Energy Testimony

Thank you Chairman McGregor, and members of the committee for the opportunity to speak with you today about House Bill 357. My name is Amy Gomberg and I am an Advocate with Environment Ohio, a non- profit environmental advocacy organization.  Today, I will focus on the renewable energy standard in House Bill 357.  Specifically, we strongly support the 22% clean renewable electricity requirement and believe that this commitment is necessary to developing Ohio’s renewable energy resources.

Ohio’s renewable energy resources, technological know-how and extensive manufacturing, transmission, and transportation infrastructure provide Ohio with a recipe to become more energy independent. 

Right now approximately 87 percent of Ohio’s electricity comes from burning coal. This dependence on coal for our electricity supply has economic and environmental ramifications.  For starters, a majority of the coal that we burn in Ohio must be imported which means that we have to send more than a billion dollars out of state each year to import an increasingly expensive resource.  In addition, Ohio is the fourth leading contributor in the United States of carbon dioxide emissions which fuel global warming.  It is imperative that Ohio’s utilities begin to reduce their carbon dioxide emissions and diversify their electric generation resources before Congress sets limits on carbon dioxide emissions.  This is also important for Ohio ratepayers who could shoulder the economic burden of utilities not meeting carbon emissions limits by paying for these costs through the rate base.  Additionally, the impacts of global warming will increasingly affect the quality of life of Ohioans statewide. 

In environmental terms, our reliance on coal is a major contributor to soot, smog and mercury pollution problems that has resulted in poor air and water quality statewide.  Progress has been made to reduce pollution but we still have a long way to go in order to ensure that the air we breathe is safe and the water we fish and swim in is clean.     

That said, coal will likely always be a part of Ohio’s electricity mix. However, diversifying Ohio’s energy portfolio with renewable energy is a wise investment for Ohio.  This is especially true when you consider the additional benefits of harnessing Ohio’s renewable energy potential.

For starters, by diversifying our electricity mix with clean renewable energy we can keep more dollars in-state developing homegrown energy such as wind, solar and biomass. 

Ohio has abundant wind energy resources.  Attached to my testimony is a map that was released earlier this year by the United States Department of Energy’s National Renewable Energy Laboratory.  This map shows that if we even tapped into a small amount of Ohio’s wind resources that we could achieve 20% of our electricity needs from wind. 

With regard to solar energy, solar panels run on the light that lets you see, not the light that makes you hot.  The world’s largest solar markets are in Germany and Japan – neither nearly as sunny as Ohio.  Within the U.S., New Jersey is the second-largest solar market, with Maryland and Pennsylvania coming up quickly. 

Biomass, which is derived from plant matter, crops and other non toxic materials, is another resource readily available here in Ohio.  In fact, Ohio ranks seventh in the nation according to the U.S. Department of Energy’s Oak Ridge National Laboratory in the availability of biomass stocks.

Making a commitment to developing Ohio’s renewable energy resources will also present Ohio with an opportunity to attract business and new jobs to the state.  A recent report released by Environment Ohio looked at the economic impact of diversifying Ohio’s electricity mix such that 20% of our electricity came from wind energy by 2020 versus continuing with our current electricity mix. The report found that the 20% wind scenario would result in a net gain of:   

• 40,000 person-years of employment,
• $8.2 billion increase in the Ohio gross state product,
• $1.5 billion dollars in property taxes generated to county governments
• $200 million dollars for landowners.
•  And, would result in avoiding 170 million metric tons of global warming pollution (C02), which is the equivalent to taking over 2 million cars off the road.

Ohio’s unique advantage exists in part because of our extensive manufacturing base.  Although hundreds of thousands of Ohio manufacturing jobs have left the state in the last several years the infrastructure is largely still present.  Many of Ohio’s rust-belt neighbors have capitalized on the opportunity to attract this burgeoning industry to their state at least in part because they enacted renewable energy standards.  A renewable energy standard is important because it proves a level of commitment to developing renewable energy in the state.  For a manufacturer of wind turbines or solar panels this commitment signals a market for their product.  Pennsylvania, for example, enacted a standard in 2005 and since that time Gamesa, a Spanish wind energy company, established its U.S. headquarters in Philadelphia and is expected to create 1,000 new Pennsylvania jobs.  Ohio could establish a competitive edge for new business and jobs by enacting a strong renewable energy standard.

A good example of this opportunity is seen in the November 20, 2007 Cleveland Plain Dealer article “German solar vendor to build headquarters in Cleveland”:

IBC Solar AG, Germany's oldest solar vendor, will build its U.S. headquarters in Cleveland - and hopes to produce solar equipment here.

But whether the company begins manufacturing will depend on whether the state requires that a portion of the power sold here be generated with renewable energy technology such as solar panels and wind turbines.

IBC employs about 150 people in Germany and 200 worldwide to assemble solar systems manufactured by suppliers. Advocates of renewable energy say IBC's headquarters could be the first step toward creating an industry employing thousands of people in Ohio.

Despite the commitment to locate U.S. headquarters here, the company has nagging questions about the "renewable portfolio standard" in Strickland's bill.

"Our understanding is Ohio is in process of seriously considering some form of RPS," [Vaughn] Buntain, [IBC's vice president of international marketing,] said. "When we were there a few weeks ago, one of the things we emphasized was Ohio needed to do that."

With regard to HB 357 specifically, we strongly support the 22 percent clean renewable electricity requirement and the interim benchmarks that are provided to help Ohio reach this standard.

Twenty-five other states and the District of Columbia have enacted renewable energy standards.  Attached to my testimony is a map of the other states and their standards.  Most recently, Illinois enacted a 25 percent by 2025 renewable energy standard.  Colorado and New Mexico recently doubled their renewable energy standards to 20 percent by 2020, and Minnesota increased theirs to 25 percent by 2025.  States are enacting and expanding renewable energy standards because they are experiencing both the economic and environmental benefits of doing so. 

Without a strong standard, renewable energy is far less likely to be developed.  Our research found that in 2006, more than two-thirds of all new renewable energy electric generating capacity in the United States was built in states that had a renewable energy standard.  In 2007, 70 percent of planned renewable energy generation capacity expected to be built is in states with a renewable energy standard.  We also found that when you look at all of the plans for new electricity generating capacity in 2007 that 38 percent of new capacity planned in states with a renewable energy standard would come from clean energy while only 12 percent would in states that do not have a renewable energy standard in place.  

In addition to our renewable energy resources, extensive manufacturing base and both environmental and economic opportunities there are other reasons to enact a strong renewable energy standard. 

Here in Ohio, the results of a statewide poll conducted by Public Opinion Strategies reveal that Ohio voters overwhelming support a strong renewable energy standard and view building new coal and nuclear power plants as a last resort.  Attached to my testimony is a memo written by Public Opinion Strategies which summarizes the findings of the poll and I would like to direct your attention to the five slides at the end of my testimony. 

• The  first slide shows how Ohio voters responded to the question of “Do you favor or oppose setting a standard for renewable energy in Ohio which would require utilities to obtain twenty percent of their energy from renewable sources of energy like wind and solar by 2025?”  Eighty percent of respondents had a favorable response with 49 percent strongly favoring and only 8 percent strongly opposing.

• The second and third slides show that strong majority support for a strong renewable energy standard exists in all of Ohio’s seven major media markets as well as across the partisan political spectrum.

• The fourth slide shows that of the people who favor a renewable energy standard 87 percent believe that utility companies should be fined if they fail to meet the standard.

• The final slide shows that 69 percent of those respondents who believed that a renewable energy standard would raise their electricity rates still support the policy.  

Given the economic and environmental benefits that Ohio could reap as well as the broad based support that exists for a strong renewable energy standard we urge you to make sure that any energy policy considered and voted on in the House of Representatives includes a strong renewable energy standard.

Regarding House Bill 357 specifically we would like to comment on the following sections:

Definitions (Section 4933.51):

House Bill 357 sets a requirement for renewable energy resources such as wind, solar and biomass.  Setting an actual requirement for renewable energy and keeping it separate from non-renewable energy resources like nuclear energy, pump storage, and energy derived from fossil fuels including natural gas, oil, propane, and coal including coal-mined methane, are key to renewable energy developing in the Buckeye State. 

An area of improvement that we urge you to consider is redefining biomass to exclude: Painted, treated, or pressurized wood; Construction debris; Wood contaminated with plastic or metals; and Tires.

Additionally, electricity generated from fuel cells should only count as renewable energy if the electricity originates from a renewable energy resource, not a "Hydrogen-rich fuel" which includes hydrogen that is produced from fossil fuels including natural gas, oil, propane, and coal including coal-mined methane.

Lastly, the definition of a hydroelectric generating facility includes those of a production capacity of thirty megawatts or less of electricity. We believe that a renewable hydroelectric facility is better characterized by the guidelines set by the Low Impact Hydropower Institute (http://lowimpacthydro.org), which considers the overall impact of the system, rather than the size alone. There are instances of hydropower facilities larger than 30 MW which are considered “low-impact” and renewable, as well as instances (such as the facility being considered on the Cuyahoga River) that are much smaller than 30 MW, but are much more harmful to the surrounding environment.  

House Bill 357 sets clear benchmarks for achieving the renewable energy standard. These interim standards send a clear message to renewable energy businesses that Ohio means business, today. This provides Ohio utilities with a transparent path to achieving the long term 22 percent standard, allowing utilities to plan for meeting this requirement years in advance. Twenty-five out of twenty-six renewable energy standards enacted in the United States include benchmarks that utilities must meet along the way to achieving the overall requirement. 

Including specific guidance in the legislation for how and when Ohio’s investor owned utilities must show progress on meeting the renewable energy requirement ensures that this bill is enforceable.  

House Bill 357 provides measures for utility compliance, which helps to guarantee that Ohio will see the multiple benefits of renewable energy.  We strongly support penalizing utilities that fail to comply with the renewable energy standard, and commend you for setting a standard of compliance in House Bill 357.  The bill states that for each percentage below the minimum retail sales requirement during the period of noncompliance, the utility shall be pay an amount equal to two hundred percent of the average price of a renewable energy credit in to the advanced energy fund. This fund is housed in the Ohio Department of Development, and is available for grants and loans for renewable energy projects in Ohio.

We commend your efforts to address both renewable energy and energy efficiency in House Bill 357. The energy efficiency requirements are an essential piece of Ohio’s clean, affordable energy future. It is not only important to include both renewable energy and energy efficiency, but it is necessary that these resources be addressed separately.  This is critical for getting the biggest bang out of each buck in terms of clean energy, reduced pollution, diversifying our electricity mix and economic development. 

In regards to the additional measures in House Bill 357, we are concerned about the oil and gas drilling provisions. Our concerns are two fold:

First, by allowing oil and gas drilling on any state lands we are opening up a pandora’s box which could eventually turn into further development of Ohio’s most precious remaining natural areas. The definition of developed lands includes state land that is covered by concrete, asphalt, gravel, turf, crops, or fields that have plants or trees not exceeding ten years of growth. We are not convinced that Ohio’s current “undeveloped” state lands may not be allotted “development” and then be considered for oil and gas drilling. Any state land with plants or trees is of extreme natural value, and should not be considered for oil or gas drilling.

Secondarily, we oppose the creation of the oil and gas leasing board. Consisting of the chief of the division of mineral resources management, the chief of the division of geological survey, a professional engineer; an independent oil and gas producer; and one member representing the public, this allows for no representation given to any interested party whose mission is to protect our natural environment. While considering the future development of Ohio’s natural areas it is imperative that the natural areas are also given just representation in this matter.

Lastly, Ohio’s public lands were created for the public benefit. Oil and gas drilling are not compatible with areas with important ecological, recreational, cultural, historical, and scenic values. The state of Ohio has codified its protection of the public trust to keep its state parks and nature preserves free from development, we believe that this drilling measure would breach the public trust.

In conclusion, we urge you to ensure that any energy policy considered and passed out of your committee contain a strong and clean renewable energy standard.  Thank you for the opportunity to testify before you today about the benefits of a strong renewable energy standard for Ohio.  I can now take any questions that you have.