Well-intentioned rules passed by many states to combat climate change through the development of renewable energy technologies may not achieve the intended effects and may even be counterproductive, according to research by an MIT graduate student. But the problem is easy to fix: A modified set of regulations could be much more effective, the study found.
At least 25 states have enacted renewable portfolio standards (RPS), which require electric utilities to obtain a certain percentage of their power from renewable sources by a certain date (such as "20 percent from renewables by 2020"). But these standards will not achieve the desired effects and may actually end up delaying some of the most promising renewable-energy technologies, the study found.
Michael Hogan, the student who carried out the study as part of his master's thesis work in MIT's Environmental Technology and Public Policy Program, says that such standards push investments much too heavily toward technology that is already well proven and close to being economically competitive, especially land-based wind power. In the process, technologies that may have much more potential to replace coal plants in the longer term, such as solar thermal systems and offshore wind, get short shrift.
Current RPS programs, Hogan found, "are likely to play at best a very marginal role at an unnecessarily high cost in delivering the necessary reductions in greenhouse gases, with little in the way of long-term technological development benefits." But by introducing a few refinements to these programs, he says, it is possible to greatly improve the chances that they will achieve the desired results.
Hogan's professional background is tailor-made for this line of research: He spent 28 years in the energy business, including leading roles in starting and running a number of energy companies and organizations, before deciding to resume his education with the MIT Department of Urban Studies and Planning master's program. During his years in the energy business he was responsible for the development of more than $8 billion in energy-related assets in seven countries.
The central problem, Hogan says, is that 80 percent of U.S. carbon dioxide from electricity generation, and about a third of the nation's overall emissions, come from just 620 coal-burning power plants. Thus, any attempt to reduce greenhouse gas emissions must focus squarely on addressing these plants. "In a very real sense," he writes, "nothing else matters."
While RPS tends to foster investment in wind farms, these almost never displace baseload coal-fired plants, he says, which is the key objective. Among other changes, he proposes that the rules be modified to create "bands" of technologies, based on their degree of commercial readiness, and that the regulations should strongly favor promising but still early stage technologies. Encouraging investment in technology that won't produce results until later in the process could actually foster much more significant progress, he says. "We have to bet on all the horses," he says.
In addition, it is important to recognize that rules should be tailored to the conditions in particular parts of the country, he says. For example, while land-based wind dominates the upper Midwest, solar thermal systems should be favored in the Southwest, deep-offshore wind in the Northeast, and biomass in the Southeast.
Lawrence Susskind, Ford Foundation Professor of Urban and Environmental Planning and Hogan's thesis adviser, says his student has demonstrated that renewable portfolio standards "are not working as well as they should."
Susskind says that in carrying out this study, Hogan "builds on his long experience developing energy facilities in many parts of the world" and through his analysis "offers a detailed package of reforms that could make a difference."
Hogan said the research changed his own perspective. "I went in thinking I would reaffirm things I already believed," he says, but that turned out not to be the case. For example, he said, "I went in very negative about offshore wind in the near term," but the study "completely changed my mind."
A version of this article appeared in MIT Tech Talk on October 1, 2008 (download PDF).