Indiana lawmakers push voluntary renewable standards

April 17, 2011

Indiana lawmakers are pushing a voluntary renewable electricity standard through the state Legislature, a departure from the national trend toward mandatory standards.

Senate Bill 251, which passed the Indiana House Utilities and Energy committee Friday, calls for a voluntary goal of producing 10 percent of the state's electricity from renewable energy resources by 2025, including everything from wind to solar to coal-bed methane. The state currently produces more than 95 percent of its electricity from coal-fired power plants.

If passed, the bill would make Indiana one of eight states with a voluntary standard, which Hoosier Environmental Council executive director Jesse Kharbanda said would hurt the state's chances of attracting investment in renewables because banks and other financiers would be more likely to commit to states with mandatory standards.

A 2008 study by researchers at Lawrence Berkeley National Laboratory in Berkeley, Calif., found that nearly 70 percent of renewable investment in the U.S. goes to states with mandatory standards.

"The bottom line is that a renewable energy investor is going to look at our state and not see a favorable investment climate," Kharbanda said.

The bill's author, Sen. Beverly Gard., R-Greenfield, called that a weak argument and said she has never had a bank come to the state to address that concern. Gard said it's not the state's business to pick winners and losers in the energy sector, and the state's renewables industry is already gaining attention without a standard.

"I think if you look at the facts of what we have in this state, it shows we are committed and people recognize it," Gard said. "And that is why we're getting all the renewables in this state that we are."

A recent study by the Washington, D.C.-based American Wind Energy Association ranked Indiana 11th in wind power capacity installations, with 1,036 megawatts generated from wind farms. But most of that power is being sold to neighboring states with renewable electricity standards in place, including Ohio and Illinois, which will require 25 percent of electricity from renewable sources by 2025. Texas, Iowa and California accounted for the top three wind energy producers in the AWEA report, each generating more than 2,000 megawatts through wind turbine installations.

Twenty-eight states and the District of Columbia have adopted mandatory renewable standards, and most have fared well so far. But AWEA's director of state campaigns, Brad Lystra, said Indiana's wind energy sector could keep growing despite the voluntary standard.

The fact that Indiana exceeded 1,000 megawatts of wind power without a renewable electricity standard, Lystra said, indicates that the state might not need an official standard to foster clean energy generation. Those states with a mandate needed a law on the books to provide incentives for clean and renewable energy production, or else a market might not have existed, he said.

"It's a unique position. I would say nine times out of 10, in most states, the wind industry puts a premium on the passage of a mandatory standard," Lystra said. "At this instance, we cannot ignore the fact that Indiana has developed over 1,000 megawatts in wind in the absence of any renewable energy portfolio."

Kharbanda said he doesn't think a voluntary standard is a bad thing but is disappointed lawmakers didn't examine more closely the potential economic impact of a mandatory standard.

"The more concentrated your (renewable energy) construction is, the more likely suppliers who serve the needs of those units will locate near them," Kharbanda said, comparing such economic growth to the relationship between manufacturers and suppliers in the American auto industry.

Lystra said a mandatory standard might be prudent for Indiana if clean and renewable energy projects begin to wane, which he expects to happen in the next few years.


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