Promoting Renewable Energy in Maine

Here's an editorial piece I wrote about how we can promote renewable energy in Maine:

As energy prices increase, many people in Maine are unable to pay their fuel and electricity bills. The long-term solution to this crisis is to heat and power our homes and businesses with the free energy from the sun that is already being delivered every day to every part of our state.

I believe we Mainers should begin weaning ourselves from an unhealthy addiction to foreign oil. We should let the market determine the price of gasoline and fuel oil. Artificially subsidizing the costs of burning fossil fuels through government programs simply makes the problem worse by retarding the necessary investment in sustainable local energy solutions. The rising price of fossil fuel levels the playing field for solar, geothermal and tidal energy.

Although market forces are probably the most efficient way to allocate resources toward viable energy solutions, it is unrealistic to expect politicians to restrain themselves from trying to use governmental power to help people struggling with the unprecedented fossil fuel crisis. Several proposals are circulating now about how to reduce the price of fossil fuels (dragging us further into a hopeless situation) or to reduce the price of renewable energy (arguably moving us closer to a sustainable energy future). All of these proposals suffer from the same problem: lack of government funding to sustain the subsidies in the face of increases in the real costs of fuel.

In particular, I think efforts to re-regulate our electricity market through feed-in tariffs are particularly misguided. Experience with regulated energy markets worldwide shows that central planners are unable to predict real costs and technological advances. As a result, tariff pricing leads to massive inefficiencies, higher prices and poor public infrastructure investments.

A better approach, in my mind, is to pursue our current policy of renewable portfolio standards. Rather than dictating a particular price as in a tariff scheme, regulators dictate acceptable standards for how energy is to be generated. For example, regulators may require energy providers not to pollute, or to use only renewable fuels. The market is then free to set efficient prices and make investments in technologies that meet the production standards set by regulators. Regulators enforce the rules by fining or imprisoning violators.

The major risk to both a tariff scheme and a renewable portfolio standard is that the regulators may set an unrealistic target that simply cannot be met by the market in a cost-effective manner. A renewable portfolio standard, however, is better able to allow prices to increase to attract the necessary additional capital to make the required investments. In the end, regulators will have to confront the reality that they can control price or they can control quality, but they can't control both. At this stage in our energy crisis, I believe we must focus the efforts of our regulators on improving the quality of our energy supply and allow prices to rise to reflect the true costs of our energy systems.

There are several ways to capture and use solar energy:

• wood, potatoes, straw, ethanol, biodiesel and other "biofuel"
• passive solar design
• active solar heating
• active solar power
• wind power

Forcing a tariff rate on the various options is likely to be extremely difficult. However, there are clear standards that could be established and enforced by state regulators under a renewable portfolio standard. For example, emissions can be measured and standards adopted that would eliminate coal and wood-fired power plants, shifting investment toward cleaner sources by simply fining or imprisoning producers that exceed pollution standards. We could nudge along the adoption of clean energy systems by expanding our current "net-zero" policy for home-owner clean energy systems to be a "net-positive" policy. Home owners who have installed solar panels on their grid-connected properties should be paid for all of the net power they feed back to the grid, not just a portion of it as is currently the law.

Whatever policy the state adopts, it must take steps to provide long-term predictability to the market. Since we have recently adopted electricity price competition with renewable portfolio standards, I think it would send the wrong signal to go back to a regulated tariff scheme. My message to regulators is this: "Set high standards, enforce them strictly, and give private investors the confidence that the rules of the game aren't in flux."

In the end, our state and we residents must confront the basic fact that fossil fuel prices are out of our control. Sooner or later we should switch to local, clean sources of energy: solar, geothermal and tidal. These are the only energy sources that can sustain our future economic prosperity.