Renewable Energy Portfolio Standard (RPS): Background and Debate Over a National Requirement
Prepared for Members and Committees of Congress
Under a renewable energy portfolio standard (RPS), retail electricity suppliers (electric utilities)
must provide a minimum amount of electricity from renewable energy resources or purchase
tradable credits that represent an equivalent amount of renewable energy production. The
minimum requirement is often set as a percentage share of retail electricity sales. More than 20
states have established an RPS, with most targets ranging from 10% to 20% and most target
deadlines ranging from 2010 to 2025. Most states have established tradable credits as a way to
lower costs and facilitate compliance. State RPS action has provided an experience base for the
design of a possible national requirement.
RPS proponents contend that a national system of tradable credits would enable retail suppliers in
states with fewer resources to comply at the least cost by purchasing credits from organizations in
states with a surplus of low-cost production. Opponents counter that regional differences in
availability, amount, and types of renewable energy resources would make a federal RPS unfair
In Senate floor action on H.R. 6 in the 110th Congress, S.Amdt. 1537 proposed a 15% RPS target.
The proposal triggered a lively debate, but was ultimately ruled non-germane. In that debate,
opponents argued that a national RPS would disadvantage certain regions of the country,
particularly the Southeastern states. They contended that the South lacks a sufficient amount of
renewable energy resources to meet a 15% renewables requirement. They further concluded that
an RPS would cause retail electricity prices to rise for many consumers.
RPS proponents countered by citing a study by the Energy Information Administration (EIA).
The report examined the potential impacts of the 15% RPS proposed in S.Amdt. 1537. It
indicated that the South has sufficient biomass generation, both from dedicated biomass plants
and existing coal plants co-firing with biomass fuel, to meet a 15% RPS. EIA noted further that
the estimated net RPS requirement for the South would not make it “unusually dependent” on
other regions and was in fact “below the national average requirement....” Regarding electricity
prices, EIA estimated that the 15% RPS would likely raise retail prices by slightly less than 1%
over the 2005 to 2030 period. Further, the RPS would likely cause retail natural gas prices to fall
slightly over that period.
In House floor action on an RPS amendment (H.Amdt. 748) to H.R. 3221, key points and
counterpoints of the Senate RPS debate were repeated. The RPS was added (220 to 190), and the
bill passed the House (241 to 172). The RPS amendment would set a 15% target for 2020, and
would allow up to 4 percentage points of the requirement to be met with energy efficiency
measures. After House action, informal bipartisan House-Senate negotiations began. The House
RPS provision (§9006) continues to be key issue. On December 1, 2007, the Ranking Member of
the Senate Energy and Natural Resources Committee stated that the House Leadership’s intent to
include an RPS led him to cease negotiations. Further, the White House has reportedly announced
that it would veto the bill if it includes an RPS.
Backgr ound ..................................................................................................................................... 1
The RPS Mechanism.................................................................................................................1
State RPS Action.......................................................................................................................1
Electricity Production Targets.............................................................................................2
Credit Flexibility Mechanisms............................................................................................3
Federal RPS Action and Debate......................................................................................................3
Federal RPS Legislation............................................................................................................3
Renewable Portfolio Standard (S.Amdt. 1537 to H.R. 6)...................................................3
Federal Renewable Portfolio Standard (H.Amdt. 748 to H.R. 3221).................................4
Comparing H.Amdt. 748 with S.Amdt. 1537.....................................................................5
Senate RPS Debate (S.Amdt. 1537 to H.R. 6)..........................................................................6
Resource Availability and Electricity Price Impacts...........................................................6
An Alternative Proposal: The “Clean Energy” Portfolio Standard.....................................9
House RPS Debate (H.Amdt. 748 to H.R. 3221)......................................................................9
EIA Report on RPS Provision in H.R. 3221..................................................................................10
Informal House-Senate Negotiations.............................................................................................11
Table 1. H.Amdt. 748 Compared with S.Amdt. 1537.....................................................................5
Author Contact Information..........................................................................................................12
Under a renewable energy portfolio standard (RPS), retail electricity suppliers (electric utilities)
must either provide a minimum amount of electricity from renewable energy resources or
purchase tradable credits that represent an equivalent amount of renewable energy production.
The minimum requirement is often set as a percentage share of retail electricity sales, which is 1
usually expressed in terms of kilowatt-hours (kwh). Many RPS programs use tradable credits,
sometimes referred to as renewable energy certificates, to increase flexibility and reduce the cost 2
of compliance with the purchase mandate, and to facilitate compliance tracking.
In the late 1990s, many states began to restructure their electric utility industries to allow for
increased competition. Some of the states with this newly “restructured” system established an 3
RPS as a way to create a continuing role for renewable energy in power production. Some states
without a restructured industry also began to adopt an RPS. The total number of states with an
RPS has grown steadily. In June 2007, the Federal Energy Regulatory Commission (FERC) 4
reported that 23 states and the District of Columbia had an RPS in place, collectively covering 5
about 40% of the national electric load. Mandatory state RPS targets range from a low of 2% to a
high of 25%. However, most targets range from 10% to 20% and are scheduled to be reached
between 2010 and 2025. Although this emerging “tapestry of state programs” continues to spread
to more states, the majority of recent actions have been to increase and accelerate previously 6
established standards. Most states have a similar definition of eligible renewable resources that
covers wind, solar, geothermal, biomass, and several forms of water-based power, including 7
hydropower, current, wave, tidal, and ocean power. At least 19 of the 23 states allow some form
1 Most states use the percentage requirement. The only exceptions are Texas and Iowa, which have chosen to specify
the minimum requirement in terms of installed capacity, measured in terms of millions of watts (megawatts).
Department of Energy (DOE). Lawrence Berkeley National Laboratory (Berkeley Lab). Renewables Portfolio
Standards: A Factual Introduction to Experience from the United States. (LBNL-62569) April 2007. p. 3.
2 DOE. Lawrence Berkeley National Laboratory (LBNL). Weighing the Costs and Benefits of State Renewables
Portfolio Standards: A Comparative Analysis of State-Level Policy Impact Projections, March 2007. p. 1.
3 Section 210 of the Public Utility Regulatory Policies Act (PURPA) of 1978 had guaranteed a market for the purchase
of electric power produced from small renewable energy facilities. PURPA let states determine the avoided cost pricing
of the electricity production from renewable energy facilities. The effectiveness of this mechanism lessened with the
advent of electric industry restructuring. Provided that certain conditions are met in any given state, Section 1253 of the
Energy Policy Act of 2005 terminates the PURPA requirements.
4 DOE. FERC. Renewable Energy Portfolio Standards (RPS). This is a map showing the status of state action on RPS.
Updated June 7, 2007. http://www.ferc.gov/market-oversight/mkt-electric/overview/2007/elec-ovr-rps.pdf. Also,
DOE’s Office of Energy Efficiency and Renewable Energy (EERE) has posted a map showing the status of state RPS
action. EERE notes that four additional states (Illinois, Missouri, Vermont, and Virginia) have enacted non-binding
“goals” for renewable electricity production. http://www.eere.energy.gov/states/maps/renewable_portfolio_states.cfm.
5 Berkeley Lab, Renewable Portfolio Standards.
6 The Pew Center on Global Climate Change reviewed the status of state RPS policies in 2006. See Race to the Top:
The Expanding Role of U.S. State Renewable Portfolio Standards. 2006. 36 p. http://www.pewclimate.org/global-
7 Details about eligible resources and other provisions of state RPS programs are available from the online Database of
of credit trading. Non-compliance penalties range from about one cent per kwh to 5.5 cents per
kwh. There are significant regional differences in resource availability. As shown in the
previously cited FERC map, most states in the Southeast and Midwest regions do not have an
RPS requirement. Several states have broadened their RPS provisions to allow certain energy 8
efficiency measures and technologies to help satisfy the requirement.
Most state RPS programs employ an annual renewable energy target that is set as a percentage of 9
total projected electricity production. With a percentage requirement, the amount of mandated
renewable energy will increase or decrease in proportion to changes in end-use electricity sales.
In general, the targets increase gradually, in a step-wise fashion, over a period of several years.
The scheduled rise of the annual target, and its peak value, are intended to create predictable
long-term purchase obligations that drive new development and economies of scale. The
graduated schedule is intended to allow time for competition to emerge among eligible resources.
Also, to create stability that allows for long-term contracts and financing that can help keep
renewable energy costs down, the peak target often is designed to remain in place for several
years after it is reached. Most state targets include only generation from new renewable energy 10
facilities, placed in service after the RPS standard is enacted.
Many states have created tradable credits as a way to lower costs and facilitate compliance.
Typically, the owner of a qualified renewable energy facility receives one credit for each kilowatt-
hour of electricity produced. The credits are treated as a product separate from generated power.
Credits are a purely financial product that represents the attributes of electricity generated from
renewable energy sources. The owner may bundle the credits for sale with its electrical energy.
Alternatively, the owner may sell the credits and power separately. The power would be sold in 11
the electricity market, and the credits would be sold in a secondary credit trading market.
Each year, RPS requires all retail suppliers to show that they have acquired a number of credits
equivalent to the percentage target for the previous year. The retail suppliers have options for
meeting this requirement. Suppliers can choose to build a renewable energy facility, purchase
renewable power bundled with credits, or buy credits separately through the trading market. They
are also free to choose the types of renewable energy to acquire, the price paid, and the contract
terms offered. Further, they can choose whether to enter into long-term credit and/or renewable
power purchase contracts or to purchase these commodities on the spot market. If a supplier
cannot obtain sufficient credits through these means, it can achieve “alternative compliance” by
purchasing additional credits from the state regulatory agency. For a supplier that otherwise fails
State Incentives for Renewable Energy and Energy Efficiency. http://www.dsireusa.org/.
8 The most frequently occurring energy efficiency measures are fuel cells and combined heat and power equipment.
9 Some states use a variation of this target. For example, Texas uses a capacity development target converted annually
into a percentage energy target.
10 Many states exclude existing hydropower and certain other renewables. Several states place them in a separate “tier.”
11 Evolution Markets. An Overview of the Renewable Energy Credit (REC) Markets. January 30, 2006. p. 4.
to meet the credit target, most states require that it purchase additional credits at a higher penalty
Spreading credit requirements over a longer time period can make a credit trading market more
flexible. Many credit trading systems provide a “true-up” (reconciliation) period after the RPS
compliance year. During this period, retailers that are short on their obligation can buy additional 12
credits and those with excess credits can sell them. “Credit banking” can reduce retailer risk and
promote economies of scale by allowing credits to be carried forward to one or more future years. 13
“Deficit banking” allows a retailer to defer making up a credit shortage to a future year.
Legislative proposals to establish a federal RPS date back to the 105th Congress. During the 107th, thth
committee action. Several bills introduced in the 110 Congress would create an RPS. In Senate
floor action on H.R. 6, S.Amdt. 1537 proposed a 15% RPS. The proposal triggered a lively th
debate, but was ultimately ruled non-germane. In House action during the 110 Congress, H.R.
969 was introduced with a proposal for a 20% RPS target. The House Leadership indicates that
H.R. 969 may be offered as a floor amendment to H.R. 3221, the House energy independence 15
During Senate floor debate on H.R. 6, S.Amdt. 1537 proposed to add an RPS title to the bill.16
The proposal would have modified Title VI of the Public Utility Regulatory Policies Act of 1978
to establish an RPS for retail electric utilities that would be administered by the Department of
12 Reconciliation often employs a three-month period.
13 Most states limit the “banking” period, to ensure compliance is not unduly deferred and to prevent credit hoarding
from causing artificial shortages.
14 These bills include H.R. 969, H.R. 1133, H.R. 1945, H.R. 1590, H.R. 2950, and S. 309, S. 1554, S. 1567, and S.
1602. Descriptions of the RPS provisions in these bills are provided in CRS Report RL33831, Energy Efficiency and th
Renewable Energy Legislation in the 110 Congress, by Fred Sissine, Lynn J. Cunningham, and Mark Gurevitz.
15 During the House Energy and Commerce Committee’s markup of draft energy independence legislation, a proposed
amendment would have added H.R. 969 to the legislation, but it was later withdrawn. On July 31, 2007, the
EnergyWashington.com online newsletter reported in RPS Debate Is A Go in the House that the Speaker of the House
was supporting the effort for an RPS floor amendment that would be based on H.R. 969. http://energywashington.com/
A summary of the Senate-passed version of H.R. 6 and the House energy independence legislation are presented in th
CRS Report RL33831, Energy Efficiency and Renewable Energy Legislation in the 110 Congress, by Fred Sissine,
Lynn J. Cunningham, and Mark Gurevitz.
16 In Senate floor action on its proposed substitute (S.Amdt. 1502) to H.R. 6, S.Amdt. 1537 to the substitute was
introduced, which proposed adding an RPS. S.Amdt. 1537 had not been considered when a successful cloture motion
(65-27) on the substitute took place. S.Amdt. 1537 was subsequently ruled non-germane.
Energy (DOE). For each retail supplier that sells more than four billion kwh per year,17 the RPS
would set a minimum electricity production requirement from renewable resources.
The standard would start at 3.75% in 2010, rising to 7.5% in 2013, 11.25% in 2017, and then
reaching a peak of 15% in 2020. Resources eligible to meet the RPS would include wind, solar,
geothermal, biomass, landfill gas, ocean (including current, wave, tidal, and ocean thermal), and
incremental hydropower. Existing generation from hydroelectric and municipal solid waste
facilities would not be eligible to meet the percentage standard, but could be excluded from the
sales base used to calculate the RPS.
To supplement direct generation, retail suppliers would be allowed to purchase power from other
organizations, purchase tradable credits from suppliers with a surplus, and purchase credits from
the government at an inflation-adjusted rate that would currently stand at 1.9 cents/kwh credit.
Power generated on Native American lands would receive a double credit, and onsite distributed
generation capacity smaller than one megawatt (mw) used to offset the requirement would receive
a triple credit. An excess of tradable credits could be carried forward (banked) for up to two
additional years into the future. A credit deficit would lead to a penalty that would be set as the
greater of 2.0 cents/kwh or 200% of the average market value of the credits. A credit cost cap
(adjusted for inflation) would be set at 2.0 cents/kwh.
States would be allowed to have stronger RPS requirements. Funds gathered from alternative
compliance and penalty payments would be used for state grants to support renewable energy
production, particularly in states that have a low current capacity for renewable energy
During the House Energy and Commerce Committee’s markup of draft energy independence
legislation, a proposed amendment would have added H.Amdt. 748 to the legislation, but it was
later withdrawn. Similar to S.Amdt. 1537, H.Amdt. 748 would modify Title VI of the Public
Utility Regulatory Policies Act of 1978 to establish an RPS for retail electric utilities that would 18
be administered by DOE. For each retail supplier that sells more than one billion kwh per year, 19
the RPS would set a minimum electricity production requirement from renewable resources.
The standard would start at 2.75% in 2010 and then rise annually until reaching a peak of 15% in
2020. Electricity savings from energy efficiency measures would be allowed to compose a
maximum of 25% of the standard in any given year, rising to a peak of 4% of the 15% total in
Renewable energy resources eligible to meet the RPS would include wind, solar, geothermal,
biomass, landfill gas, ocean, tidal, and incremental hydropower. Existing generation from
hydroelectric facilities would not be eligible to meet the percentage standard, but could be
excluded from the sales base used to calculate the RPS.
17 This minimum production threshold was designed to exempt most non-profit utilities, such as rural electric
cooperatives and municipal utilities.
18 However, the amendment specifically exempts all retail suppliers in Hawaii.
19 As with S.Amdt. 1537, this minimum production threshold, although substantially lower, was designed to exempt
most non-profit utilities, such as rural electric cooperatives and municipal utilities.
To supplement direct generation, retail suppliers would be allowed to purchase power from other
organizations, purchase tradable credits from suppliers with a surplus, and purchase credits from
the government at an initial rate of 1.9 cents/kwh credit that would be inflation-adjusted. Power
generated on Native American lands would receive a double credit, and onsite generation used to
offset the requirement would receive a triple credit. An excess of tradable credits could be carried
forward (banked) for up to four years, and a deficit of credits could be “borrowed” from
anticipated generation up to three years into the future. A credit deficit would lead to a penalty
that would be set as the lesser of 4.5 cents/kwh or 300% of the average market value of the
credits. A credit cost cap (adjusted for inflation) would be set as the lesser of 3.0 cents/kwh or
The governor of a state may petition DOE to allow up to 25% of a retail supplier’s requirement to
be met by submitting federal energy efficiency credits associated with eligible (“qualifying”)
electricity savings. Eligible electricity savings from end-use energy efficiency actions would
include customer facility savings, reductions in distribution system losses, output from new
combined heat and power systems, and recycled energy savings obtained from commercial and
industrial systems. In each case, the electricity savings would have to meet the measurement and
verification requirements that would be set out in DOE regulations.
States would be allowed to have stronger RPS requirements. DOE would be required to engage
the National Academy of Sciences to evaluate the RPS program.
As Table 1 shows, S.Amdt. 1537 and H.Amdt. 748 have some similarities but differ in several
important aspects. The two proposals have nearly identical conditions for overall target
percentage, eligible resources, base amount, multiple credits, and state policy coordination.
However, the proposals have notable differences in the exemption criterion, inclusion of 4%
energy efficiency in target percentage, sunset date, tradable credit cost cap, and flexibility
mechanisms. H.Amdt. 748 includes a program evaluation provision and S.Amdt. 1537 did not.
Both proposals have a state grant provision. The grant provision in S.Amdt. 1537 had an
additional focus on states with a low renewable energy resource capacity. The grant provision in
H.Amdt. 748 allows funding to be used for grants, production incentives, and other state-
approved mechanisms for renewable energy and energy efficiency.
Table 1. H.Amdt. 748 Compared with S.Amdt. 1537
Policy Design Element H.Amdt. 748 S.Amdt. 1537
Electric Utility/Retail Supplier 1 billion kwh (1 million mwh) or more; all 4 billion kwh (4 million mwh) or more
suppliers in Hawaii excluded
- Initial Date 2010 2010
- Initial Value 2.75% 3.75%
- Peak Start Date 2020 2020
- Peak Value 15% 15%
- Sunset Date 2039 2030
Eligible Resources solar, wind, ocean, tidal, geothermal, solar, wind, ocean (current, wave,
(includes new facilities and biomass, landfill gas, incremental hydro tidal, and thermal), biomass,
incremental production from pre-geothermal, landfill gas, incremental
existing facilities) hydro
Policy Design Element H.Amdt. 748 S.Amdt. 1537
Base Amount Excludes pre-existing hydropower and Excludes pre-existing hydropower and
MSW-generated power MSW-generated power
- Native American Land - double credit - double credit
- On-Site Offset - triple credit - triple credit (less than 1 mw)
- Cost Cap/Alternative - lesser of 3 cents/kwh or 200% of AMV - 2 cents/kwh
++carry forward - 3 years - 2 years
++borrow from future - 3 years - none specified
Coordination with State Policies states can have higher standards states can have higher standards
NAS Program Evaluation yes, within 8 years none specified
Non-Compliance Penalty the lesser of the greater of
4.5 cents/kwh 2.0 cents/kwh
(inflation adjusted) (inflation adjusted)
or 300% AMV or 200% AMV
Use of funds from Alternative grants to states for renewable energy state grants for renewable energy
Compliance and Penalties production, low income energy production; priority for states with
assistance, and weatherization services; low renewable energy capacity
in each state, at least 75% must go to
grants and production incentives for
renewables and efficiency
Note on acronyms: The term kwh stands for kilowatt-hours; mwh stands for megawatt-hours; MSW stands
for municipal solid waste; and AMV stands for average market value.
The following discussion describes some key aspects of the Senate floor debate over S.Amdt.
In the Senate RPS debate, opponents argued that regional differences in availability, amount, and
types of renewable energy resources could make a federal RPS unfair. To support this point, a
letter was introduced from the Southeastern Association of Regulatory Utility Commissioners that
The reality is that not all States are fortunate enough to have abundant traditional renewable
energy resources, such as wind, or have them located close enough to the load to render them
cost-effective. This is especially true in the Southeast and large parts of the Midwest.... Our
retail electricity customers will end up paying higher electricity prices, with nothing to show 20
Further, a fact sheet prepared by the Edison Electric Institute (EEI) elaborated on the point about
the potential impact on electricity prices:
20 Congressional Record. Vol. 153, June 13, 2007. p. S7687.
A federal RPS requirement could cost electricity consumers billions of dollars in higher
electricity prices, but with no guarantee that additional renewable generation will actually be
developed. Because many retail electric suppliers will not be able to meet an RPS
requirement through their own generation, they will be required to purchase higher cost
renewable energy from other suppliers or purchase renewable energy credits. Thus a
nationwide RPS mandate will mean a massive wealth transfer from electric consumers in
states with little or no renewable resources to the federal government or states where 21
renewables happen to be more abundant.
Proponents counterargued that a national system of tradable credits would enable retail suppliers
in states with less abundant resources to comply at the least cost by purchasing credits from
organizations in states with a surplus of low-cost production. Also, supporters pointed out that
S.Amdt. 1537 provided that funds collected from payments for alternative compliance and
penalties would be used to provide grants:
... to states in regions which have a disproportionately small share of economically 22
sustainable renewable energy generation capacity....
The proponents also noted that in addition to many environmental and public interest groups, the
RPS proposal was supported by some electric and natural gas utility companies as well as several 23
corporations, including BP America and General Electric.
Perhaps most importantly, RPS proponents countered by citing a study prepared by the
Department of Energy’s Energy Information Administration (EIA). The report examined the 24
potential impacts of the 15% RPS proposed in S.Amdt. 1537. Regarding resource availability,
the report found that:
Biomass generation, both from dedicated biomass plants and existing coal plants co-firing
with biomass fuel, grows the most by 2030, more than tripling from 102 billion kilowatt-25
hours (kwh) in the reference case to 318 billion kwh with the RPS policy.
In a follow-up fact sheet to that study, EIA noted that “the South has significant biomass 26
potential.” Compared with other regions of the country, EIA found that the South would not be
“unusually reliant on purchases of allowances from other regions or the federal allowance 27
window....” Further, EIA found that the net requirement for the core region of the South defined
21 EEI. EEI Raises Concerns About a Mandatory Federal Renewable Portfolio Standard. June 12, 2007.
http://www.eei.org/newsroom/energy_news/rps.htm See Fact Sheet entitled: Protect Electricity Consumers and
Existing State Renewable Power Programs: Congress Should Oppose a Mandatory Federal Renewable Portfolio
Standard. 3 p. http://www.eei.org/industry_issues/electricity_policy/state_and_local_policies/rps.pdf.
22 Congressional Record. Vol. 153, June 13, 2007. p. S7657.
23 The list of supporters is available on the Web at http://energy.senate.gov/public/
24 DOE. EIA. Impacts of a 15-Percent Renewable Portfolio Standard. June 2007. 24 p.
25 EIA, Impacts of a 15% RPS, p. 7.
26 EIA. Supplemental Results to “Impacts of a 15-percent Renewable Portfolio Standard.” Provided to Senator
Bingaman, July 26, 2007. 17 p. Also, a map of biomass resource potential prepared by DOE’s National Renewable
Energy Laboratory (NREL) is available on the Web at http://www.nrel.gov/gis/images/biomass.jpg.
27 EIA defined “the South” broadly to include four regions of the National American Electric Reliability Corporation
(NERC). They are: Southern Electric Reliability Corporation (SERC), Florida Reliability Coordinating Council
(FRCC), Southwest Power Pool (SPP), and Electric Reliability Council of Texas (ERCOT). A map of the NERC
regions is available at http://www.nerc.com/regional/.
by the Southern Electric Reliability Corporation (SERC)—after subtracting exemptions for small
retailers and adjusting the baseline generation for pre-existing hydropower and municipal solid 28
waste facilities—was “below the national average requirement across all regions.”
Regarding electricity prices, RPS proponents also cited findings from the EIA study. EIA
estimated that, relative to its base case projections for retail electricity prices, the 15% RPS would
likely raise retail prices by slightly less than 1% over the 2005 to 2030 period. Further, the report
estimated that relative to its base case projections for retail natural gas prices, the RPS would 29
likely cause retail natural gas prices to fall slightly over the 2005 to 2030 period.
EIA qualified the report’s findings on potential electricity price impacts. It noted that projected
impacts of an RPS on expenditures for electricity and natural gas in end-use sectors are sensitive
to assumptions about the projected baseline generation fuel mix in its reference case. A higher
share of natural gas in the generation mix would allow an RPS to displace proportionally more
natural gas. Thus, to the extent that natural gas contributes a larger share of the future generation
mix, the 15% RPS would have more economically favorable impacts. To the extent that natural 30
gas contributes a smaller share, the opposite effect would be more likely.
Opponents also contended that the proposed 15% RPS could impose indirect costs for
transmission. EEI stressed that costly new high-voltage transmission lines would be needed, 31
especially for wind turbines, which are often located far from population centers. EEI further
notes that delays are likely and transmission infrastructure issues have posed significant 32
challenges to the growth of renewable generation. Some analysts have suggested that even if
plans and financing were in place now to develop the national transmission capacity needed to
meet a 15% (or higher) RPS, the construction could not take place quickly enough to meet the 33
The American Wind Energy Association (AWEA) has acknowledged the transmission issue, 34
pointing to ongoing efforts to address it. For example, the Texas RPS is driving a boom in wind
development. To address transmission constraints there, the state recently established
“competitive renewable energy zones,” and directed the Electric Reliability Council of Texas 35
(ERCOT) to develop transmission plans for up to 25,000 megawatts of new wind capacity.
28 As shown by the NERC map cited in the previous footnote, the SERC region includes the states of Mississippi,
Alabama, Georgia, North Carolina, South Carolina, Tennessee, and parts of Florida, Illinois, Missouri, Arkansas,
Louisiana, and Virginia.
29 EIA, Impacts of a 15% RPS, p. iv and v.
30 EIA, Impacts of a 15% RPS, p. v.
31 EEI, Protect Electricity Consumers, p. 3.
32 EEI, Protect Electricity Consumers, p. 3.
33 For more on this issue, see CRS Report RL33875, Electric Transmission: Approaches for Energizing a Sagging
Industry, by Amy Abel. Also see Tripp, Jennifer B. Transmission Access and Delivering the Wind Power. Presentation
developed for R. W. Beck, Inc. (Available from CRS. Not available on the Web.)
34 AWEA reports both regulatory and legislative efforts underway to address the transmission issue.
35 AWEA. Windletter. July 2007. p. 7. http://www.awea.org/windletter/073107_AWEA_WL.pdf.
RPS proponents note that transmission may be much less of an issue for biomass power
development in the South. For co-firing in existing coal plants, new biomass generation may not
require any new transmission infrastructure. Even for new biomass plants, transmission needs
may involve shorter distances, smaller volumes, and lower costs than that which may be required
for more remote wind farm locations in the Midwest regions.
Opponents of RPS brought an alternative measure to the Senate floor that they argued would
address their concerns about resource hardship, transmission needs, and electricity price
increases. That measure, S.Amdt. 1538, proposed expanding the RPS concept to include energy 36
efficiency measures and other energy production facilities. The “Clean Portfolio Standard,” or
CPS, would have started the requirement at 5% in 2010 and increased to 20% by 2020. Eligible
resources would have been expanded beyond renewables to include energy efficiency, fuel cells,
new nuclear power plants, and new coal power plants that include carbon dioxide capture and
RPS proponents argued against the CPS proposal. They asserted that the main purpose of the RPS
was to stimulate the market development of new pre-commercial and near-commercial renewable
energy equipment. The CPS, they said, would not require any real change in the energy mix, and
would mainly add an incentive to expand the use of conventional nuclear energy and fossil energy
with carbon capture. In conclusion, RPS proponents contended that the CPS proposal would 37
eliminate any real requirement to produce additional power from renewables. S.Amdt. 1538 was 38
tabled by a vote of 56 to 39.
In House floor action on H.R. 3221, an RPS amendment (H.Amdt. 748) was added by a vote of
220 to 190. The bill subsequently passed the House by a vote of 241 to 172. The RPS amendment
would set a 15% target for 2020, and would allow up to 4 percentage points of the requirement to
be met with energy efficiency measures. The issues in debate, and the constellation of proponents
and opponents, were similar to the elements of the preceding Senate floor debate over S.Amdt.
The arguments in opposition to H.Amdt. 748 echoed those raised in the Senate RPS floor debate.
The National Association of Manufacturers (NAM) and the Edison Electric Institute (EEI) 39
expressed their opposition to RPS. Both NAM and EEI stated that the RPS could create
hardship for states and regions with low amounts of renewable resources, impose burdens for
electricity transmission and reliability, and raise electricity prices for consumers. Both also stated
support for a long-term extension of federal tax credits for renewables, which they contended
would be the most effective form of support. On the House floor, RPS opponents decried the
36 Congressional Record. Vol. 153, June 13, 2007. p. S7658-S7659.
37 Congressional Record. Vol. 153, June 14, 2007. p. S7690.
38 Congressional Record. Vol. 153, June 14, 2007. p. S7691.
39 The NAM letter of opposition is available at http://www.energywashington.com/secure/data_extra/dir_07/
ew2007_2360.pdf. Also, EEI’s opposition is noted at http://www.energywashington.com/secure/
absence of support for nuclear power facilities and said the RPS proposals would undermine coal
facilities. They contended that it was unfair to exempt electric cooperatives, municipal utilities,
and the state of Hawaii. Opponents to RPS argued further that some states with fewer resources
would be burdened with additional electricity costs. Opponents also contended that biomass
power technologies were not yet ready for commercial use and that certain usable forms of
biomass had been left out of the definition of eligible biomass resources.
The American Wind Energy Association stated that a national RPS is needed “to fully reap the 40
benefits of renewable energy,” and cited broad support for RPS. Also, the Union of Concerned
Scientists (UCS) said it used EIA’s computer model to examine the potential effects of an RPS
and found somewhat larger savings for cumulative electricity and natural gas bills than EIA’s 41
study. An EIA report observed that in the early years after its creation in 1992, the federal
renewable energy electricity production tax credit (PTC) “had little discernable effect on the wind 42
and biomass industries it was designed to support.” In a subsequent report, EIA found that, after
the late 1990s, the combined effect of the PTC with state RPS programs had been a major spur to 43
wind energy growth. On the House floor, RPS proponents argued that all states have sufficient
renewable energy resources and that the RPS had been recalibrated to include energy efficiency
measures to make it even more flexible. Supporters also cited a study by Wood Mackenzie 44
Corporation that showed RPS would lead to a net reduction in natural gas an electricity prices.
They contended that cooperatives and municipal utilities had been excluded in order to make the
target easier to achieve. On the House floor, RPS opponents also contended that biomass power
technologies were not yet ready for commercial use and that certain usable forms of biomass
were excluded. Proponents acknowledged that there is a need to expand the definition of biomass 45
resources, and offered to do so in conference committee.
In November 2007, the DOE Energy Information Administration (EIA) submitted a report that
describes the potential impacts of the 15% RPS provision in H.R. 3221 (Title IX, Subtitle H). The
report found that the RPS provision:
... is similar in many respects to RPS proposals that have previously been analyzed by EIA.
Our analysis shows that the RPS, taken alone, tends slightly to increase projected electricity
40 AWEA. Statement of the American Wind Energy Association on a National Renewable Portfolio Standard (RPS).
July 31, 2007. 2 p. AWEA notes support from the National Venture Capital Association, League of Conservation
Voters, National Farmer’s Union, and United Steelworker’s Union. http://www.awea.org/newsroom/releases/
41 UCS. A 20 Percent National Renewable Electricity Standard Will Save Consumers Money and Reduce Global
Warming Emissions. May 2007. 2 p. (Not available on the Web.) UCS also found that a 20% RPS would have greater
environmental and job development benefits than a 15% standard.
42 EIA. Annual Energy Outlook 2005. p. 58.
43 EIA. Annual Energy Outlook 2006. (Section on “State Renewable Energy Requirements and Goals: Update Through
2005.”) p. 27. Further discussion of the importance of the interaction between PTC and RPS is presented in the section
under Renewable Portfolio Standard entitled “Federal Support for State RPS Policies.”
44 Wood Mackenzie. The Impact of a Federal Renewable Portfolio Standard. February 2007. 17 p. The Corporation has
a history of energy industry consulting, including studies on oil, natural gas, and electric power generation. (The report
is not available on the Web.)
45 Congressional Record. August 4, 2007. p. H9850.
prices and costs by 2030, while tending to reduce the use of natural gas for electricity
generation and natural gas prices. Cumulative discounted residential energy expenditures
through 2030, which are projected to total $2,874 billion in the reference case, are unchanged
or fall slightly, with a reduction of approximately $400 million (.01 percent) in one of the 46
two RPS cases modeled.
The report examined a case A, which assumed that energy efficiency credits would be claimed to
the maximum extent possible and would not result in significant sales reductions. Case B
assumed that no claims would be made for energy efficiency credits. The results for both cases
showed that RPS “tends to reduce projected natural-gas-fired electricity generation relative to the
EIA reference case.” EIA found that overall natural gas prices would be lower in the RPS cases
and that residential expenditures would be relatively flat, until late in the period, and would grow
by 0.4% to 0.8% by 2030.
EIA includes a caveat about its findings:
... it should be noted that the RPS proposal was modeled on a standalone basis, so its
possible interactions with other policy changes proposed in H.R. 3221 or other bills were not
considered. For example, proposals to increase the use of transportation fuels derived from
biomass could increase competition for the biomass supplies utilized in this analysis to 47
comply with the RPS targets.
After the House completed action on H.R. 3221, informal bipartisan negotiations over the
omnibus energy bills began between the House and Senate. The RPS provision (Title IX, Subtitle
H) in the H.R. 3221 continues to be key issue. On December 1, 2007, the Ranking Member of the
Senate Committee on Energy and Natural Resources stated that the House Leadership’s intent to 48
include an RPS led him to cease negotiations. Further, on December 3, 2007, the White House
reportedly announced that it may veto the negotiated bill, if it includes an RPS and certain other 49
provisions. On December 4, 2007, United Press International reported that, in a press
conference, DOE Secretary Bodman warned against the inclusion of “a narrow, one-size-fits-all 50
renewable portfolio standard.”
46 EIA. Oil and Natural Gas Market Supply and Renewable Portfolio Standard Impacts of Selected Provisions of H.R.
3221. November 2007. p. 1. http://www.eia.doe.gov/oiaf/servicerpt/bmy/pdf/bmy.pdf.
47 EIA, p. 7.
48 The statement is available on the Committee’s website, at http://energy.senate.gov/public/
49 The White House. Letter to House Speaker Nancy Pelosi from Allan B. Hubbard. December 3, 2007. 2 p.; Also see:
E&E News PM. Energy Policy: White House Attacks Energy Bill Compromise. December 3, 2007.
50 UPI. U.S. Energy Chief: Energy Bill Concerns. December 4, 2007. http://www.upi.com/International_Security/
Specialist in Energy Policy