for the electricity than they otherwise would without them. Therefore, goes the argument, the laws create solar “welfare queens” who exist merely because of government favoritism. If the laws are repealed or constrained, claim the Koch-supported critics, solar energy and other renewables will be forced to “compete” and consumers would benefit.

Though perhaps superficially appealing, this argument ignores at least two giant elephants in the room.

Elephant #1 is the complete lack of a “free market” in the North Carolina electricity industry. In case the Koch disciples hadn’t noticed, electricity is provided in North Carolina by a small group of regulated monopolies and public entities. The notion that “freeing” Duke Energy to pay slightly less upfront for coal than it would pay for solar energy somehow validates “free markets” is as preposterous as saying that repealing Obamacare would do the same thing for healthcare.

Earth to Locke people and AFP: that cow is already out of the barn. Like health care, electricity is an industry that is, as a public necessity, inherently, unavoidably, thoroughly and permanently regulated by government. Moreover, if markets and competition are what you’re about, wouldn’t a law that unleashes scores of small solar entrepreneurs do a lot more for “liberty” than one that puts the business back in the hands of few giant fossil fuel producers?

All that said, Elephant #2 is even important and noteworthy and it goes like this: Fossil fuels aren’t cheaper than renewables. As a new and powerful report from the International Monetary Fund demonstrates convincingly, the true cost of fossil fuels to society is vastly higher when one figures in the massive public subsidies that are expended in the form of environmental damage, health impacts and the public costs of dealing with both.

As CNBC reported Monday:

Governments around the world charge prices for energy that do not account for its harmful environmental, health and other side effects, amounting to a $5.3 trillion ‘post-tax’ subsidy this year, the International Monetary Fund said in a report on Monday.

The IMF said China in particular failed to charge its more than 1 billion consumers for the pollution that comes from heavy use of fossil fuels, adding up to a $2.3 trillion subsidy this year.

The United States was the second-biggest offender, with an estimated $699 billion subsidy, followed by Russia, the European Union, India and Japan.”

You got that? The nations of the world are effectively spending around 6.5% of their gross domestic product dealing with the effects of fossil fuel pollution, but because most fail to include it in the upfront price charged for fossil fuels, we labor under a wildly false impression of their true cost. If the Americans built an extra $699 billion per year into the upfront price of fossil fuels instead of just paying it later, you can rest assured that the “free market” would produce some different results. In comparison, the subsidies provided to the renewable energy industry – an industry with a comparatively tiny environmental impact – are laughably insignificant.

The bottom line: Conservative ideologues love to talk about “liberty” and “free market economics,” but when it comes to the price of energy and the health and wellbeing of the planet, what they’re really preaching in North Carolina right now is a toxic brand of Koch-onomics. Let’s hope our elected leaders wake up to the deception before it’s too late.

Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site. Please see our republishing guidelines for use of photos and graphics.

Rob Schofield
Rob Schofield

Editor Rob Schofield oversees day-to-day newsroom operations, authors regular commentaries, and hosts a weekly radio show/podcast.