By Jenna Bentley
May 29, 2018
Renewable energy is at the forefront of conversations in science, politics, and economics. Billions have been invested into research and technology in the hopes of creating a viable industry. However, we have seen the negative consequences when government-backed subsidies are used to prop up fledgling industries or when mandates force industries to comply with production standards that aren’t economically sound. As Milton Friedman said in his book Capitalism and Freedom, “A major source of objection to a free economy is precisely that it…gives people what they want instead of what a particular group thinks they ought to want.” Now, California billionaire Tom Steyer is trying to tell Arizonans they ought to want a costly new renewable energy mandate.
The innocuously titled “Clean Energy for a Healthy Arizona” mandate would amend the Arizona Constitution to require that utilities derive half of their electricity from renewable sources, such as solar and wind, by 2030—a drastic increase from Arizona’s current 15 percent renewable energy goal. Currently, Arizona utilities operate with a mixture of renewable energy, carbon-free nuclear power, and natural gas. The debate is not whether we should or should not be looking to renewable energy for our state’s future—the issue is with forcing Arizona’s taxpayers to implement a program that is not fiscally sound.
A recent study conducted by Arizona State University’s Seidman Research Institute yielded concerning consequences if the Clean Energy mandate passes: a $72.5 billion loss in Gross State Product, a $42.6 billion in loss of disposable personal income, a loss of 547,000 job years over the 43-year time horizon, a$3.5 billion loss in state taxes, and a $2.30 billion loss in local tax. Perhaps the most disturbing consequence is the impact on Arizona’s schools. Aside from school districts paying almost double for electricity, they stand to lose more than $858 million in property tax revenues.
Ultimately, of course, Arizona taxpayers would be forced to make up this difference in revenue, devastating our state’s already fragile economy. Additionally, rural utilities would be hit particularly hard. Inability to comply with the technological changes required under the mandate could mean the closure of these small utilities, potentially leaving rural Arizonans without electricity.
Arizona must learn from California’s mistakes and reject this ill-conceived initiative. While renewable energy may be a viable option to Arizona’s consumers, premature mandates are not the right path forward.
Jenna Bentley is the external affairs director at the Goldwater Institute.