Markets-- Not Mandates-- Best Promote Clean Energy
California is often lauded for its commitment to the environment. To be fair, the state has implemented a number of green policies purposed to mitigate the carbon footprint of its nearly 40 million residents. However, many of California’s endeavors have resulted in government overreach and done little to improve environmental quality.
California seems to abandon basic economic principles in favor of feel-good policies that play well politically. The state’s recent mandate, which requires nearly all new homes to be built with solar panels, is the latest example of this.
At first glance, a solar panel requirement seems like a great idea that would do wonders for the environment. However, a deeper investigation reveals that this policy is incredibly misguided and disturbs a competitive energy market.
Solar prices are naturally declining due to investment and innovation, but this mandate will disrupt the smooth trend. Instead of forcing solar into residential energy markets, California should allow free market forces to direct the transition to solar and other renewable energy sources.
This mandate, which targets residential panels, is not cost effective in accomplishing increased solar use. A more effective policy would prioritize investment in large scale solar farms that produce energy at a rate 2 to 6 times less costly than residential rooftop panels. Once again, a California environmental policy is prioritizing ethics over pragmatism.
While it has seen significant growth in renewable energy production, California should look to other states where a non-regulatory approach has succeeded in expanding clean energy use.
In Georgia, the Public Service Commission recently approved a deal between Georgia Power, Google, and Walmart that commits large amounts of solar to power local facilities. To prevent a hike in customer electricity prices, the companies also agreed to absorb any extra costs from this addition of renewables to the grid. Instead of forcing solar into the market at the expense of consumers and alternative sources, Georgia is allowing companies to take initiative and direct a smooth shift to increased emphasis on solar.
In Texas, wind power has experienced unbelievable growth thanks to a largely unregulated power grid. A lack of federal oversight and mandates has facilitated innovation, lowered prices, and allowed competitive markets to thrive.
Less regulated markets have paved the way for renewable energy expansion in red states across the country. This development may explain why in congressional races, the clean energy sector now contributes more to Republicans than Democrats. This presents an opportunity for Republicans to lead on clean energy and emphasize that progress can be accomplished through markets and not mandates.
The American Conservation Coalition strongly supports market oriented energy policies that rely on investment, innovation, and incentive. A command and control approach, like this rash solar mandate, often leads to unintended economic consequences and fails to accomplish its intended goals. Hopefully, for the sake of a stable energy sector, elected officials in California will realize that much better options exist to promote clean energy use.