A Federal Clean Energy Standard Would Build On Decades of State Experience

With renewable energy on the rise, many electric utilities—especially those dependent on fossil fuels—are facing a crisis. Some are embracing the challenges necessary to implement new infrastructure, but others are resisting change. A new stories series from Audubon investigates the industry at this crucial time. Read Part 1 and Part 2.

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In 1983, Iowa’s Republican state legislature voted to create the United States’ first renewable energy standard. The law required that the state’s two electric utility companies, MidAmerican Energy and Alliant Energy Interstate Power and Light, get 105 megawatts of electricity from renewable sources.

What resulted, eventually, was a boon for wind energy developers. For the first decade, utilities ignored the law. Then, in 1996, the state utilities board forced their hand and over time turbines went up across the state. Just over a decade ago, coal provided more than 70 percent of all electricity produced in Iowa. In 2019, wind energy overtook coal and last year it generated nearly 60 percent of the state’s electricity. That’s 11,660 megawatts—more wind energy than any other state in the country, and enough to also supply renewable power to other states such as Minnesota.

That massive shift in energy production—from coal to wind—took off because legislators set a long-term goal that forced utilities to supply a certain amount of their provided energy from renewable sources. That renewable-energy goal, sometimes called a renewable portfolio standard (RPS), didn’t specify what type of renewable energy should be produced, how it should be developed, or where it should come from. Still, it worked. The simple act of setting a long-term goal, backed by political and legislative power, enabled and justified investments in clean energy.

“What we see today in Iowa is meaningfully attributable to the RPS, as a seed that planted that growth,” says Galen Barbose, a research scientist at Lawrence Berkeley National Laboratory.

Since then, dozens of states have followed Iowa's lead. Today, 30 states have some sort of legal energy standard which creates benchmarks and incentives to guide electric utilities, generators, and providers to transition to energy sources that do not emit planet-warming greenhouse gases. They come in two main flavors: a RPS, which mandates renewable energy such as wind and solar, or a clean energy standard (CES), which also includes non-renewable power sources such as nuclear that do not produce carbon gas.

The policies had their doubters. Setting clean-energy goals, with no plans for how to achieve them, was dismissed by many industry and political leaders. But the states have proven it can work to not only increase local clean energy production but also to create a market for wind, solar, and other technologies that extends across state lines. This state-level progress on energy standards, paired with federal investments, have led to “a dynamic and rapidly accelerating market industry that's ready to go,” says Sam Ricketts, a policy advisor at Evergreen Action, a group focused on political support for clean energy. “We're seeing a massive market shift where an overwhelming majority of the new electrical capacity added to the market last year was renewable energy.”

Now politicians, led by the Biden administration, want to implement a CES on a national scale. Despite the rapid growth in clean electricity in many states, the United States can’t meet its national goal of emitting net-zero greenhouse gases by 2050 unless all 50 states adopt clean-energy policies. Instead of waiting for each to pass their own, President Biden has prioritized passing a national CES, modeled on the state-level energy goals, to spur the entire country towards clean energy. 

How the CES would be packaged is not finalized. One proposal, first put forth in the Biden administration’s American Jobs Plan, calls for upgrading the grid, lowering energy bills, and improving public health while moving us toward 100 percent clean electricity by 2035. Meanwhile, Congressional leaders have included a CES variation in their $3.5 trillion budget reconciliation proposal: the Clean Electricity Payment Program, or CEPP, which would pay utilities to expand their clean energy sales each year—and tax them if they fail to meet a certain threshold.

No matter what form it takes, a national CES would absorb lessons from the state laws and at the same time help align the country on energy policy by pressing utilities to adopt clean energy. “This is the opportunity for the federal government to take a look at that momentum at the state level and apply it everywhere,” Ricketts says.

There is no single model for a national energy standard because every state’s is unique. Some of the older RPSs mandate that electric utilities generate a certain amount of energy from wind and solar, as is the case in Illinois. Others direct utilities to incorporate a certain percentage of renewable electricity into their offerings. In recent years, states have moved toward passing CESs that encompass clean fuel sources like hydropower, nuclear, and carbon-capture technology that aren’t necessarily renewable. Some states get more creative: North Carolina requires that 0.2 percent of the electricity its utilities provide come from the waste from hog farms, while a Virginia law passed in 2020 directs the utility to get 5.2 gigawatts of its electricity from offshore wind farms. Together, they create a patchwork of requirements for electric utilities that often work across state lines.

A national CES could address some of these inconsistencies while providing an economic incentive for utilities to transition more quickly, say clean-energy supporters. “The more certainty that we can provide to the utilities and entities within the power system, the more we can make that transition quickly,” says Lori Bird, an energy analyst who worked for the National Renewable Energy Laboratory before becoming the director of the World Resources Institute’s energy program.

A national standard could also incentivize the 20 states, including coal-rich states like Wyoming and West Virginia, to develop clean electricity. “One virtue of a national standard is that it would ensure that there is some progress everywhere whether or not a state or a region has a RPS,” says Warren Leon, the director of the Clean Energy States Alliance, a nonprofit focused on advancing clean energy. Such a standard, he says, would ensure “national progress and not rely on each individual state having to take action.”

One of the benefits of using the states as testing grounds for the national policy is that they have already disproven common skeptical arguments. When states first began passing RPSs in the 1990s and early 2000s, critics raised concerns about the expense of renewables and argued that meeting RPS goals would be economically unfeasible. In a 2008 edition of Issues in Science and Technology, a journal published by the National Academies of Sciences, Engineering, and Medicine and Arizona State University, authors of an article titled, "A National Renewable Portfolio Standard? Not Practical," stated that "mandating rapid, massive deployment of [renewable energy] technologies will result in high cost, disputes over land use, and unreliable electricity, leading to a public backlash against these policies."

However, the critics were largely wrong, especially on cost. In the last decade, the price of developing a solar farm has decreased by 90 percent. The lifetime cost of a wind farm is now more than 70 percent lower than it was 10 years ago. The costs over that timeframe plummeted thanks in part to RPSs, Bird says.

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In the last decade, the price of developing a solar farm has decreased by 90 percent.
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The policies offer additional benefits: CESs reduce water use, increase the number of renewable-energy jobs, and lower air pollution and greenhouse gases emitted by the power sector, according to reports conducted by the National Renewable Energy Laboratory and Lawrence Berkeley National Laboratory.

Perhaps most importantly, the states have proven that energy standards work. With some exceptions, especially where utilities sought to undermine the laws, states with an RPS have largely met their mandates and strengthened their standards. As those requirements become more stringent, utilities learn how to get increasingly higher percentages of electricity from variable sources. California, for example, regularly gets 90 percent of its electricity from wind and solar, and Vermont—the last state in New England to pass an RPS—gets 99.9 percent of its electricity from renewables. “Most of the states with renewable energy standards, when they bumped up the level, found that they could achieve it,” Bird says.

This experience and evidence on how state-level energy standards operate makes a federal policy more likely to succeed. Beyond passing the law, a few additional hurdles exist. Utilities that currently own and operate fossil-fuel power plants will likely try to avoid getting stuck with stranded assets. Plus, upgrading the grid will require the construction of new electricity transmission lines and large batteries to store excess power generated by wind and solar when it’s excessively windy or sunny. A national standard will also likely have to include a diversity of clean energy sources, and a national policy would have to be compatible with state CESs.

But RPS and CES history has shown us that it’s possible to reach and surpass lofty renewable energy goals, even those that once seemed impossible. The marketplace created as a result spurs innovation, invention, and investment in a cleaner grid—which is the key to a carbon emissions-free future.