Law lets utilities go outside N.C. for cleaner energy credits

John Clark's job is to promote clean energy production in South Carolina from the sun, wind and animal waste.

But he wants nothing to do with the sort of law that requires utilities to produce a certain amount of electricity each year from renewable energy -- the type of measure N.C. lawmakers approved Wednesday.

Clark doesn't like the requirements because utilities often end up buying out-of-state green energy certificates through national trading systems. For N.C. utilities, it's an important allowance in the legislation because the state doesn't produce enough renewable energy to fully meet the standard. Ratepayers will cover the extra cost through a rider on their bills.

Clark, who is director of the S.C. Energy Office, said it's better to keep money in the Carolinas that might be spent by utilities and customers on out-of-state green power. That money could be used to promote local clean energy production that could generate new jobs, he said.

"I can't see a state policy that ends up subsidizing power in another state," he said.

The N.C. legislation requires utilities, such as Charlotte's Duke Energy Corp. and Raleigh's Progress Energy, to produce 12.5 percent of electricity from renewable energy sources and through efficiency programs. But the companies could meet up to 25 percent of the standard using the out-of-state certificates.

The certificates are technically investments in green power production, but the electricity doesn't actually make it to N.C.'s power grid. Electricity produced more than a state away is difficult to transmit cheaply.

Regardless of where the green energy is produced, supporters say, the Carolinas and other regions heavy into manufacturing will benefit from a national shift to renewables because of increased demand for parts, such as wind turbines. Any investment in green energy is good for the environment because carbon dioxide from coal plants is blamed as a cause of global warming.

Duke, which has about 1.8 million customers in North Carolina, depends on coal for 52 percent of its electricity in the Carolinas. And the utility depends on coal for about 98 percent of the electricity for its 1.6 million customers in Indiana, Kentucky and Ohio.

Utilities in areas such as the Carolinas, which have no commercial wind power, will likely buy out-of-state certificates from western states such as Texas, which is the nation's top producer of wind power.

Solar energy power generation, for the most part, is still too expensive to be commercially viable without extra incentives. Hog and poultry waste are plentiful in the Carolinas.

Pat Nye, director of sales for the Bonneville Environmental Foundation, said economic development implications need to be factored into any renewable energy requirement. The Portland, Ore., foundation sells green power certificates on a national market.

Nye said the requirements should be met using a three-tier system, with utilities given incentives to look first within the state, then to the region and then across the country. That way, more local production would come online, he said. Clark said investment in S.C. renewable energy projects has produced jobs.

For example, the owner of the Palmetto Landfill near Spartanburg and a partner decided to build a 10-mile pipeline to pump methane gas to the nearby BMW Manufacturing Co. plant. The cheap methane gas provides 25 percent of power at the plant and will be used to run machines in an expansion, Clark said.

"It's cheaper and more profitable for BMW," he said. "It's definitely economic development."

And in June, the S.C. General Assembly passed a package of renewable energy incentives for business that takes effect in stages over the next few years.

One provision gives a 25 percent tax break on equipment bought to produce energy from renewable biomass sources, which include wood chips, hog waste and methane gas produced from decaying garbage in landfills.

Because of the incentive, Sonoco Products Co., a consumer packaging supplier with its headquarters in Hartsfield, plans to switch from natural gas and build a plant to provide electricity from biomass, Clark said.

"We don't produce any coal, oil or natural gas in South Carolina. Anytime you spend money on biomass you're transferring dollars from Texas, Kentucky and the Middle East to dollars spent in South Carolina," he said. "I would like to see states like South Carolina get the economic development benefit of the movement to renewables."Making the Green Grade