State needs stronger restrictions on what counts as a renewable energy source

The Clean Energy Jobs Act may pass the General Assembly this year. But without changes, the act won’t deliver all the clean energy it promises, and will possibly waste hundreds of millions of dollars of Maryland ratepayers’ money.

The legislation calls for 14.5 percent Maryland solar energy by 2030, and as much as 10 percent offshore wind. Those are good, ambitious targets that will support Maryland jobs and clean energy. But that gets us less than halfway to CEJA’s target of 50 percent renewable energy by 2030. Where does the rest come from?

The same place it comes from today: “unbundled,” renewable energy credits. Renewable energy credits represent that renewable energy has been produced somewhere on the grid, but they are an add-on to energy, not the energy itself.

Because of Maryland’s loose restrictions on what types of unbundled renewable energy credits can be counted as renewable energy, the credits often provide little more than a veneer of cleanliness to our regular dirty fuel sources. Buying these types of renewable energy credits doesn’t provide physical delivery of electricity to customers. Maryland’s electricity still comes overwhelmingly from fossil fuels and nuclear. Instead, these credits give us the right to claim our energy is cleaner than it really is, and we pay extra for the pretense.

Defenders of the buying out-of-state unbundled renewable energy credits say the practice helps developers finance renewable energy projects, and that is good for Maryland. That may be true in some cases. However, because of Maryland’s loose restrictions on what types of unbundled renewable energy credits can be counted as renewable energy, Maryland ratepayers often end up subsidizing either dirty energy sources or out-of-state energy sources that don’t need our subsidies.

For example, in many Midwestern states, wind energy is now the cheapest source of electricity. Yet Maryland utilities bought almost $12 million worth of unbundled renewable energy credits from wind farms in North Dakota, Iowa, Illinois, Indiana and Ohio in 2017. When Maryland utilities buy unbundled renewable energy credits from wind farms in other states, we have no way of knowing whether those wind farms need our subsidies, and if so, why Maryland ratepayers should be footing the bill. Maryland could better incentivize new wind development and save money for customers by requiring utilities to enter into contracts to buy real wind energy — including from these Midwestern states — not just the unbundled credits. This “bundled” approach means Maryland customers would buy real clean energy in place of fossil fuels decorated with renewable energy credits.

But at least wind energy is clean. Many of the sources for Maryland renewable energy credits are dirtier than fossil fuels. In 2017, highly polluting sources like trash incinerators, woody biomass and black liquor (a waste product of paper mills) provided a whopping 41 percent of the renewable energy credits paid for by Maryland consumers. Most of the dirty biomass and black liquor renewable energy credits are produced by highly polluting industrial operations in states such as Virginia, Tennessee, North Carolina and Ohio, and are owned and operated by corporations worth billions of dollars. Maryland residents and businesses should not pay higher electricity bills to subsidize wealthy, out-of-state corporate polluters in the name of clean energy.

A final problem with Maryland’s use of unbundled renewable energy credits — also continued in CEJA—is that it places no limit on the age of facilities that qualify. If we want to incentivize new, clean energy, it makes no sense to allow utilities to buy credits from decades-old, out-of-state facilities that provide no electricity to Maryland businesses and residents. That includes many of the small hydroelectric facilities in states such as New York, New Jersey, Pennsylvania, Virginia, West Virginia and Illinois.

Other leading clean energy states have addressed the problem of unbundled renewable energy credits. In California, which has a 50 percent RPS, only 10 percent of renewable energy credits may be unbundled. New York, which also has a 50 percent renewable energy standard, requires that almost all the credits come from facilities that commenced operation after January 1, 2015, and are located in New York or that the electricity is delivered and sold in New York under contract. In, Illinois at least 75 percent of the renewable energy credits must come from wind and solar projects, and facilities must generally be located in Illinois.

The Clean Energy Jobs Act represents a big commitment for Maryland. Given the financial strain many Maryland residents face and our current climate emergency, the General Assembly should fix the legislation so that Maryland residents and businesses can be confident they are paying for real clean energy in their electric bills, or subsidizing projects that provide real economic and climate benefits for our state.

Tim Whitehouse

The writer is executive director of Chesapeake Physicians for Social Responsibility.

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