In March, IWF published its third installment in our monthly policy newsletter series, this time on the topic of Misguided Renewable Energy Policies. In it, we argued that states which impose renewable electricity mandates risk that industries which consume large amounts of power relocate to other states, if not overseas.

Marlo Lewis with the Cooler Heads Coalition reports on the Global blog that California is experiencing exactly this kind of business exodus due to the state’s ambitious new renewable energy target which requires utilities to generate or purchase one-third of all electricity from qualified renewable sources, such as solar and wind energy.

“California is experiencing the fastest rate of of companies relocating to out-of-state or out-of-country locations since a specialized tracking system was put into place two years ago,” reports business relocation coach Joseph Vranich. Seventy companies completely or partly moved their operations out of California since Jan. 1, 2011 for reasons other than business expansion. …

Why are companies leaving the Golden State? As you might expect, California’s out-of-control spending, high taxes, and burdensome regulations figure among the top 10 reasons. Vranich, however, recently added high energy costs to the list:

The #10 Reason (New!) – Unprecedented Energy Costs: The California Manufacturers and Technology Association states that commercial electrical rates here already are 50% higher than in the rest of the country. However, a law enacted in April 12, 2011 requires utilities to get one-third of their power from renewable sources (e.g., solar panels, windmills) within nine years. Look for costs to increase by another 19% in many places to a whopping 74% in Los Angeles. Such new burdens along with upcoming regulations stemming from the “California Global Warming Solutions Act” set potentially overwhelming obstacles to companies here as they try to meet competition based in other states and in foreign nations.

The experience in California demonstrates that a federal renewable energy standard (RES), as favored by President Obama and others in the Democratic Party, would have devastating effects on the nation. As the Heritage Foundation estimates, a federal RES would:

  1. Raise electricity prices by 36 percent for households and 60 percent for industry;
  2. Cut national income (GDP) by $5.2 trillion between 2012 and 2035;
  3. Cut national income by $2,400 per year for a family of four;
  4. Reduce employment by more than 1,000,000 jobs;
  5. and Add more than $10,000 to a family of four’s share of the national debt by 2035. 

President Obama’s clean energy goal of generating 80 percent of all electricity in the U.S. from qualifying clean energy sources, including nuclear, natural gas, clean coal, and renewable, is a broader attempt at implementing a RES. By garnering support from politicians and industry on both sides of the aisle from including modified conventional sources in the mandate, a federal RES might finally be implemented, after failing to pass through Congress repeatedly during the last decade.

Americans should oppose attempts by the government to micromanage our energy supply by mandating which sources generate our electricity in government-defined proportions. The market is much better equipped to determine which energy composition is best capable of meeting our environmental and energy needs.