Deinonychus antirrhopus

Renewable Energy Provision Stalls in the House

A far reaching energy bill has stalled in the House of Representatives.

Basically the bill will require large utilities to increase the percentage of generation from renewable sources (wind, solar, hydro, and geothermal) over the next several years. Starting in 2005 the minimum percentage will be 1% and will have to increase over time until 10% is reached by 2019.

As it stands right now this would have the effect of increasing the costs of electricity. Renewables are currently more expensive than fossil fuels. It it were true the renewables were cheaper utilities would be switching to renewable based generation. After all most utilities are for profit entities.

Another interesting thing to consider is that for businesses this is cost increasing measure. When costs go up one outcome (at least in competitive markets) is that marginal firms go out of business. In other words, you get more unemployment people. So at a time when unemployed is remaining high there is an effort right now to increase the costs of running a business.

This ties in to the post here about how regulations basically act as a drag on the economy. No taxes are increased, but people are made worse off generally speaking and the utilities are labeled the bad guys. One can argue that people are made better off due to the reduced pollution, but this benefit is not immediately clear nor easily measured.