Energy Policy

Misguided policy drives high energy costs for Maine manufacturers

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There is a legislative agenda to “make Maine green again” that could make Maine’s manufacturing sector disappear. Whether it is propelled by renewable energy special interest groups or a misguided devotion to stamping out pollution, the negative consequences of this agenda will bankrupt our state and increase pollution.

The pressure to make green legislation must be unbelievable because lawmakers refuse to consider the unintended consequences of these laws, or listen to the very real concerns from those who would be impacted by them.

A majority of the Maine Legislature wants to increase the amount of renewable energy that we are currently required to use in our electricity portfolio. Maine is already doing its part; renewable energy accounts for 75 percent of our electricity and Maine generates 67 percent of all wind power in New England.

Current law requires that 10 percent of the state’s electric energy sources come from Class I renewables and 30 percent from Class II, a total of 40 percent renewable resources. LD 1494, “An Act to Reform Maine’s Renewable Portfolio Standards” would increase the amount of Class I renewables from 10 percent  to 50 percent  by 2030, a total renewable mandate of 80 percent.

Power from wind and solar are more costly than power derived from natural gas, which is a factor in why industrial power electricity rates for Maine are the eighth highest in the nation. Most other regions in the US offer significantly lower electric costs and are also offering relocation services to many of our state’s manufacturers.

If you look at a pie chart of what sectors generate the most CO2 in Maine, transportation accounts for over 50% and residential heating from burning oil is 18%. Industry is the anchovy on this pie chart, a bare 10% contribution to carbon dioxide emissions. Commercial accounts for 10 percent and electric power nine percent, for those of you wanting to count to 100.

So, what really stinks for industry is Maine industries are not the source of CO2 emissions, yet they are being heavily penalized for it. Something about this smells fishy because LD 1494 will not fix the problem it purports to solve.

Estimates for the cost increase expected when or if LD 1494 goes into effect are between two and four cents per kilowatt hour. If you are a homeowner or small user of electricity, the cost is manageable. But manufacturers are large energy users; they make stuff, which requires a lot of power. Exponentially, this bill will make manufacturers pay hundreds of thousands of dollars more per year, an insurmountable cost that will drive them out of business or out of Maine.

What happens when manufacturing leaves? We remember the mass exodus of Maine’s textile mills and the paper industry, which migrated out of Maine because of many factors, some that were out of our control. Imagine how much larger our population would be in our rural areas and how strong our workforce would be if we still had those industries. Today, we are faced with another industry migration; it’s more subtle and less obvious, but still detrimental to Maine’s economy.

We have lost businesses whose expenses from Maine’s high taxes, energy costs and labor shortages were no longer sustainable. Harder to account for are the businesses that deliberated moving to Maine and chose more profitable states. As an older state, many business owners are nearing retirement and looking to sell their companies. Most of their offers are from out-of-state enterprises which would result in the relocation of all that hard-earned capitol earned by the efforts of Maine residents.

These misguided efforts to lower Maine’s CO2 emissions will actually increase CO2 emissions for the nation as a whole. When a product is no longer made in Maine, it is made somewhere else that likely has lower renewable energy requirements and production. There is an even greater chance that the product will be made in a developing country with inferior environmental emission controls, poor safety standards, and no renewable energy offset requirements. How is this making us green again?

The vacuum left behind when a manufacturer leaves Maine is not just lost jobs and lost tax revenue. Manufacturers are supported by countless service companies, from insurers to investors and consultants to construction companies. These affiliate businesses could also be lost from our state because many are clients of and depend heavily on the manufacturing sector.

It is very frustrating that many policymakers do not realize that penalizing our own producers has a negative environmental impact. Today’s zeal for compensating for our CO2 contribution is getting to be dangerous. Even if the goal is to make Maine the recreational play state of New England, evicting the perceived polluters will cause more pollution. Adding more windmills will not change the fact that Maine is down wind of industrial and economically productive states; a significant amount of our air pollutants are imported.

Busy people are at a legislative disadvantage. They don’t have a full day to dispose of to come to Augusta and testify. They don’t always have time to find out what bills are being proposed, let alone figure out if their business will be impacted. They definitely don’t have time to understand the many complex bills that are pages long and have sentences 75 words long.

Adding to the difficulty in creating awareness for these complicated bills is the fact that the details are hard for many to understand, and therefore hard to encourage testimony and opposition. It’s much simpler to understand and defeat a bill that adds 30 cents to a gallon of gas or heating oil. One wonders if the legislature is taking advantage of busy people.

Higher taxes and greater energy costs are not good for business, and businesses employ people and keep Maine profitable. It is a generous effort to fight for fiscal accountability, especially when the time these hard-working people have to speak out is so very limited. Let’s continue to speak out and hope that common sense prevails in Augusta.

About Cathy Nichols

Cathy Nichols is a Maine resident, part-owner of a manufacturing business and serves as a policy outreach coordinator at the Manufacturers Association of Maine.

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