Climate bill spurs less green power than hoped

WASHINGTON (Reuters) - The renewable energy mandate in the climate change bill approved by the House of Representatives last week does not go far enough for green power proponents, but the proposed national standard is likely as strong as it will get.

Aimed at combating global warming, the House bill requires at least 15 percent of electricity generated by utilities to come from sources such as wind and solar by 2020, up from 2007 levels of around 2.5 percent.

President Barack Obama and clean energy advocates have called for a much higher national renewable electricity target of 25 percent by 2025, but House Democrats softened the goal to appease lawmakers from coal-dependent states.

Displeased with the concessions, two dozen renewable energy companies and trade groups ratcheted up lobbying efforts two weeks ago to spur Congress to boost the green energy target.

But experts say green power advocates probably will not be able to squeeze any more out of lawmakers, who fear saddling voters with higher energy bills in a recession.

"I think the less aggressive proposals show a concern by legislators that rates could change and go up, and that this is not a good way to get votes in recession," said Christine Tezak, senior energy policy analyst at Robert W. Baird and Co.

"A POSITIVE FOR RENEWABLE ENERGY"

Wind and solar producers still will benefit from the mandate if it becomes law, said Kevin Book, an energy analyst for ClearView Energy Partners.

"Despite appearances to the contrary, this is a positive for renewable energy because, like the Renewable Fuel Standard for biofuels, this is a real backstop," Book said.

Almost 30 states have already set targets for renewable energy production, and many exceed the House bill's proposed national standard.

While this may seem to make a watered-down national goal unnecessary, Book cautioned that many states already have altered their mandates when they became inconvenient.

"Even if the federal standard did nothing but hold states to their own targets, it would be considerably stronger than the status quo," Book said.

Even with a national mandate, renewable energy companies would face major hurdles, including competition from cheaper forms of power and lack of a modernized transmission grid.

"Targets below 25 percent by 2025 reflect a shade of realism regarding the scale of capital investment needed to hit such an unrealistic target," said Ken Medlock of the Baker Institute at Rice University in Houston, Texas.

RENEWABLE BOOSTERS LOOK TO THE SENATE

The House legislation tries to put a cost on greenhouse gas emissions by requiring major polluters to acquire permits.

But more than 85 percent of permits will be given away to industries. An Environmental Protection Agency analysis of the bill concluded permit prices will not be high enough in the short term to "drive a significant amount of additional low- or zero-carbon energy."

While the national standard would be an important symbolic move, it will not significantly increase pressure to boost use of renewable energy, said Rob Gramlich, senior vice president for public policy of the American Wind Energy Association.

The bill could weaken demand for wind power and other renewable sources by expanding the definition of renewable energy sources, and requiring that power providers reduce total energy use by 5 percent through efficiency gains, he said.

The House bill will not "deploy significant new renewable energy above what states are doing and (it won't) keep development going at current levels well into the future," Gramlich said.

AWEA supported passing the House legislation, but Gramlich said the group hopes to lobby the Senate to boost its target.

That will be no easy task. The Senate Energy and Natural Resources Committee recently approved a comprehensive energy bill that would set a 15 percent renewable power goal, but states could meet up to a quarter of the mandate through energy efficiency measures.

Several Senators have said they hope to strengthen the standard before a full chamber vote, but it will be hard to gain support of lawmakers from states without many renewable resources, who worry their constituents will face higher electricity prices.

"Industry lobbyists are certainly trying to strengthen the mandates, but they're up against fundamentals," Book said. "The major obstacle the sector faces is the obligation to become cost-competitive on its own merits."

Both chambers will have to agree on a final version of the measure before it is signed into law.

(Reporting by Ayesha Rascoe; Editing by David Gregorio)