In June 2001, the city of Chicago and 48 city government agencies signed a contract with local utility ComEd to purchase 10 percent of their electricity from renewable sources, a figure due to increase to 20 percent in five years. This is the largest such purchase in the United States, but Chicago is just one example of the many cities, businesses, and individuals who are buying "green power." Utilities in 8 states and many other industrial countries now offer such purchases. (See maps.)
In October 1999, Leeds Metropolitan University in the United Kingdom started buying at least 30 percent of its energy from green power. Six months later, Edinburgh University signed an agreement to obtain 40 percent of its energy this way. Since renewable energy sources in the United Kingdom are exempt from a climate change levy enacted in April 2001, making this switch is virtually cost-free and can even save money.
The Netherlands has more than 775,000 green energy customers, which represents 5 percent of the population. The number of customers has tripled in just one year. This rapid growth is due to an energy tax exemption for green electricity, green energy deregulation, and successful marketing campaigns. With Dutch demand outstripping supply, more than 30 percent of the green power used there is now imported.
Germany has approximately 280,000 green energy customers. Many large German companies are buying green power, helping to create consumer demand to move beyond fossil fuels. Dresdner Bank, Weleda AG, a large homeopathic medicine company, and 23 kindergartens in Lorrach all purchase 100 percent green power.
In March 1999, a comprehensive ecological tax reform law took effect in Germany that reduced income taxes, raised taxes on energy sources tied to carbon emissions, and exempted renewables. In February 2000, the parliament passed a renewable energies law that included payments for excess green energy generation fed back into the power grid; at those times, the meters run backwards, reducing customers' electric bills. These policies, which help make green energy cost-effective, are essential to the ultimate success of green power programs.
Australia's green power sales are evenly divided between 60,000 residential customers and almost 2,500 commercial ones. Most of the green energy supplied to date in Australia is derived from biomass and hydroelectric power, with only 8 percent coming from wind or solar. With wind resource development accelerating, however, wind's share is increasing rapidly.
In the U.S. state of Colorado, the Grassroots Campaign for Wind Power has educated citizens about the benefits of wind power and encouraged a shift in purchasing behavior. As a result, Colorado has 20,000 residential green power subscribers and numerous commercial ones, including IBM, Hewlett-Packard, and Patagonia, as well as the cities of Denver, Fort Collins, and Aspen. Even the governor's mansion buys green power. At the University of Colorado, students voted overwhelmingly during the spring of 2000 to raise student fees by $1 per semester in order to purchase wind power. This fee increase generates $50,000 per year, enough to buy the output of one wind turbine, or 2 million kilowatt-hours of electricity.
A large number of U.S. businesses and other commercial customers have also signed up. In addition to large, high-profile companies like Toyota and Kinko's, lesser-known companies are aligning their purchasing decisions with their environmental values. Fetzer Vineyards, for example, began buying 5 million kilowatt-hours of renewable energy annually for its organic wine operations in Hopland, California.
In 1996, Salem, Oregon, was the first U.S. city to go completely renewable for all power used in the city. Already getting 83 percent of its electricity from hydropower, it replaced the remaining 17 percent, which was from fossil fuels and nuclear power, with wind energy purchased from the Bonneville Power Administration (BPA). In 2000, Oakland, California, signed up for 9 megawatts of green power to meet its entire electricity load for city agencies. Santa Monica, California, also uses exclusively green power for its city facilities.
Government agencies are also signing up for green power. The U.S. Environmental Protection Agency (EPA) purchases 100 percent green power at five of its facilities across the country. In so doing, EPA currently obtains 9 percent of its overall electricity consumption from green power. In 2000, Secretary of Energy Bill Richardson directed the U.S. Department of Energy (DOE) to purchase 3 percent of total electricity needs from non-hydro renewable sources by 2005, and 7.5 percent of total electricity purchases by 2010.
Green power offers an opportunity for citizens and corporations to act on their environmental concerns and to demonstrate support for public policies supporting renewable energy. In Colorado, for example, the demand for green power is driving the investment in wind farms, a fast-growing source of power in the state.
It is clear, however, that green power purchase options alone, even in fully deregulated markets, will not bring about the large-scale changes needed to move the world to a sustainable energy economy. Individual and corporate choices based on environmental concerns cannot replace the role of public policies. Indeed, tax restructuring and renewables portfolio standards, acting in concert with energy efficiency and green power programs, represent the best hope for creating an ecologically sustainable energy economy.
To be certified as a "green-e" product in the United States by the Center for Resource Solutions (CRS), a voluntary program, green power offerings must contain more than half renewable energy. Thus in many cases, almost half of the mix can come from fossil fuels and nuclear power. CRS set up the 50 percent standard mindful of the need for wide acceptance by various stakeholders, and wary of setting the initial standard too high for many companies to meet it. While such concerns are important, the ideal green power products would emphasize wind, solar, and geothermal, since they do not contribute to climate change, air pollution, or acid rain. Fossil fuels and nuclear power would be excluded from such products.
The new green power standard in Illinois, unveiled by environmental and consumer groups in the state, is the greenest in the U.S. To qualify, green power in Illinois must be from new renewable sources, must be composed of at least two-thirds wind and solar power, and must create air quality benefits for the state. A similar standard, if adopted nationwide, could yield substantial benefits.
The green power option for consumers and businesses is generating demand, yet its current definitions are flawed. Unless standards require much higher percentages of renewables that are green, customers may be paying a premium for only marginally cleaner power. To address climate change, the global energy economy needs to be fundamentally restructured. Green power purchase options, one instrument among many to do this, can help move us in the right direction.
Copyright © 2002 Earth Policy Institute