Why energy policy matters

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Energy drives every aspect of our economy. It powers our industries, our homes, our vehicles, and our lives. Historically, the majority of our energy has come large, centralized power plans that create power using fossil fuels. But those plants then must transport energy hundreds of miles to their eventual destination. As the energy economy moves away from large, dirty power plants and toward clean homegrown energy, significant changes will be needed in terms of infrastructure and regulation. Those kinds of changes require clear market signals—and that’s where policy comes in.

Energy policy determines the rules that govern our energy system. It has a huge impact on your life, shaping everything from how much you pay for electricity to where wind farms are located to whether coal plants are retired. Smart, market-driven policy generates jobs and creates economic opportunity.

POLICY ARENAS

Important energy policy decisions are made in many different arenas, including state legislatures, regulatory groups, and board rooms across the country.

State Legislature: Each state’s elected officials are regularly faced with energy policy decisions. This might include a bill that would require utilities to increase the amount of renewable energy in their electricity mix (known as a renewable energy standard) or a policy that makes it easier for consumers to purchase an electric car or put solar panels on their roofs.

Public Utilities Commission (PUC): A state’s public utilities commission is the governing body that regulates rates and services of a public utility. For example, Minnesota’s PUC is made up of five commissioners, appointed by the governor and confirmed by the Senate, who serve six-year, staggered terms. Their job is to make sure utilities’ business decisions are prudent, protect the public interest, and provide energy that’s affordable, reliable, and increasingly clean and efficient.

Business Leaders: Owners and managers regularly make internal policy decisions that have a big impact on their company’s energy use or the availability of products that consumers can buy in their stores. For example, when IKEA makes a commitment to install more than 500,000 solar panels on its stores worldwide or decides to stop selling incandescent light bulbs, these policies can have powerful and widespread effects across the economy.

RENEWABLE ENERGY BOOM

Energy policy doesn’t exist in a vacuum—it can make a huge difference. Case in point: a long-term commitment to energy policy in the Midwest is already transforming the region’s energy system, economy, and environment as more and more states focus on wind as an energy source.

The first Midwestern wind farm was built in Minnesota in 1994. Since then, wind has expanded to 21,390 megawatts in the 12 Midwestern states stretching from North Dakota and Kansas in the west to Ohio and Michigan in the east. This capacity—enough to power 17 million homes—constitutes an investment of more than $30 billion in the area’s economy. In fact, wind now supplies as much as 25 percent of the power demand in Iowa and South Dakota, and more than 15 percent of power in Minnesota.

This number keeps growing. Berkshire Hathaway Energy, owned in part by billionaire Warren Buffett, recently announced plans to add 1,000 megawatts of new wind power in Iowa, raising the share of wind energy in the company’s portfolio to 39 percent. This $1.9 billion outlay “will be the largest economic development investment in the history of the state,” according to Governor Terry Branstad.

EFFECTIVE POLICY PAVES THE WAY

Strong energy policy has directly triggered and sustained the growth of wind in the Midwest—often called the “Saudi Arabia of wind.” Every state in the region now has a renewable electricity standard, which requires or encourages utility companies to produce a portion of their electricity from solar, wind, and other renewable resources.

Standards have a big impact on business. And business leaders recognize their effectiveness and value the impact they can have on the renewable energy market. In July 2014, David Mortenson of Minnesota’s Mortenson Construction said “It’s…important that states like Minnesota are leaders in setting a renewable energy standard and let the market figure out how to do it.”

By tapping into its enormous renewable energy potential and manufacturing know-how and establishing strong, market-driven policy, the Midwest is poised to become a world leader in renewable energy. With continued smart, stable policies the Midwest can lead the United States—and set a standard for other countries—in building huge clean energy markets.

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