WindsolarandcarsThe largely discredited implementation of [[cap and trade]] seems to have given way to a different approach in US law, which is the idea of the [[renewable portfolio standard]] (RPS). Like the standards established decades ago for ever tightening standards for the fleet-wide efficiencies of automotive companies aka [[Corporate Average Fuel Economy]], the RPS is a requirement for regulated power companies to produce some minimum percentage of energy via socially-preferred methods such as wind or solar.

The idea is to use regulation to wean the power companies to build and use the more environmental-friendly sources. Although implemented in 27 states, some worry that RPS is going to be a part of a federal energy bill (Son of Cap and Tax) that sets national standards on state regulatory initiatives that are supposedly more stringent (read most costly).

It should come as no surprise that RPS has consequences – after several studies, RPS leads to consumer price increases of about 4% each year.

Interesting enough, it seems that the power companies are already managing their portfolio of generating assets. They are looking at cleaner energy sources in the future since the administrative or regulatory cost of using abundant and cheap coal are likely to increase anyways.

My worry is that by making privately owned companies do something that they are already doing anyways with a politically forceful gesture that translates inevitably into higher prices for consumers is a wasted effort in that the costs exceed the benefits. The same type of political push has been made by the government last year to force the car companies to build plug-in electric cars within some timeline. These companies were working their way towards that goal anyways, but with this regulatory pressure they will be encouraged to get there before the consumer is willing to pay for it.

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