Governor Daniels and various, retrograde legislators argue that coal should be added to the definition of renewables in Representative Crooks’ Renewable Electricity Standard (RES) legislation, HB 1102. What? You ask? You’re not alone. We were just as amazed with the idea and disappointed with the people.

This is very Orwellian in approach.

Renewable should be associated with sustainable. A fossil-fuel based economy is not sustainable and has left an enormous legacy cost, i.e. global warming (not to mention hundreds of billions of dollars (possibly more) in public health costs and environmental damage). One of the main arguments for renewables is that these investments hedge against near term carbon regulation. An emphasis on coal only exacerbates those costs to ratepayers whether sequestration technology exists or not because, ultimately, it’s pay billions now (for a plant) and billions later (for sequestration). So, coal is neither sustainable from an ecological/public health standpoint, nor is it sustainable from an economic standpoint.

Secondly, there is already plenty of institutional and financial support for coal. The financial support should raise eyebrows because it consists of a taxpayer and ratepayer bailout for unproven technology and recently (ala SB 224) for any and all research and development costs relative to capture and sequestration technology and so-called carbon scrubbers. In other words, new baseload coal plants have already become uneconomic investments. They cannot be built without CWIP (construction work in progress) or a 30 year contract that forces ratepayers to pay whether they receive the end-product (gas or electricity) or not, the guts of HB 1117 and its companion bill SB 223.

Third, one could say the same for corn-based ethanol. Using essentially the food supply to make liquid fuel for vehicles doesn’t make economic sense. It is not a sustainable option. It can only be done, once again, with massive taxpayer subsidies.

Fourth, if we were using resources efficiently (i.e. electricity), new baseload, electric generating plants would be off the table entirely, we would be attracting 21st century businesses instead of embarking on an approach favored in the 1950s and vastly improving the quality of Indiana citizens.

Daniels and coal dust lawmakers shouldn’t be working to break the public trust. What we need is a clean RES bill to pass. What we don’t need is a bait and switch shell game. The public needs an honest RES policy and honest support for it from the Statehouse.

Grant Smith
CAC Executive Director

The following is a synopsis of a report by the American Council for an Energy-Efficient Economy (ACEEE), "Examining the Potential for Energy Efficiency to Help Address the Natural Gas Crisis in the Midwest," written by Martin Kushler, Dan York, and Patti Witte.

To view the PDF of this report, click here.

National Impacts
ACEEE (the American Council for an Energy Efficient Economy) estimates that a 5 year total national investment of $30 billion in gas and electric savings technology could produce over $100 billion in savings for all customer classes (residential, commercial and industrial).

The rationale behind curbing both natural gas and electric demand with more efficient buildings, lighting, appliances, windows, motors, pumps, insulation, etc. is that much of our electric generating capacity consists of gas-fired power plants. For instance, from the late 1990s to the early 2000s the U.S. energy industry added 175,000 megawatts of gas-fired power plants. Therefore, if electric demand is reduced, natural gas usage decreases as well.

State/Regional Impacts
The reliance on natural gas in the Midwest represents a huge drain on the regional economy because 92% of the natural gas is imported from outside the region. It's estimated that by 2006 $29 billion will be leaking from the Midwest economy in a business-as-usual scenario.

The cost of natural gas to ratepayers is also rising. Midwest ratepayers paid about $26 billion on natural gas bills in 2002 and will pay an estimated $40 billion in 2006.

Indiana imports 99.75% of its natural gas. The dollar drain from the Indiana economy was $1.8 billion in 2002 and is estimated to be $3.7 billion in 2006. By 2006, Hoosiers will pay $4.7 billion in total bills directly related to their natural gas usage and $155 million for natural gas-powered electric generation.

The ratio between bills paid and economic drain demonstrates that most ratepayer expenditures for natural gas usage leave the state. In fact, about 70% of a resident's heating bill is for the gas commodity, the remainder for the local gas company's overhead and profit margin.

The significant savings across all customer sectors would also accrue to low-income households. In other words, the more comprehensive the program in terms of funding and scope, the greater the benefits to everyone, including to low-income households. However, weatherization (energy efficiency) programs targeted specifically at low-income households also yield impressive results.

The costs of achieving the savings projected above in Indiana would be approximately $148 million per year. This would amount to an investment of approximately $2.2 billion over 15 years. However, the total accumulative savings over that time period, not accounting for inflation, would be approximately $12.4 billion. In other words, the benefits far outweigh the costs.

The Daniels Administration is holding public forums in five towns and cities from October 25th to November 8th to discuss energy policy. CAC and its allies were informed of the effort less than a week prior to the first meeting, and major metropolitan areas, such as Evansville, Gary, South Bend, etc., are not on the list; however, the public should take the opportunity to respond to this issue critical to our wallets and well-being.

The Daniels Administration is pushing hard for more coal plants, large confined animal feeding operations, ethanol production, and biodiesel production. Also, there seems to be some, but much less emphasis, on true renewable energy technologies like wind turbines and solar panels. Although the Administration has acknowledged energy efficiency as a way to combat high heating bills, the Administration seems to have prioritized a supply-side approach with respect to energy policy. CAC has not focused on ethanol and biodiesel issues. We do oppose large CAFO operations with thousands of hogs, cows or poultry because of their negative, local economic and environmental impacts and tendency to force family farmers out of business. We also view the bias toward the supply-side approach to electric and natural gas demand as unaffordable.

Everyone is aware of the home heating crisis we are facing this winter. This is no longer an issue for the severely impoverished. The problem is reaching beyond those we have considered to be "in poverty" to the lower middle class and, perhaps, into middle income households. On top of this, the Hoosier economy is generating most of its jobs in the lower wage service sector. Health care costs are also spiraling out of control. Moreover, businesses, particularly small businesses, are not immune from the negative financial impacts of higher energy and health care costs.

The electric utility industry wants to build more coal-fired power plants. The new generation of plants will be at least one billion dollars each, for medium-sized plants (600 megawatts). The prospect of carbon dioxide regulations, which even Wall Street is anticipating, will increase the cost of coal plants substantially. Added to that, the cost of coal itself will be rising as it tracks increasing oil prices. But people can't afford this. Many can't afford their winter heating bills. A growing number of the population is without health insurance and can't afford to get sick. People can't afford gasoline prices, which are going to continue, with slight variation, to increase. People can find a job but the jobs don't pay enough to enable them to make ends meet.

The only sensible approach to energy policy is to launch a statewide effort that emphasizes energy efficiency first in order to reduce our reliance on expensive coal plants, save ratepayers money, create jobs, and clear the air. If you check out our Web site, you'll see that energy efficiency is both a powerful economic development and environmental protection tool. It is absolutely critical at this juncture that state policy makers embrace energy efficiency as our top priority in dealing with the energy cost crunch. We don't need electric rates to get as high as natural gas rates.

As far as the forums go, the Administration is not holding meetings in some of the largest metropolitan areas of the states. For instance, there will be no forums held in Northwest Indiana, South Bend, and Evansville. Cities with sizable populations are not on the list either. These include Kokomo, Anderson, Muncie, Lafayette, Bloomington, Terre Haute, Richmond, Columbus.

Please attend a meeting if you can. Please e-mail to Brandon Seitz with the Lt. Governor's Energy Group at: bseitz@lg.in.gov to express your support for a statewide energy efficiency program.

Make sure you state that you are aware of the energy forums and the Daniels Administration's request for public input on the energy issue so that Brandon knows the context of your letter.

Here is a list of the forums on energy policy that the Daniels Administration is holding.