Michigan Governor Wants to Increase Renewable Energy Mandate

Source: Taylor Smith, Heartland Institute • Posted: Monday, June 10, 2013

In a recent AP interview, Republican Michigan Governor Rick Snyder says he wants to increase the state’s renewable energy mandate, a 2008 law that requires utilities to get at least 10 percent of their electricity from renewable sources by 2015.

A ballot initiative last year would have raised that standard to 25 percent by 2025, but was defeated. The Governor campaigned against that proposal at the time, but now says he would like the Legislature to increase the standard.

We will have reached our 10 percent goal for renewable energy, and will have well-established efficiency programs, so we will be in a good position to set higher goals in both these areas. We will need solid information about the effects of our policies and the energy marketplace to make good decisions. This coming year, I will invite the Legislature and Michigan citizens to tell me what information we will need to fairly evaluate our energy policies, and we will embark on an effort to collect and analyze those facts.

But meeting the 10 percent goal doesn’t automatically position the state to set higher goals, as the Governor implies.

When a state constructs its first renewable energy facilities as a result of laws such as the renewable energy mandate, the areas of the state with the highest wind-potential or the highest-solar potential are always taken up first. An expansion of those policies means putting up new facilities in less productive areas, resulting in diminishing marginal returns, and higher costs as larger investments in transmission and distribution as required.

It’s not as if Michigan is an energy-poor state. It actually has the largest reserve of natural gas in the Great Lakes region. Natural gas, according to The Economist, “seems to be doing as much to reduce pollution as many of the efforts introduced over the years to restrict emissions from vehicles, power stations and other sources.” In fact, if you account for externalities in the price of electricity generation, natural gas is the cheapest source. And it’s extraction through hydraulic fracturing and horizontal drilling technologies has had a net positive effect on employment, whereas jobs created from the renewable energy mandate provides a net loss. Given these facts, I think a robust discussion on phasing out the renewable portfolio standard is far more warranted than increasing it.