It has not been a stellar few months for clean energy advocates. With the state facing an unprecedented budget crisis, the Christie administration has tapped into more than $400 million in funds for clean energy and energy efficiency to balance the budget.
And to clean-energy advocates, that poses a worrisome question: Is New Jersey about to scale back its aggressive plans to rely on cleaner but more expensive ways of producing electricity?
Their concern comes in the wake of a directive from Gov. Chris Christie to re-examine the less-than-two-year-old energy master plan, a document that calls for 30 percent of the power supplied to businesses and residents to come from renewable sources of energy, such as solar and wind power.
Cabinet officials insist they do not envision a radical rewriting of the plan. But Department of Environmental Protection Commissioner Bob Martin and Board of Public Utilities President Lee Solomon have made it clear they believe it fails to consider the economic consequences of pursuing such ambitious targets, including reducing energy consumption by 20 percent by 2020.
“There has to be a cost benefit analysis on the things we do,” said Solomon, whose agency will take the lead in reviewing the plan. “We can’t simply impose what we would like to happen on the state of New Jersey.”
Martin is even more adamant about the plan’s flaws. “It is one of the worst pieces of economic analyses I’ve ever seen done,” he said at a clean energy summit in New Brunswick last month. “They didn’t put the numbers of what it would cost the ratepayer or industry.”
The cuts have triggered a hearing by the Assembly Telecommunications and Utilities Committee today in Trenton over what needs to be done to meet its goal.
“It’s time to assess where we stand, where we go from here to minimize the damage and what further work needs to be done,” said Assemblyman Upendra Chivukula (D-Middlesex), chairman of the committee.
The current plan was adopted in October 2008, its first revamp since 1991. It sets highly ambitious goals for increasing reliance on solar and wind projects to provide electricity. For instance, it calls for 3,000 megawatts of offshore wind capacity to be built by 2020, none of which has even secured initial permits for the projects. (One megawatt is enough to power about 800 homes.)
The plan also projects developing 1,500 megawatts of combined heat and power plant generation by 2020. The Christie administration earlier this year tapped $158 million in a special fund aimed at helping to build those plants, raising doubts about that target.
While the plan has won praise from clean energy advocates and environmentalists, some business lobbyists have questioned many of its assumptions and expressed worry about the long-term impact on energy prices because of its reliance on new and more costly ways of producing electricity.
“The goals are laudable, but what are we doing to improve the economy and create jobs and what are we doing to remain economically competitive?” asked Sara Bluhm, a vice president of the New Jersey Business & Industry Association.
Others said it is appropriate the new administration take another look at the plan, given the volatile nature of the energy sector.
“The numbers constantly change,” said Steven Goldenberg, a lawyer for the New Jersey Large Energy Users Coalition, a group representing pharmaceuticals and other large manufacturers. “Look at the price of natural gas today compared to when they were putting it together.”
Natural gas prices have plummeted in the past couple of years, an event that some believe makes a stronger case for developing additional generation capacity from combined heat and power plants, which tend to be more efficient and less polluting than other traditional ways of producing electricity.
Clean-energy advocates argue that if the new administration is going to apply a cost/benefit analysis test to the plan, then it must include such factors as the cost of air pollution and the ways that clean energy projects stimulate the economy.
“I don’t want the governor to scale back clean energy programs under the guise of being fiscally responsible,” said Matt Elliott, clean-energy advocate for Environment New Jersey. He also said the cost/benefit analysis ought to apply to new power projects, such as coal and nuclear power plants, which rely on heavy subsidies to be economically competitive.
The cost/benefit analysis recommendation was among the initial directives issued by Christie in an executive order in his first week in office. It was a component of “common sense principles” that state agencies ought to weigh when drafting new rules and regulations, along with a recommendation that new rules ought not to exceed federal standards.
The latter provision concerns Jeff Tittel, executive director of the New Jersey chapter of the Sierra Club. New Jersey has more aggressive rules governing how much greenhouse gas emissions should be cut than a pending bill in Congress, he noted, as well as more ambitious targets for increasing the reliance on cleaner forms of energy, such as solar and wind power.
“When you base it on what is coming out of the feds, all of a sudden we could see the energy master plan goals turned back,” Tittel said.
Solomon said the new administration would not rewrite the plan, but said that “we have to analyze everything we do and its impact on the rate base, the tax base and quality of life before we move forward.”