Will hog farmers save renewable energy in North Carolina?

The North Carolina legislature is considering a controversial bill to kill the state's renewable energy law, and a big crowd turned out yesterday for its first hearing in a House subcommittee -- including a crew from the Showtime cable network filming a documentary on energy policy.

"They say politics is Hollywood for ugly people," quipped Rep. Jason Saine (R-Lincoln), chair of the Commerce and Job Development Subcommittee on Energy and Emerging Markets, as the cameras rolled.

The hearing on House Bill 298 opened with a legislative researcher listing the sections of the state's existing renewable energy law, known as Senate Bill 3, that would not be affected by the legislation, including energy efficiency and consumer demand management programs. HB 298 also would not touch the construction work in progress provision, which makes it easier for utilities to bill customers for new plant construction costs, or the provision allowing utilities to collect nuclear project development costs from ratepayers.

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But what it does change is the part of the law that creates a renewable energy and energy efficiency portfolio standard (REPS) requiring the state's investor-owned utilities to purchase an increasing amount of power generated from renewable sources. While the original version of the bill would have repealed the renewable energy requirements immediately, a substitute version considered by the committee would end the program in 2018, capping utilities' renewable energy generation requirements at 6 percent -- less than half of the current end goal of 12.5 percent.

Speaking on the bill's behalf, Rep. Mike Hager (R-Rutherford), a former Duke Energy engineer and one of the four primary sponsors, called REPS "as an entitlement program that is beginning to get its roots in our state." Hager and two of the other four primary sponsors are associated with the American Legislative Exchange Council, a conservative policy advocacy group that is working with allied groups, many with fossil-fuel industry ties, to overturn such laws.

Hager held up a bottle of Texas Pete hot sauce made in Winston-Salem, N.C. to argue that REPS increases power bills all along the supply chain and thus "hits you when you buy a product in North Carolina." However, his claim that REPS bears the blame for rising power bills has been challenged by analyses that show increased conventional fuel costs are primarily responsible for driving up power bills, with REPS-related costs adding only a negligible amount, and by research showing the REPS will eventually save ratepayers millions of dollars by avoiding construction of expensive new conventional power plants.

Noting the state has supported the renewable energy industry for six years now, Hager said it was time for the industry to stand on its own without subsidies -- overlooking the fact that North Carolina does not have a free electricity market but a regulated monopoly dominated by his former employer, and that conventional energy sources enjoy enormous subsidies including the ability to use the atmosphere as a free open sewer for greenhouse gas emissions.

The chair then opened the floor for comments, allowing concerned citizens three minutes at the microphone. The only speakers in favor of Hager's bill represented conservative policy advocacy groups -- the North Carolina chapter of Americans for Prosperity, the tea party group that gets significant funding from foundations associated with the Koch Industries oil and chemical conglomerate, and Civitas Institute, the conservative Raleigh-based think tank founded and primarily funded by GOP donor, Variety Wholesalers CEO, and state budget director Art Pope, who is also a big financial supporter of AFP and a former national board member. Both groups have long questioned the reality of manmade climate change.

Not surprisingly, many solar and wind developers spoke out against repealing REPS, which they praised for creating thousands of jobs and jumpstarting a booming new industry for the state. But they were joined in making their case by representatives of a powerful North Carolina industry that often aligns against environmentalists: hog farmers.

Rural resistance to REPS repeal

Besides solar and wind, North Carolina's REPS also defines energy generated from swine and poultry waste as renewable -- a provision that was controversial when Senate Bill 3 was passed back in 2007. That bill was sponsored by retired state Sen. Charlie Albertson (D-Duplin), who represented a rural district with many livestock operations.

At the time, many environmental groups objected to defining livestock waste as a renewable energy source since that would condemn some North Carolina communities to continuing to live near massive animal waste lagoons, whose emissions are increasingly recognized as a public health threat. But other environmental groups made the case that capturing methane for power generation was a better option than allowing the potent greenhouse gas to escape into the atmosphere.

In the end, the animal waste provision won support for the renewable energy law from the state's powerful agribusiness interests, who now see in Hager's bill a threat to their investments. Although Hager tried to appease them by preserving livestock waste power incentives in his committee substitute bill, farmers were having none of it.

Among those who spoke out against Hager's proposal was Tom Butler of the N.C. Pork Council and Butler Farms, a hog farm in Harnett County, N.C. that has invested in a methane generation unit that itself runs on solar power. Developed by the Environmental Credit Corp., the system generates 180 kilowatts of power that the farm sells to the South River Electric Membership Corp.

"The Butler Farm project wouldn't be possible without Senate Bill 3," Butler told the subcommittee.

Kraig Westerbeek, an assistant vice president with Murphy-Brown, the livestock production subsidiary of meatpacking giant Smithfield Foods, said that while he appreciates the effort to change the bill to address his industry's concerns, he still opposes the legislation. Noting that livestock waste-to-energy projects require big upfront capital investments, he said he was concerned that the bill sent the message to investors "that North Carolina is not serious about encouraging renewables."

And a representative of Oakhaven Farms said the addition of a solar power plant on their beef cattle operation in Rockingham County, N.C. has allowed them to continue to afford taxes on the land.

Gabriel Cumming, the economic development director for Warren County, N.C., testified that clean energy generation has not only created jobs in his rural community but has also helped expand the tax base.

"This type of economic development is good for rural areas," he said.

In the end, the bill squeaked by in an 11 to 10 vote, with two key Republicans -- Reps. Ruth Samuelson of Mecklenburg County and Tom Murry of Wake County -- voting against it.

The bill now moves to the House Environment Committee, where Samuelson serves as the vice chair.