fbpx

Latest Posts

Home

Facebook

Twitter

Search
About

How a 50% renewable energy mandate will hurt the state’s economy

This morning, we launched our new report, Doubling Down on Failure: How a 50 Percent by 2030 Renewable Energy Standard Would Cost Minnesota $80.2 Billion.

In it, we report how enacting a 50 percent renewable energy mandate by 2030 would

  • Increase electricity costs by $80.2 billion to meet mandated renewable energy goals and maintain this electric system through 2050.
  • Cost each Minnesota household $1,200 per year through 2050.
  • Increase household electric bills by $375 per year, a 32% increase compared to 2017.
  • Destroy 20,950 jobs by 2050 and reduce Minnesota’s GDP by $3.1 billion every year to create temporary construction jobs.

How the numbers were crunched

This last calculation was done by me. At the press conference this morning, I was asked how.

Estimates of Minnesota households energy costs as percentage of after-tax income by income category gave us the average energy spend in each income category. Multiplying these by the number of households in each category, we get an estimate of total energy spending by each income category. This, in turn, gives an estimate of the share of Minnesota’s total energy spend by each income category. Taking the estimate of the cost to implement these mandates an apportioning it using these percentages, we can work out how much each household income group would have to pay. We then enter this into IMPLAN economic modelling software as a decline in household income in each category.

What the numbers mean

When the cost of something like energy rises, households will consume less of it and less of other things. They will go out to eat less, buy fewer new clothes, hold off on getting their car fixed. As a result, the restaurants, clothing retailers, and mechanics experience a loss of income. This is how we get job losses in sectors across Minnesota’s economy resulting from these energy price hikes.

You can find examples in the 1970s. Then, in 1973 and again in 1979, we had the ‘Oil Shocks’. Energy prices spiked. In real terms, people’s incomes had fallen. On both occasions, the economy tipped into recession.

John Phelan is an economist at the Center of the American Experiment. 

Comments

Subscribe

Categories

Upcoming Events

  • Morning in Minnesota: St. Cloud

    Location: St. Cloud

    Sign up HERE! Courtyard by Marriott St. Cloud 404 West Saint Germain Street St. Cloud, MN, 56301 Please join Center of the American Experiment on Tuesday, July 21 for breakfast with Center policy fellow and education expert Catrin Wigfall as she explains K-12 education in the state and its persistent disparities despite decades of increased spending. Following her presentation, Catrin will lead a Q&A session. 7:30 AM Check In and Breakfast 8:00 AM Presentation 9:00 AM Conclude   Catrin Wigfall is a Policy Fellow at Center of the American Experiment. She is also the director of EducatedTeachersMN and EmployeeFreedomMN. Catrin’s…

    Register Now
  • Kristi Noem: The Courage to Reject a Shutdown

    Location: Online

    Sign up HERE! Join us Wednesday, July 8th for an interview with South Dakota Governor Kristi Noem over Zoom. In response to COVID-19, Noem defied the norm of a statewide shutdown and let South Dakotans choose for themselves what safety precautions to take. Tune in to this live online event to hear how Governor Noem preserved her state’s economy while still keeping citizens safe. Wednesday, July 8th at Noon CT Sign up HERE!  

    Register Now
  • Morning in Minnesota: Marshall

    Location: Marshall Golf Club

      Sign up for this event HERE! Please join Center of the American Experiment on Thursday, July 16 at Marshall Golf Club for a breakfast with Center economist, John Phelan, as he discusses Minnesota’s economic future. Following his presentation, John will lead a Q&A session. 7:30 AM Check In and Breakfast 8:00 AM Presentation 9:00 AM Conclude John Phelan is a graduate of Birkbeck College, University of London, where he earned a BSc in Economics, and of the London School of Economics where he earned an MSc. He worked in finance for ten years before becoming a professional economist. He…

    Register Now