The State of the States on Clean Energy

Two Steps Forward

The State of the States on Clean Energy

As America enters the next chapter of its political history, with a newly minted Congress and a hobbled presidency, national leadership on climate and energy issues continues to remain a pipe dream. One side wants to accelerate business as usual: more oil drilling, "clean" coal nuclear plants, letting "the market" determine which technologies win or lose. The other side wants to accelerate a new generation of technologies, including renewables, a more intelligent grid, and a strong emphasis on efficiency, with ample subsidies ensuring that these technologies take hold.

So far, business as usual seems to be winning out.

Not that renewables haven't made progress. A decade ago, the growth of solar and wind power was measured in kilowatts. Today it is measured in megawatts, even gigawatts. But solar and wind, despite massive investments and technology breakthroughs, represent a tiny fraction of grid power. Green energy use -- measured as a percentage of all U.S. electricity generation, grew from 2.11 percent in 2003 to just 3.36 percent in 2009, according to the State of Green Business 2010 report, published by GreenBiz.com.

The reason? There are many. It begins with the lack of a comprehensive national climate or energy policy and includes a myriad of roadblocks, barriers, and speed bumps that have made the route to a low-carbon economy frustratingly slow and, for investors and entrepreneurs, needlessly perilous.

National leadership probably will be lacking for the foreseeable future, and even the incumbents are bemoaning the state of affairs. Peter Darbee, chairman of the California utility giant PG&E, recently told the San Francisco Chronicle, "America has gone backwards in terms of our commitment on climate change. It's a terrible disappointment."

Blaming "Washington" for all this is an easy cop-out. Fact is, much of the nation's energy policy happens at the state level. And while national leadership would no doubt help, there are a myriad of rules and regulations at the state level that can accelerate the growth of efficiency and renewables. Together, these policies empower energy customers -- consumers and businesses alike -- to use solar and other renewables to meet their electricity needs, and otherwise create an environment in which alternatives can flourish.

So, I was pleased to see the publication last week of two research reports rating the states on next-gen energy policy. The first, the U.S. Clean Energy Leadership Index, is a subscription publication produced by Clean Edge, a company I co-founded (though I was not involved in the publication's creation). It assesses and ranks more than 80 different state-level indicators.

Each state's overall Leadership score is comprised of three subscores: Technology (such things as a state's overall clean electricity generation, green buildings, and alt-fueled vehicles); Policy (including renewable portfolio standards, renewable fuel standards, efficiency grants and rebates, and net metering laws); and Capital (including venture capital investments, utility energy efficiency program budgets, and green pricing programs). All told, these 80 indicators show how, and how much, states are positioning themselves for a low-carbon future. The index is weighted and data is normalized by state GDP, population, total sales, and other factors.

In Clean Edge's analysis, California ranked first, followed by Oregon, Massachusetts. Washington, Colorado, New York, Illinois, Connecticut, Minnesota, and New Jersey, among the top-10 states. However, Iowa led the U.S. in utility-scale clean electricity generation as a percentage of total electricity, receiving more than 14 percent of its in-state generation in 2009 from wind power; no other state exceeded 10 percent electricity from large-scale clean-energy sources. And Michigan, with its recent focus on electric vehicle and automotive battery technologies, led in clean-energy patents, "a key indicator in the human and intellectual capital area of the Index's capital category."

Subscriptions are geared toward corporations, economic development agencies, investors, policy makers, technology innovators, foundations, and other key stakeholders actively involved in the clean-tech marketplace.

Meanwhile, another report, titled Freeing the Grid, was issued by a quartet of nonprofit groups focused on renewable energy. This annual report -- from the Interstate Renewable Energy Council, Network for New Energy Choices, North Carolina Solar Center, and Vote Solar -- focuses much more narrowly on two aspects of state policy: net metering (a billing arrangement in which customers that generate more renewable energy than they need for their own use can sell it back to the grid at market prices), and interconnection (the technical rules and procedures allowing customers to "plug in" their solar or wind generating equipment to the grid).

Net metering and interconnection rules are seen as two of the most important enablers of clean-energy policy. And lacking any national laws allowing -- or requiring -- utilities to make interconnection and net metering ubiquitous and easy, each state must concoct its own scheme for doing so. The result is a messy patchwork of differing rules and regulations, but it's the best we've got.

Like Clean Edge, this group assesses and grades states, albeit across a narrower set of two dozen policy-related criteria. There was good news: 37 states received A or B grades for their net metering policies, up from 13 states in 2007, while 20 states received high marks for interconnection practices, a tremendous improvement over just one B grade awarded in 2007. Massachusetts and Utah led the pack, receiving exceptional "A" grades in both departments.

This is geeky stuff, to be sure, but these rules and regulations represent the foundation upon which a robust clean-energy industry can grow and prosper. Without these policies in place, the industry is doomed to limp along as it has over the past decade, and whatever clean-energy leadership the U.S. can still reasonably claim will quickly fade away.

Can state leadership on renewables overcome the lack of a national policy? It's hard to know. But from where things stand today, it's pretty much the only way next-gen energy will win out over business as usual.