Ground Electronic Warfare: Background and Issues for Congress

Summary: Ground electronic warfare (EW) is a group of programs directed by the Army and Marine Corp which are designed to effect ground forces use of the electromagnetic spectrum. The U.S. military has several ground EW programs that are used for different missions. These programs can broadly be categorized into counter-improvised explosive device (C-IED) systems, counter-unmanned aerial systems (C-UAS), and communications and radar jammers. Over the past several years, senior leaders in the Army and Marine Corps have testified about the need to improve EW capabilities.

Summary: Role of EW in Ground Operations

Summary: EW is a component of modern warfare, particularly in response to threats posed by potential adversaries such as Russia and China. EW refers to operations that use the electromagnetic spectrum (i.e., the "airwaves") to detect, listen to, jam, and deceive (or "spoof") enemy radars, radio communication systems, data links, and other electronic systems. EW also refers to operations that defend against enemy attempts to do the same.

Summary: Ground EW programs have gained importance in an era of "great power competition." Countries like Russia and China have developed so-called anti-access/area denial (A2/AD) systems, some of which are designed to prevent U.S. military access to radio and satellite communications, and to deny the use of radars for artillery and air defense operations.

Summary: Ground Forces EW Programs

Summary: This report focuses on three categories of unclassified EW programs in the Army and Marine Corps, along with their respective programs and systems:

Summary: C ounter -IED : the Thor and Duke Version III systems. C ounter -UAS : the Batelle Drone Defender, Blighter Counter-UAS system, the Mobile Expeditionary High Energy Laser, the Marine Air Defense Integrated System (MADIS), and the Compact Laser Weapons System (CLaWS). C ommunications and radar jammers : the EW Tactical Vehicle (EWTV), the EW Planning and Management Tool (EWPMT), the Communication Emitter Sensing and Attacking System II (CESAS II), and the Mobile EW Support System (MEWSS).

Summary: Potential Oversight Issues for Congress

Summary: Congress has continually shown interest in EW, and the decisions it makes regarding EW could affect future military capabilities and funding requirements. In particular, EW programs pose several potential issues for Congress:

Summary: Is DOD's proposed mix of ground EW capabilities and investments appropriate? How do the Army and Marine Corps transition emerging technologies from demonstrations into programs, and are these programs funded adequately? What role might emerging technologies have in shaping current EW plans and programs?

This report focuses on selected ground electronic warfare (EW) systems. The Department of Defense (DOD) FY2020 budget requests funding for a number of ground EW systems associated with the Army and the Marine Corps.

Generally, ground EW capabilities seek to use the electromagnetic spectrum to achieve one of three battlefield effects. First, ground EW systems can be used to defeat Improvised Explosive Devices (IED). This was the focus of the U.S. military's ground EW programs for the past decade and a half. A second role for ground EW can be to defeat Unmanned Aerial Systems (UAS). A third role, largely a legacy from the Cold War, can be to jam enemy communications and radars.

An overall issue for Congress is whether to approve, reject, or modify DOD's proposals for ground EW programs. These programs also pose a number of potential oversight issues for Congress. Congress's decisions on these issues could affect future U.S. military capabilities and funding requirements. Potential issues for Congress include

balancing EW programs between counter-improvised explosive device missions and great power competition, potentially standardizing how different services approach EW funding, and the role new technologies may play in EW operations.

Electronic warfare (EW)âsometimes also called electromagnetic maneuver warfare (EMW) âis an integral component of modern warfare, particularly in operations against technologically sophisticated potential adversaries such as Russia and China. EW generally refers to operations that use the electromagnetic spectrum (i.e., the "airwaves") to detect, listen to, jam, and deceive (or "spoof") enemy radars, radio communication systems and data links, and other electronic systems. EW also refers to operations for defending against enemy attempts to do the same. More formally, DOD defines electronic warfare as "[m]ilitary action involving the use of electromagnetic and directed energy to control the electromagnetic spectrum or to attack the enemy."

As shown in Figure 1 , DOD divides EW into electronic warfare support, electronic protection, and electronic attack. Electronic warfare support , sometimes also referred to as electronic support measures (ESM), involves listening to an adversary's radar and radio transmissions in an attempt to detect, locate, and understand how to avoid, jam, or deceive those systems. Electronic protection involves limiting the electromagnetic signatures of one's own military equipment and hardening one's own military equipment against the effects of enemy EW operations. Electronic attack (EA) involves jamming and deceiving enemy radars and radio communications and data links.

Developing ever-better EW systems is a component of the competition in military capabilities between major military powers. Because EW programs tend to be classified and are sometimes related to intelligence systems and capabilities, these systems are not frequently discussed publicly in much detail.

Ground EW systems provide EW support, electronic protection, and electronic attack. For instance, the Marine Corps' Mobile Electronic Warfare Support System categorizes enemy radio signals. Many of the counter-improvised explosive device countermeasures serve in both a protection and attack role by emitting a signal to jam radio communications to "attack" communications while protecting soldiers and marines. Counter-unmanned aerial systems provide a similar function for drones.

Counter-Improvised Explosive Device (C-IED)

In the immediate post-Cold War era, electronic warfare gained prominence as a potential way to mitigate threats from improvised explosive devices (IEDs). During counter-insurgency operations in Iraq and Afghanistan, U.S. and allied ground forces suffered many casualties from IEDs. To detonate IEDs, insurgents learned to use cell phones, small two-way radios, and other basic radio communications to maximize the amount of damage. One C-IED method the DOD developed was for EW systems to jam IED communications radio frequencies to prevent them from detonating. From FY2006 through FY2011, the Joint IED Defeat Organization received $18 billion to develop C-IED technologies, including electronic warfare systems.

These C-IED techniques included the development of a "man-portable" platform (see Figure 2 ), which supports U.S. forces on foot patrol, without the protection of a vehicle. However, due to power constraints, these types of C-IEDs provide jamming in a limited area; the jammers use batteries that are heavy and must be carried. DOD also procured C-IED jamming systems for vehicles, such as the Duke Version 3 system ( Figure 3 ), which can be installed on nearly any vehicle, though typically it is installed on the Humvee or the Mine-Resistant Ambush Protected Vehicle. Although these vehicular-based C-IED jammers are more powerful, because they draw power from the vehicle's engine, they are not able to accompany ground forces into buildings or in constricted areas such as alleyways. Thus ground forces require both systems, for mounted (travelling by vehicle) and dismounted (travelling by foot) operations.

The emergence of unmanned aerial systems (UAS), more commonly called drones, has created unique challenges for U.S. military forces. Both state and nonstate actors have employed drones for intelligence, surveillance, and reconnaissance (ISR) and certain strike capabilities (particularly large UAS platforms such as the MQ-9 Reaper for U.S. allies or the Wing Loong II developed by the People's Republic of China). Most UAS systems use radio frequencies to operate.

Adversaries have used UAS to support ground operations in recent years. The Islamic State (IS, also known as Islamic State in Iraq and the Levant (ISIL)) modified commercial drones to perform reconnaissance and drop small explosives, such as hand-grenades and mortars, on unsuspecting personnel. The Russian military demonstrated its ability to pair EW drones with artillery fire, with devastating effects. According to U.S. intelligence sources, Russian forces used a single drone to provide intelligence for an artillery fire mission in July 2014 that resulted in the destruction of two Ukrainian battalions within minutes. Emerging concepts like "swarming," where many small drones work together to accomplish a task, are also being developed. In 2015, IS demonstrated swarming tactics to attack a Russian airbase in Syriaâthough it is unclear how effective these swarming tactics were against Russian forces.

As a result, DOD has developed EW techniques to deny potential adversaries the ability to use drone aircraft. These counter-UAS systems are divided into two categories: systems that detect UAS, and systems that interdict UAS systems kinetically or nonkinetically. Some counter-UAS systems are capable of both detection and attack. According to one analyst, as of February 2018 there were 235 counter-UAS products from 155 manufacturers. These counter-UAS products range from hand-held devices that can jam radio and global positioning system (GPS) signals for point defense (see Figure 4 ) to larger, ground-based systems that can defend larger areas (see Figure 5 ). The latest generation of counter-UASs by the Army and Marine Corps are being developed to destroy targets using directed energy such as lasers.

The Army has recently developed vehicle-mounted lasers capable of engaging UAS. In 2018, the Army tested the Mobile Expeditionary High Energy Laser (MEHEL), a 5 kilowatt (kW) laser, which is placed on a Stryker-armored vehicle (see Figure 6 ). This laser has demonstrated being capable of destroying small drones in flight. The Army is planning to test a more powerful 10kW laser, and anticipates upgrading to a 50 kW laser, capable of destroying rockets, artillery, and mortars, by 2022. The Army plans to translate these technology demonstrators into future air defense systems by the mid-2020s. However, several challenges remain for the Army to field laser technologies. The first challenge is to develop a sufficient energy source that can fit into relatively small spaces. Some of the first lasers required a large power source housed in a semi-truck trailerâa power system too large to be practical for operational forces. The second challenge is providing sufficient power so that a laser beam can travel long distance. Light quickly diffuses in the atmosphere, thereby limiting the range of the system, particularly for lower-powered lasers.

Similarly to the Army, the Marine Corps is developing its own counter-UAS systems through the ground-based air defense (GBAD) program. In June 2019, the Marine Corps Warfighting Lab announced the first laser-approved operations, named the Compact Laser Weapons System (CLaWS) (see Figure 7 ). According to the Marine Corps, the CLaWS program is a rapid prototyping effort to provide an affordable solution for the C-UAS challenge. The Marine Corps is also procuring the Marine Air Defense Integrated System (MADIS) as part of its GBAD future weapons system. MADIS is a C-UAS system designed to be integrated onto the Joint Tactical Light Vehicle. In the FY2020 budget request, the Marines requested procurement funding to integrate 28 MADIS systems into the service's vehicle fleet.

Advances in networking sensors and computing power have made using the electromagnetic spectrum for communications an important task in any military operation. These networks allow a military to develop a comprehensive picture of the battlespace and enable forces to effectively coordinate attacks. Disrupting an enemy's communications systems limits their ability to command forces and maintain battlespace awareness. Both the Army and the Marine Corps have developed several programs to deny potential adversaries access to their communications networks.

The Army's primary communications jammer is the EW tactical vehicle (EWTV), a modified mine-resistant ambush protected vehicle that incorporates a variant of the CREW Duke system (see Figure 8 ). According to the Army, the EWTV was "developed to provide Army EW Teams with the ability to sense and jam enemy communications and networks from an operationally relevant range at the brigade combat team level." The Army states that the EWTV is designed to provide electronic attack capabilities for brigade combat teams.

To manage electronic attack and electronic support capabilities, the Army uses the EW planning and management tool (EWPMT). This system is often installed between the antennae and radio transceiver. The EWPMT allows operators to neutralize and exploit enemy signals through a computer program called Raven Claw. The software gives EW commanders a comprehensive view of the electromagnetic spectrum, allowing them to detect and jam enemy communications systems and radars.

Marine Corps radio battalions primarily employ the Communication Emitter Sensing and Attack System (CESAS) II to jam communications systems. According to a project officer, the CESAS II "has the ability to operate in a larger frequency range, covering a much larger portion of the communications spectrum [high frequency, very high frequency, and ultra high frequency]." CESAS II comes in two variants: a vehicle-transportable version (see Figure 9 ) and a man-portable system. According to Marine Corps Systems Command, CESAS II reduces the weight of the vehicle jammer from 1,300 pounds to 670 pounds; the man-portable version weighs 180 pounds. The Marine Corps declared initial operational capability in July 2016 and plans to declare full operational capability in FY2021.

The AN/MLQ-36 Mobile Electronic Warfare Support System (MEWSS) is another vehicle the Marine Corps uses to jam communications and other electronic transmissionsâsuch as radar. The Marine Corps fields 12 MEWSSs, which are modified light-armored vehicles procured in 1987. The MEWSS has received a series of upgrades, including a program called the MEWSS Product Improvement Program, which added a 9-meter extendable mast.

During the Cold War, competition in EW capabilities was an ongoing and significant component of the overall competition in military capabilities between the U.S.-led NATO alliance and the Soviet-led Warsaw Pact alliance. The end of the Cold War and the shift in the early 1990s to the post-Cold War eraâa period that featured reduced tensions between major powers and a strong U.S. military emphasis on countering terrorist and insurgent organizationsâmay have led to a reduced emphasis in U.S. defense plans and programs involving EW related to so-called high-end warfare, meaning high-intensity warfare against technologically sophisticated adversaries.

The perceived shift in the international security environment from the post-Cold War era to an era of renewed great power competition has led to a renewed focus on EW in U.S. defense planning and programming. In particular, U.S. defense planning has focused on aspects of EW related to high-end warfare, and to concerns among some observers that the United States needs to strengthen its EW capabilities as part of its overall effort to preserve U.S. qualitative military superiority over potential adversaries such as Russia and China.

China and Russia have developed sophisticated anti-access/area denial (A2/AD) systems to deny U.S. military forces many advantages; Chinese and Russian EW systems are considered A2/AD systems that deny the U.S military access to their communication and command and control. DOD notes that Russia has emphasized EW in its military modernization effort. Russia reportedly has employed EW as part of its military operations in Ukraine and Syria. DOD similarly states that China recognizes the importance of EW in modern military operations and is developing its EW capabilities as an integral part of its broad-based military modernization effort. China encouraged greater integration between its civil and military technological and industrial bases, which may enable its EW capabilities to benefit from the sophistication of its extensive civilian electronics industry.

Overview of Russian EW Capabilities and Operations

For more than a decade, the Russian military has focused on modernizing its forces, with a particular emphasis on command, control, communications, and computers (C4) and intelligence, surveillance, and reconnaissance (ISR) systems, of which EW plays an important part. According to military analyst Robert McDermott, the Russian military views electronic warfare as a "type of armed struggle using electronic means against enemy C4ISR to 'change the quality of information,' or using electronic means against various assets to change the condition of the operational environment." McDermott describes a close relationship between Russian signals intelligence forces and EW forces, where several EW units perform signals intelligence (SIGINT) functionsâsimilar to U.S. ground force organizations such as the Marine Corps' Radio Battalions. What distinguishes Russian EW organizations, he claims, is also a close relationship with air defense and artillery.

According to the Defense Intelligence Agency (DIA), the Russian military first tested its military modernization efforts in the Georgian war in 2008. DIA notes that "Russian military limitations were fully on display during the August 2008 "five-day war" with Georgia. Russian forces prevailed and defeated their relatively weak Georgian opponents, but after-action analysis by the Russian military highlighted many failings." Based on this operational experience, Russian forces began instituting what is termed the "New Look Program." According to the DIA,

[p]artially-manned Soviet-style divisions were reorganized into what were planned to be fully-manned brigades; officer ranks were trimmed from 350,000 billets to initially 150,000, although later the number rose to 220,000; the contract manning effort was reshaped and reinvigorated, with a goal of 425,000 professional enlisted personnel in the force by 2017; the six extant military districts were reshaped initially into four joint strategic commands, which controlled all military assets in their areas in peace and war; and lastly, a massive state armaments program was initiated, allocating 1.1 trillion rubles over 10 years, aiming at fielding a Russian military with 70% new or modernized equipment by 2020.

Investments in EW, through the New Look Program, have been significant. Since 2008, Russian military forces have continued to transform EW capabilities and organizations.

There are some clues in the many statements by the defence ministry and senior EW officers that indicate the modernisation of EW is based on examining how such capability has been exploited by the US and NATO in military operations over the past two decades. There also appears to be some influence based on US Prompt Global Strike and developments in US and NATO high-precision weapons that is pushing the defence ministry to plan for countering these. At the outset, despite the opaque nature of the overall aims of the procurement processes, one statement that stands out is from the leadership of KRET, aware of the underlying drivers behind the need for modern EW systems in Russia's military.

Indeed, by November 2016, the First Deputy General Director of KRET, Vladimir Mikheyev, referred to the "National Strategic EW System" as an "asymmetric response to the network centric system of combat operations" on the Murmansk -BN as a key part of the subsystem. The Murmansk -BN has a reported range of 5,000 km, is deployed on seven trucks, and monitors activity on airwaves, intercepting enemy signals with a broad jamming capability; it uses 32-metre-high antennas and has been deployed in Crimea. Mikheyev said the creation of the Russian EW strategic system can be called the "implementation of a network centric defence concept".

Additionally, Russian forces have begun introducing EW forces into their main combat arms organizations. Both McDermott and the DIA indicate that each motorized brigade has at least one electronic warfare companyânumbering more than 100 personnelâto provide desired tactical effects (as depicted in Figure 11 ). Appendix A provides an overview of the organization and types of equipment these EW companies use.

China has also seen a similar progression in EW capabilities over the past decade. Most defense analysts focus on Chinese aviation, maritime, and anti-space capabilities; however, the People's Liberation Army (PLA) has developed highly capable systems in the ground domain. China has developed a concept of "informationized warfare," which attempts to gain an advantage in information through robust ISR networks, while attempting to deny adversaries access to informationâthus preventing them the ability to command and control forces. To accomplish this goal, the PLA organizes EW functions in a new command called the Strategic Support Force, which includes cyber, psychological, information, and space forces.

Most of the focus on Chinese EW operations has been on air, maritime, and the space domains. However, China has developed sophisticated capabilities to counter U.S. forces on the ground as well. According to Jane's Defence Weekly, China has invested substantial resources into science and technology initiatives focused on improving its network and electronic warfare capabilities. These investments include ground-based sensors and jammers, space-based intelligence assets, and a number of airborne jammers. China has also invested in many unmanned systems that can swarm to provide desired effects, including signals intelligence interceptions and electronic attack.

Balance of Ground EW Capabilities . A potential oversight issue for Congress is the balance of EW capabilities the Army and Marine Corps are fielding and plan to procure. During the height of the conflicts in Iraq and Afghanistan, EW programming was weighted toward counter-IED programs rather than on countering great power competition. Although U.S. military forces continue to operate in high-threat IED areasâas illustrated by recent casualties in Afghanistanâthese programs do not necessarily provide the necessary protection against potential Russian or Chinese weapons systems. Both services have acknowledged that they require new investments to support command and control in an electromagnetically contested environment. Congress may review how both the Marine Corps and Army allocate resources to counter the IED threat, while working to ensure that ground services are prepared to counter emerging threats. Part of the capabilities balance is overlapping programs between the Army and Marine Corps. As both the Army and Marine Corps have EW programs with similar functions. For instance, both services are developing competing C-UAS programsâthe Army MEHL and the Marine Corps CLaWSâthat appear to have similar capabilities. C-IED programs, on the other hand, are joint programs in which one service develops a solution that other services can procure (thus all DOD services use the same programs which can have efficiencies for sustainment). Congress may examine if it is worthwhile for the Army and Marine Corps to develop competing programs, or if funding competing programs allows technology research and development (R&D) to make greater progress. Funding of Programs . Funding for EW systems can be difficult to track due to the complexity and classification of EW programs. One challenge associated with ground EW funding is that both the Army and the Marine Corps use research and development appropriations to potentially fund procurement activities due to the relatively fast-paced changes to electronic components. A second, but related, challenge is tracking EW programs when they transition from development to procurement. Part of the challenge is that the procurement activities for EW systems can be relatively small compared with larger weapons systems. As a result, DOD procurement activities do not necessarily disclose these components from the larger acquisition, making it difficult to track both a breakout of EW components associated with larger systems (e.g., the M1 Abrams main battle tank) and the total dollar figure associated with EW procurement activities for the Army and Marine Corps. The Marine Corps and the Army use different funding policies to maintain EW programs. Many of the Army's EW capabilities, as either demonstrators or prototypes, receive R&D funding. As a result, funding for these programs is generally seen as inconsistent and lacking plans for sustainment. The Marine Corps' programs, on the other hand, are programs of record, receiving both R&D and procurement funding. By making these systems programs, the Marine Corps seeks to provide predictable funding for systems over long periods of time. However, these systems are developed through the acquisition system and therefore might not be at the forefront of technological advances. Emerging Technologies . Emerging technologies may change how the Army and Marine Corps conduct EW. Some experts argue that advances in electronics are already changing how ground forces perform electronic warfare, particularly with continuously improving active electronically scanned arrays and new software defined radios. Some argue that these advances in electronics, paired with artificial intelligence, could allow for some automated decision making. These algorithms could help manage the electromagnetic spectrum by making spectrum allocation decisions, determine when adversaries are jamming (or denying) a frequency band, and automatically develop a jamming plan to deny adversaries access by looking at trends in their electronic emissions. Artificial intelligence algorithms could also enable EW systems to locate and engage small unmanned aerial systems by using data sources to help identify radar contacts (versus environmental clutter from clouds or animals) and electronic emissions. Neither the Army nor the Marine Corps have publicly stated that they plan to use artificial intelligence for managing electromagnetic spectrum operations or electronic warfare. New materials are changing the size, weight, power, and cooling of electronics components and power supplies. Electronics are smaller and require less power, and therefore smaller batteries. These new electronics emit less heat because of their reduced consumption of energy, requiring less cooling to maintain ideal temperatures, further reducing energy consumption. Battery technology is improving energy density. These designs provide similar electrical power outputs while reducing their size and weight, making it easier to develop man-portable electronics (such as the Thor C-IED system and the CESAS II jammer). Furthermore, advances in electronics allow for new waveforms using advanced electronically scanned array (AESA) antennas and other designs. As new materials emerge, DOD may request additional funding to upgrade EW systems and potentially procure AESA technology to more effectively jam enemy communications and radar systems. Quantum technologies could potentially change electronic warfare. Emerging developments in quantum communications and quantum radars will likely change how the military communicates and observes enemies. Quantum technologies will likely have an impact on EW; however, the exact impact they will have on executing EW operations remains unclear.

Appendix A. Russian EW Company Equipment


Electricity Portfolio Standards: Background, Design Elements, and Policy Considerations

Summary: Electricity portfolio standards, such as renewable portfolio standards and clean energy standards, are policies aimed at changing the energy sources used to generate electricity. Supporters identify multiple policy goals, including greenhouse gas reduction, technology inno vation, and job creation. Twenty-nine states, three U.S. territories, and the District of Columbia are currently implementing mandatory portfolio standards. Congress, to date, has not established a national portfolio standard, though bills that would do so have been introduced in every Congress since the 105 th .

Summary: Congressional interest in 2011 and 2012 prompted a variety of analyses about potential impacts of a national portfolio standard. The national electricity generation profile has changed since then in ways that might make previous analyses less relevant to any future policy debate. Between 2012 and 2018, in the U.S. generation from coal fell (from 37% to 27%), generation from natural gas increased (from 30% to 35%), and generation from renewable sources (e.g., hydropower, wind, solar) increased (from 12% to 18%). Many expect these trends to continue, regardless of any new federal policy related to the electric power sector.

Summary: Portfolio standards are generally envisioned as market-based policies in the sense that they use financial incentives rather than prohibitions to achieve policy goals. Several key concepts in portfolio standards are common to other market-based policies. Credits are an accounting mechanism used for compliance and are tracked in electronic databases sometimes called registries. Lawmakers can choose the degree of flexibility around credit use in a portfolio standard, with potential impacts on overall policy costs and benefits. Procedures to monitor, report, and verify credits can help portfolio standards achieve their policy goals and reduce the risk of fraud.

Summary: Other concepts are specific to portfolio standards. Choices about these design elements can strongly influence policy outcomes. Generally, choices that would tend to reduce costs would also tend to result in fewer changes in the electricity generation profile.

Summary: The choice of which energy sources would be eligible for compliance, and therefore would be incentivized by the program, is often central to policy discussions about portfolio standards. Past proposals have included a range of eligible sources, including renewable sources, nuclear, fossil fuel-fired power plants equipped with carbon capture and sequestration technology (CCS), and natural gas combined cycle power plants. Some proposals have included nongenerating sources like energy storage and energy efficiency as well. Other design elements include whether all utilities should have to comply with a portfolio standard or whether some would be exempted; how much generation from eligible sources a portfolio standard is designed to achieve; by when should the desired amount of generation from those sources be achieved; to what share of a utility's electricity sales should a portfolio standard apply; and whether any provisions should be included that delay or halt compliance under certain circumstances (e.g., undesirably high prices).

Summary: If established, a national portfolio standard would likely have economic effects, though estimating these in advance is subject to some uncertainty. Any sources and associated industries excluded from the definition of eligible sources would likely experience negative economic effects. At the same time, industries associated with sources included in the standard would likely experience positive economic effects. The net effect on national economic activity would depend on the design details of any portfolio standard and the ways that consumers might respond to potentially higher electricity prices.

Summary: A national portfolio standard might also have environmental effects compared to a business-as-usual scenario, depending on design choices such as source eligibility and the change from business as usual a portfolio standard is designed to achieve. Potential eligible sources vary in their GHG and air pollutant emissions, as well as other attributes such as water consumption and power density (which can affect land requirements). Implementation could affect environmental outcomes too. For example, deploying small-scale distributed eligible sources might have different effects than deploying large-scale eligible sources.

Summary: Another policy consideration is potential interaction with state energy policies like existing portfolio standards, electricity infrastructure siting, and the use of competitive markets to influence electricity investment decisions. Such interactions may generate debate regarding preemption and highlight potential federalism concerns.

Legislative proposals have been introduced since the 105 th Congress to create a national electricity portfolio standard that would require electric utilities to procure a certain share of the electricity they sell from specified sources. Twenty-nine states, three U.S. territories, and the District of Columbia are currently implementing mandatory portfolio standards, and an additional eight states and one territory have voluntary versions.

Various existing and proposed portfolio standards use a range of terms for similar concepts. A renewable portfolio standard (RPS) typically means a requirement to procure electricity from renewable sources. A clean energy standard (CES) typically means a variant of an RPS that includes some nonrenewable sources, such as nuclear or selected fossil fuels, in the requirement. Some lawmakers and stakeholders use these terms interchangeably, and some use the term CES or "clean energy" to refer only to renewable sources. This report uses the more general term "portfolio standard" to avoid confusion between RPS and CES.

At both the federal and state level, lawmakers express multiple goals for portfolio standards. These include greenhouse gas reduction, technology innovation, and job creation. Policy design choices, as discussed in this report, can influence the extent to which portfolio standards might achieve those or other goals.

Other policies could potentially achieve the same goals as portfolio standards. For example, tax incentives or funding for technology research, development, and deployment could promote the use of certain types of electricity generation sources by reducing their costs. This report does not compare portfolio standards with other policy options, nor does it fully examine the costs and benefits of establishing a national portfolio standard compared to business-as-usual trends in the electric power sector.

This report provides background on portfolio standards and an overview of policy design elements to inform debate around proposals introduced in the 116 th Congress, building on previous CRS reports addressing this topic. This report also analyzes potential effects of portfolio standard design choices, with an emphasis on economic effects, environmental effects, and potential interactions with state energy policies. Other potential effects that may be of congressional interest, but are outside the scope of this report, include public health, considerations regarding critical minerals used in some energy sources, electric reliability, cybersecurity, and geopolitics.

A number of government agencies, nongovernmental organizations, academic researchers, and private sector entities analyzed potential effects of a national portfolio standard in 2011 and 2012 because of congressional interest at that time. Since 2012, the U.S. electric power sector has seen several changes in its generation profile that were unanticipated in those analyses. These include an increase in generation from sources using natural gas and renewable energy, along with a decrease in coal-fired generation. The current U.S. electricity generation profile and market trends may be important context for any congressional debate about a potential national portfolio standard.

The U.S. Energy Information Administration (EIA) reports that total electricity generation was 4,047,766 gigawatt-hours (GWh) in 2012 and 4,207,353 GWh in 2018, an increase of 4%. Most of this increase occurred between 2017 and 2018, as shown in Figure 1 .

Between 2012 and 2018, the share of electricity generation from different sources has changed. Coal generated 37% of total generation in 2012 and 27% in 2018. Natural gas generated 30% of total generation in 2012 and 35% in 2018. Renewable sources, including hydropower, wind, solar, geothermal, and biomass, generated 12% of total generation in 2012 and 18% in 2018. Many expect these trends to continue. For example, EIA's projection of current laws, regulations, and market trends show coal contributing 17% of total generation in 2050, natural gas contributing 39%, and renewable sources contributing 31%.

Electric power sector observers generally agree on the factors causing these trends, although the relative importance of each factor is subject to some debate. The changes from 2012 to 2018 are due to a combination of (1) continued low natural gas prices and low wholesale electricity prices; (2) federal environmental regulations, especially on coal-fired power plants; (3) declining capital costs for wind and solar sources; (4) federal tax incentives for wind and solar sources; (5) state portfolio standards and other policies; (6) changing consumer preferences, especially large corporations' and institutions' commitments to procure more electricity from renewable sources; and (7) natural turnover as generators age.

Differing perspectives over the relative influence of these factors could affect stakeholder views on the merits of a federal policy to promote greater use of certain energy sources for electricity generation. Some might argue that sources that are now cost competitive (e.g., natural gas, wind) may not require policy support to increase their share of the electricity generation profile. Others may see electricity generation as solely an area for state policy as discussed further in the section " Interaction with Other State Energy Policies ," below. A related consideration may be whether increasing the pace of change in the U.S. electricity portfolio could pose reliability risks.

Key concepts in portfolio standard policymaking may or may not have identical meaning when used in other contexts. For convenience and clarity, this section introduces key concepts used in this report.

As noted above, lawmakers and observers are not consistent in their use of terms related to portfolio standards. Renewable portfolio standard (RPS) is the most frequently used term to describe a portfolio standard, though renewable energy standard, alternative energy portfolio standard, and others are in use. The term clean energy standard (CES) is frequently used to refer to a variant of RPS in which certain nonrenewable sources are eligible in addition to renewable sources, but some federal legislative proposals have used the term "clean energy" to refer only to renewable sources. The Appendix provides more information about previously introduced bills.

Banking refers to the extent to which credits issued in the program may be used for compliance after their vintage year (see definition, below). Banking provisions can equivalently be described in terms of expiration. For example, if credits expire after two years, then banking for two years is allowed. A related concept is borrowing which allows credits of future vintage years to be used for compliance.

Base quantity of electricity is the sales volume to which the portfolio standard applies. The base quantity could equal total electricity sales, but it need not. Excluding sources from the calculation of the base quantity changes the required amount of generation from eligible sources in absolute terms. The base quantity to which the portfolio standard applies also affects the financial incentive that different sources receive. Even sources deemed ineligible under the portfolio standard could receive some policy support if they were excluded from the base quantity of electricity. This concept is discussed further in the section " Base Quantity of Electricity ."

Carve outs , tiers, multipliers, partial crediting, and usage limits are all policy options for influencing the relative support that different types of eligible sources receive under a portfolio standard. Eligible sources will be available at different costs. Policymakers may want to avoid a situation where compliance is achieved mostly through the use of a single, low-cost source. A carve out is a requirement within the overall policy requirement to achieve a minimum level of compliance by using a certain source. Carve outs have been used, for example, to require use of solar energy even when that was more expensive than other eligible sources. The same goal might be accomplished through use of tiers . Typically, a carve out will apply to a single source type while a tier might apply to multiple source types. A related concept is that of usage limits that set maximum levels for compliance from certain sources. Multipliers are rules under which selected sources receive more than the usual amount of credit for generating electricity, but the credits are completely fungible (see definition, below) with others. Sources that are eligible for multipliers would receive extra policy support, relative to other sources. Multipliers could be used, for example, to encourage demonstration and commercialization of new technologies. P artial crediting would give selected sources less than the usual amount of credit and could be applied to sources lawmakers wanted to give less policy support.

Clean energy , as used in this report, refers to the set of sources that lawmakers might choose to include in a portfolio standard. These sources could include wind, solar, geothermal, biomass, hydropower, marine energy, nuclear, natural gas combined cycle generators, or fossil fuel-fired generators equipped with carbon capture and sequestration technology (herein, CCS). Lawmakers could also choose to include nongenerating sources such as energy storage or energy efficiency. Other considerations about the choice of eligible sources are discussed in the section " Source Eligibility ."

Covered entities are the entities with a compliance obligation under a portfolio standard. Most portfolio standards being implemented by states or proposed at the federal level have electricity distribution utilities as the covered entities. These utilities may or may not own electricity generators, depending on state and local regulatory regimes. Typically, a utility procures electricity from a number of different generators using a variety of energy sources (its portfolio ). Other considerations about the choice of covered entities are discussed in the section " Utility Applicability ."

Credits are the unit of accounting for portfolio standards and other market-based policies. Electricity cannot easily be traced from its point of generation to its point of consumption, so accounting measures are required to assess compliance with a portfolio standard. In many existing portfolio standards, credits are issued by an administrator to a generator that uses a clean energy source. The number of credits issued is based on actual measured electricity generation (i.e., ex post ). The generator can then sell credits to a utility, and the utility surrenders them to the program administrator to demonstrate compliance. If a generator sells both electricity and associated credits to the same entity, the credit is bundled . If a generator sells electricity and associated credits to different entities, the credit is unbundled . Lawmakers could allow entities other than generators and utilities (e.g., financial institutions) to buy and sell credits, or they could allow only utilities with a compliance obligation to purchase credits. The price that utilities would pay for credits would depend on the portfolio standard stringency, the overall volume of electricity generated by clean energy sources, and other market factors. The sale of credits could create an additional source of revenue for a generator, potentially improving its economic performance relative to a business-as-usual scenario with no portfolio standard. In some cases, the ability to sell credits might be the deciding factor for whether a new generator would be constructed (or, for existing generators, whether a generator would remain operational instead of being retired). In other cases, generators may be profitable without the sale of credits, and the credits might create a windfall profit. The requirement to buy credits would likely increase the overall costs for a utility. Typically, a utility's costs for complying with a portfolio standard would be passed on to its customers. If a utility were unable to fully pass on its compliance costs, it might see reduced profitability.

Fungibility is the attribute of credits allowing them to be used interchangeably and without penalty. Since many state portfolio standards already exist, federal policymakers would have to decide if these state credits would be fungible with federal credits under a federal portfolio standard. If they were, then current holders of state-issued credits could use them for compliance with a federal portfolio standard or sell them to another entity for that purpose. If they were not, then state-issued credits could potentially lose value, depending on the relative stringency of a national portfolio standard and the state portfolio standard. Some states have implemented cap-and-trade programs in addition to portfolio standards, both of which aim to reduce greenhouse gas emissions from the electricity generation. Like portfolio standards, cap-and-trade uses credits (also called allowances) as an accounting mechanism and for compliance purposes. Under existing state policies and federal proposals, credits under portfolio standards are not fungible with allowances under cap-and-trade programs for greenhouse gases.

Market-based policies attempt to use financial incentives to achieve policy goals. Many discussions contrast them with command-and-control policies that set specific permissions or prohibitions. Portfolio standards indirectly provide financial incentives because they create demand for generation from certain eligible sources in electricity markets, even if those eligible sources are more expensive than ineligible sources. Some observers argue this mechanism is a disruption of market forces. In comparison, tax credits, grants, and loan guarantees provide direct financial incentives for eligible sources and therefore lower the cost of those sources in the market. Most portfolio standard proposals do not expressly prohibit use of ineligible sources, but they do create a financial disincentive to use them.

Monitoring, reporting, and verification (MRV) are three distinct steps that ensure that market-based policies achieve the desired goals. In the case of portfolio standards, MRV practices would measure the amount of electricity generated by eligible sources and verify that each unit of electricity from eligible sources was used only once for the purpose of compliance. Monitoring and reporting electricity generation is commonplace in the industry, at least for large-scale generators connected to the electricity transmission system. Verification for market-based policies is often completed by an independent third party.

Qualifying facilities (QFs) are established in the Public Utility Regulatory Policies Act of 1978 ( P.L. 95-617 ; PURPA) as certain small power production facilities and cogeneration facilities that receive special treatment. Utilities must purchase electricity from QFs at a price determined by what the utility would otherwise have to pay for electricity. There is no direct relationship between QFs under PURPA and sources that would be eligible under a portfolio standard, though the term "qualifying source" is sometimes used in both contexts. To avoid confusion, this report refers to sources defined as clean energy under a portfolio standard as "eligible sources."

Registries , sometimes called tracking systems, are electronic databases used to facilitate credit issuance and transfer. State portfolio standards typically make use of registries in the following way. After an administrator verifies the amount of electricity generated from an eligible source, the administrator creates an appropriate number of credits. These credits are assigned a serial number and placed in the account of the appropriate entity in the registry. If the credit owner agrees to sell the credits to another entity, the owner files the necessary documentation with the administrator, who then authorizes the credits to be transferred to a different account in the registry. A covered entity would demonstrate compliance by transferring the required number of credits from its account to the administrator's account. The administrator would take action to retire the submitted credits to make sure they cannot be used again for compliance. Cybersecurity measures can help prevent theft of portfolio standard credits or other fraudulent activity. Some government agencies currently operate registries that could potentially be used to administer a national portfolio standard, and some private firms operate registries as well.

Vintage refers to the time period in which a tradeable credit in a market-based policy is issued. Portfolio standards typically have annual compliance periods, with vintage expressed in years. In policies with shorter or longer compliance periods, the vintage could be associated with a specific month or a series of years. For example, if an eligible source generated electricity in the year 2025, it would receive a vintage 2025 credit. The banking and borrowing rules (see definitions, above) determine the years in which credits of a given vintage may be used for compliance.

If Congress chose to establish a national portfolio standard, lawmakers would face choices about the design of the policy. This section discusses some key design elements and potential effects of different choices. Often, design choices reflect a balance between increasing the certainty of achieving policy goals and decreasing the likelihood that consumers will experience undesirable cost increases. Design elements can interact with each other, so the potential effect of a choice about one element may be influenced by choices about others.

Not all portfolio standard design choices must be made in legislation. Congress could direct an agency to promulgate regulations that implement a portfolio standard. The previous federal proposals summarized in the Appendix take different approaches. Some proposals made very few design choices and left most decisions to an agency, while others specified most design choices and left few decisions to an agency. Specifying details in legislation could add complexity that potentially impedes the legislative process or creates challenges in policy implementation. On the other hand, specifying details in legislation would give lawmakers greater control over policy design decisions.

Portfolio standards achieve their policy goals by increasing electricity generation from certain eligible energy sources, as defined by lawmakers. The various energy sources used for electricity generation have many different attributes that lawmakers might weigh in determining which sources could be eligible under a national portfolio standard. Recent state policy debates and many current discussions at the federal level have centered around three attributes: carbon intensity, technology maturity, and market competitiveness (i.e., cost).

The debate around carbon intensity has focused on whether to include sources with a carbon intensity less than conventional coal-fired generators (i.e., low carbon sources), such as natural gas combined-cycle power plants, or include only those with a carbon intensity of zero (i.e., zero carbon sources). This debate closely relates to the desired environmental outcome of a portfolio standard. All else being equal, a portfolio standard that includes low carbon sources would likely result in higher greenhouse gas emissions from the electric power sector than a portfolio standard under which only zero carbon sources were eligible. Advocates for substantial greenhouse gas reductions disagree about whether all zero carbon sources should be eligible, with nuclear energy and CCS being particularly contentious. Advocates who support nuclear energy and CCS often present cost arguments, while advocates who oppose those sources often present arguments about environmental quality and environmental justice.

The debates around technology maturity and market competitiveness both focus on the desired balance between supporting new technologies and supporting existing technologies. These debates closely relate to the desired economic and technological outcomes of a portfolio standard. Many mature technologies are less expensive than new technologies, so including them as eligible sources might achieve the policy goals at a lower overall cost. Mature technologies may be easier to deploy, from an operational point of view, since industry best practices and standards for their use are established. At the same time, a portfolio standard that includes mature technologies might not encourage the desired level of investment in new technologies. A compromise may be the use of carve outs, tiers, multipliers, partial crediting, or usage limits, as described above, to attempt to influence the extent to which covered entities used new or mature technologies for compliance.

Energy storage and energy efficiency are not electricity sources, in the usual sense, because they do not generate electricity. Their supporters argue their deployment helps achieve similar policy goals as portfolio standards, namely technology innovation, greenhouse gas reduction, and job creation. Portfolio standards could incentivize energy storage and energy efficiency directly, for example, by defining them as eligible sources and providing an accounting methodology for issuing credits to them. Such accounting methodologies may be more complex than those used for electricity generation, especially for energy efficiency since energy savings cannot be directly measured. Alternatively, portfolio standards could indirectly incentivize deployment of energy storage or energy efficiency in the setting of the base quantity, as discussed in the section " Base Quantity of Electricity ." If lawmakers wanted to incentivize their deployment, another option could be to establish separate targets for energy storage deployment and energy efficiency alongside a portfolio standard. Some states with portfolio standards have taken that approach, and some previous federal proposals took that approach as well.

Distributed energy resources (DER) are located near the point of consumption in the electric power sector (e.g., an individual home, commercial facility, or manufacturing plant). Federal portfolio standard proposals to date put a compliance obligation on electric utilities; however, utilities do not always own or operate DER. From the perspective of an electric utility, many DER are like energy efficiency in that they reduce electricity sales. Some, but not all, DER use renewable sources, so lawmakers might consider whether to include these as eligible sources. The electric power industry does not have established methodologies for measuring generation from DER, so these would need to be developed if DER were to receive credits. Alternatively, the setting of base quantities can influence the incentive DERs receive as discussed below.

Other energy source attributes may be of interest to Congress. These include energy density, which can affect land requirements, and the geographic variability in resource quality. As is also the case for other topics, geographic variability in natural resources can potentially raise concerns about uneven wealth impacts in portfolio standard policymaking. For example, the nation's wind resources most suitable for wind energy development are concentrated in the central United States and offshore of the Northeast and Mid-Atlantic. The nation's largest solar resources are concentrated in the Southwest. If eligible sources under a portfolio standard were all concentrated in one region (or, similarly, if a lack of eligible sources were concentrated in one region), wealth transfer could occur, raising potential concerns over fairness. Relatedly, some regions have developed some resources more than others, for example via implementation of state portfolio standards. Including existing sources, such as those incentivized under state policies, could potentially result in wealth transfer from states that had not previously implemented supportive policies. On the other hand, excluding existing sources could be perceived as penalizing early actors.

Most homes, businesses, and other consumers acquire electricity from the electric grid and pay electric utilities to provide that electricity to them. Over 3,200 electric utilities operate in the United States, and they are generally classified by three ownership models.

Investor-owned utilities (IOUs) are operated by private companies on a for-profit basis, and they deliver electricity in at least portions of every state except Nebraska. Publicly owned utilities (POUs, sometimes municipal utilities or munis) are owned by local governments and operated on a not-for-profit basis. Electric co-operatives (co-ops, sometimes rural co-ops) are member-owned organizations operated on a not-for-profit basis, typically located in rural areas.

State governments allow IOUs to act as monopolies in their service territory, with no competition on electricity distribution, in exchange for accepting electricity rates as determined by state regulators. Similar to IOUs, POUs and co-ops are allowed to operate as monopolies with respect to electricity distribution. Unlike IOUs, they are generally exempt from regulation by state governments regarding electricity rates, investment decisions, and other operations. POUs and co-ops together serve about 27% of Americans.

Lawmakers would have to decide to which type of utility a national portfolio standard would apply, if they chose to implement such a policy. If one class of utilities, such as co-ops, were excluded, then the overall effect of the policy might be reduced, since the excluded utilities could still procure electricity from ineligible sources above the levels set by the portfolio standard. On the other hand, excluding some utilities based on ownership model might be desirable in order to address concerns about overall compliance costs and cost distribution. POUs and co-ops often serve fewer customers than IOUs, so any fixed administrative costs associated with compliance must be shared by a smaller number of customers, resulting in relatively larger shares of administrative costs. Some state portfolio standards establish different (usually less stringent) targets for POUs and co-ops, while some exclude them altogether.

Utility size, expressed as annual electricity sales, could be a more precise characteristic than ownership model in addressing concerns about higher administrative costs for smaller utilities, since some IOUs are small and some POUs are large. Figure 2 shows the share of utilities of each ownership model for selected utility size ranges. Table 1 shows the total number of utilities of each ownership model in the selected size ranges.

Previous legislation has included different utility size thresholds for inclusion. Utilities that did not meet the specified size threshold would not have had a compliance obligation under those proposals. For example, S. 2146 in the 112 th Congress would have initially included utilities with at least 2 million megawatt-hours (MWh) of sales and then phased in smaller utilities of at least 1 million MWh of sales. The provisions of Title I of the Public Utility Regulatory Policies Act of 1978 (PURPA; P.L. 95-617 ) apply to utilities with at least 0.5 million MWh of sales.

A potential consideration is the share of total U.S. electricity sales that would be covered by a portfolio standard if utility size thresholds were established. Figure 3 shows the share of total U.S. electricity sales associated with utilities of different sizes, for all ownership models. In 2017, 82% of U.S. electricity sales came from distribution utilities that had annual sales volumes greater than 2 million MWh, 87% came from utilities with sales greater than 1 million MWh, and 92% came from utilities with sales greater than 0.5 million MWh.

The target of a portfolio standard refers to "how much?" and "by when?" A target might be defined for a single year (e.g., 50% of electricity sales in 2050), or it might be phased in over multiple interim periods (e.g., 25% of electricity sales in 2020â2029; 40% of electricity sales in 2030â2039; 80% of electricity sales in 2040â2049). Target phase-in can be implemented in different approaches, as shown in Figure 4 . Each of these approaches has different implications for how individual source types might be affected, though actual outcomes would be influenced by other factors such as future technology costs and electricity demand. Linear phase-in would tend to benefit existing sources and mature technologies with relatively short development timelines, such as wind and solar. These sources could be available to generate electricity and meet near-term compliance obligations. A back-end loaded phase-in might avoid near-term electricity price increases and allow time for commercialization of new technologies, but it might not result in desired environmental results in the near term. A stepped phase-in could balance the advantages and disadvantages of the other two options. It might also lead to uneven investment patterns, with periods of relatively high project development associated with target increases followed by periods of relatively low project development during target plateau periods.

The stringency of a policy indicates the changes the policy might make in generation profile compared to a business-as-usual scenario. Generally, the stringency of the policy will be positively correlated to the costs and benefits of implementing the policy, so as policy stringency increases, the costs and benefits will also increase. For example, a portfolio standard target of 50% of electricity sales by 2050 would likely cost more to implement than a target of 25% of electricity sales by 2050, all else being equal. Similarly, a portfolio standard target of 30% of electricity sales by 2030 would likely cost more to implement than a target of 30% of electricity sales by 2050. At the same time, the more stringent options (i.e., the higher target percentage or the earlier target date) could result in greater technology innovation and lower greenhouse gas emissions than the less stringent options.

Another way to describe portfolio standards' stringency is the net change in generation from eligible sources. This approach acknowledges that the national electricity generation profile is currently quite diverse with many types of sources. The net change is the difference between the final requirement of the portfolio standard (i.e., the target) and the share of generation from eligible sources before the policy is implemented. Suppose a portfolio standard required 20% of generation to come from wind and solar sources by 2020. These sources contributed 9% of electricity generation in 2018, so the net change required by such a portfolio standard would be 11%. The different ways to describe portfolio standard stringency could influence public perception of it. In this example, the same target could either be described as 20% or 11%, with potentially different implications for perceived costs and benefits.

For portfolio standards that express compliance obligation as the percentage of electricity sales coming from clean energy sources, the base quantity is the denominator used to calculate the compliance obligation. The base quantity of electricity can determine the amount of generation from eligible sources a portfolio standard requires in absolute terms. It has been described as "perhaps the most important and least understood concept in the design of a [portfolio standard]." The base quantity could equal total electricity sales, but it need not. The base quantity could instead be a specified subset of total sales. Some portfolio standard proposals have excluded electricity generated from certain sources in the base quantity calculation (see Appendix ). Under such an approach, a utility with a compliance obligation would be incentivized to procure electricity from sources excluded from the base quantity because doing so would lower the amount of electricity from clean sources it would have to procure.

To illustrate this point, consider a hypothetical portfolio standard with a 50% clean energy requirement. The compliance obligation for this portfolio standard would be expressed as

If a utility sold 10 million MWh annually and the base quantity of electricity equaled the total sales, then the utility would have to procure 5 million MWh from clean energy sources.

If electricity from certain sources were excluded from the base quantity, the required procurement changes. If a utility procured 1 million MWh of the 10 million MWh it sold from sources excluded from the base quantity, then the utility would have to procure 4.5 million MWh from clean energy sources. The portfolio standard, in this case, would incentivize the utility to procure electricity from both kinds of sources, namely those excluded from the base quantity and those defined as clean energy by the policy.

The utility's incentive to procure electricity from sources excluded from the base quantity would generally be less than the incentive to procure electricity from clean energy sources, depending upon the cost of different energy sources and the overall portfolio standard stringency. If policymakers wanted to provide some policy support to certain sources, but less support than other sources receive, they might exclude certain sources from the base quantity calculation.

A related consideration is the treatment of energy efficiency (EE) and DER (including, potentially, customer-sited energy storage). These result in reduced utility sales, so, to some extent, they are inherently included in the base quantity calculation. Utility investments that increased EE or generation from DER could also help the utility achieve compliance with a portfolio standard by reducing the amount of electricity it would have to procure from clean energy sources. For many utilities, reducing sales reduces the company's profitability, but some regulatory models are being developed and implemented in which profitability can be maintained or can increase as use of EE and DER increases.

Future electricity demand, technology development, and technology costs are all uncertain. Ultimately, these uncertainties result in uncertainties around the cost to consumers of a portfolio standard, which could be an important consideration for lawmakers. To protect consumers from undesirably high electricity costs, portfolio standards can include provisions that reduce stringency in response to high costs. These various provisions are sometimes called safety valves.

Safety valves need not be included in legislation, since Congress could amend a law establishing a portfolio standard in response to any concerns that developed. Including safety valves in legislation could, however, promote regulatory certainty for covered entities and consumers, because legislative action to address any concerns that might arise could potentially be a lengthy process. Another option could be for Congress to explicitly authorize an agency to implement safety valves.

An alternative compliance payment (ACP) allows a utility to pay a fee in lieu of surrendering credits. The degree of cost control it might provide would depend on the level at which an ACP were set. For example, if electricity generation from eligible sources were available at 5 cents per kilowatt-hour (cents/kWh) and an ACP were 10 cents/kWh, utilities would likely procure electricity from the eligible sources instead of paying the ACP. If, however, the ACP were 3 cents/kWh, utilities would likely pay the ACP and procure electricity from ineligible sources. Use of ACP could be unlimited, or it could be limited to a certain share of overall compliance.

If an ACP were included in a national portfolio standard, lawmakers would also have to decide how any collected revenue would be disbursed. One option would be to use the revenue to further desired policy goals, for example by funding greenhouse gas reduction programs or technology research and development. Another option would be to return the revenue to electricity consumers as a way of further reducing the cost impacts of a portfolio standard. Other options include treating it as general fund revenue, deficit or debt reduction, or other spending.

Portfolio standards could include provisions to suspend or delay compliance with targets under certain conditions. These conditions could include compliance costs reaching a specified threshold or identification of reliability risks.

Some cost containment for portfolio standards comes from the use of tradable credits to demonstrate compliance, especially if a portfolio standard allows unbundled credits. A low cost eligible source might be located outside of a utility's service territory. When utilities can use unbundled credits, they can demonstrate compliance by surrendering credits from this low cost source. The alternative, namely, disallowing tradable credits, could require utilities to procure electricity from high cost sources or could require the development of more sources than would be required to meet electricity demand, resulting in overall higher costs for consumers. One argument against unbundled credits is that they might not address concerns over localized concentrations of co-pollutants from conventional generators, known as hot spots. For example, if a utility procured electricity from an ineligible source that also emitted harmful air pollutants such as particulate matter or nitrogen dioxide, and the utility complied with the portfolio standard with credits associated with eligible sources located outside its service territory, hot spots might not be reduced to the extent they might be if unbundled credits were not allowed.

Banking or borrowing could also decrease overall compliance costs. For instance, in years when utilities had access to many credits from low cost eligible sources, relative to what were required by the target, utilities might bank credits. If fewer credits were available in future years, relative to what were required by the target, a utility could surrender the banked credits, resulting in lower compliance costs. Banking could reduce a utility's exposure to volatility that can occur in electricity markets. This reduced risk can also reduce overall compliance costs, since a utility would not have to take other actions to reduce its risk exposure. To the extent that banking or borrowing could reduce the net change in generation, it might lead to reduced environmental benefits and reduced incentive for technology innovation.

Alternatively, lawmakers could establish mechanisms to increase the stringency of a portfolio standard if certain thresholds were passed. Stringency could be increased by increasing the target to a higher percentage of electricity sales or moving the deadline to achieve the target to an earlier year. The trigger for such an action could be credit price, greenhouse gas emissions levels, technology development, or other thresholds. This might be one way to increase the desired benefits of a portfolio standard in cases where compliance costs were unexpectedly low. It might also create uncertainty for covered entities and potentially result in unintended consequences such as market participants avoiding actions they might otherwise take in order to avoid triggering a change in stringency.

The previous section discussed some potential effects of different choices about design elements for a portfolio standard. A key theme in discussion of design elements is the balance between achieving policy objectives and minimizing electricity cost increases for consumers, assuming a portfolio standard were implemented. The potential effects discussed in this section might be characterized instead as the potential effect of a portfolio standard compared to business as usual. While the previous section addressed the question "How can a portfolio standard be designed?," this section addresses the question "What might happen if a portfolio standard were implemented?"

Any projections of the effects of a policy on the U.S. electric power sector are subject to uncertainty around various factors. These include future economic activity, electricity demand, energy costs (e.g., natural gas prices), and technology costs. Some factors may be more strongly influenced by decisions made by foreign governments than by the federal government. For example, international demand for electricity from solar energy could lower the cost to produce solar panels, or countries with large critical mineral resources could impose export bans, increasing the cost in the United States of any technology using those minerals.

The overall effect on the American economy of a national portfolio standard would be influenced by multiple factors. Increased electricity costs could reduce economic activity, depending on the price response throughout the economy. Potential price responses are reduced electricity consumption, increased investment in efficiency measures, or reduced spending on other goods or services. Some price responses might have minimal effect on overall economic activity, for example if consumers shifted spending from electricity consumption to energy efficiency improvements.

Potential economic effects might not be uniformly distributed. There could be regional differences in electricity price changes, given the geographic variability in energy resources. Utilities in regions with relatively less potential to develop eligible sources (i.e., regions in which eligible sources are relatively costlier) might buy credits from eligible generators in other regions. The cost of credits might result in higher electricity prices for customers of the utility buying credits. At the same time, customers of any utilities selling credits might see lower electricity prices. As discussed above, the ability to use unbundled credits for compliance could reduce overall compliance costs relative to the case where only bundled credits were allowed because utilities across the country could take advantage of low cost eligible sources. At the same time, unbundled credits could result in wealth transfer between different regions of the country. Policy design choices might affect any potential wealth transfer. Electricity prices already vary across the country as a result of differences in resource availability, electricity demand, and utility regulatory models.

There might also be differences in cost distribution among household income levels. Generally, poorer Americans spend a larger portion of their income on electricity than wealthier Americans, so electricity cost increases could disproportionately affect them.

Within the electric power sector, businesses associated with eligible sources might be positively affected while businesses associated with ineligible sources might be negatively affected. The affected businesses might be individual generators and also firms associated with their supply chains. For negatively affected businesses, the potential impacts might include loss of capital investment (sometimes referred to as stranded costs) and reduced employment. Communities surrounding a negatively affected generator might experience negative effects such as loss of tax revenue base and increased demands on social services. For positively affected businesses and communities, the opposite might be true, namely increased capital investment, increased employment, and other positive economic effects. Additionally, American businesses that develop goods or services used to comply with a portfolio standard could potentially expand into international markets, depending on whether eligible sources also experienced demand growth internationally. Depending on policy design details, local electricity market factors, and local energy resources, some existing businesses in the electric power sector could experience negligible effects of a potential national portfolio standard.

Proponents of portfolio standards describe multiple environmental benefits, such as reduced greenhouse gas (GHG) emissions (i.e., climate change mitigation) and reduced air pollutants (i.e., improved air quality). The extent to which a portfolio standard might produce potential environmental benefits would depend in part on choices about source eligibility and stringency. Potential eligible sources vary in their GHG and air pollutant emissions, as well as other attributes such as water consumption and power density (which can affect land requirements). Implementation could affect environmental outcomes too. For example, some eligible sources might be deployable in either large-scale or small-scale installations, with differing effects on environmental factors such as land use. Some would argue these potential effects should be compared with potential effects of other energy options. A comprehensive comparison of potential environmental effects of various energy sources is beyond the scope of this report.

Interaction with State Portfolio Standards

The conditions under which federal law preempts state law can vary, and determination of federal preemption can be complex. Twenty-nine states, three U.S. territories, and the District of Columbia are currently implementing mandatory portfolio standards, and an additional eight states and one territory have voluntary versions. As of September 6, 2019, nine of these have targets of 100%. If Congress implemented a national portfolio standard, it could expressly preempt existing state portfolio standards. If a national portfolio standard were enacted that did not preempt state portfolio standards, utilities in states with existing portfolio standards might have to comply with both simultaneously. In practice, whichever standard had the higher stringency would determine the amount of eligible sources in a utility's portfolio. In this case, the relevant stringency could be either the required percentage of generation from eligible sources or the set of eligible sources itself. For example, some existing state portfolio standards include nuclear energy as an eligible source. If a national portfolio standard did not include nuclear energy, then a utility might be out of compliance with the federal standard even if it were in compliance with the state standard and the state and federal standard required the same amount of electricity from eligible sources. Assuming a generator were eligible for both a state and national program, a utility could procure electricity (or credits) from that generator to demonstrate compliance with both. In other words, the presence of two portfolio standards would not necessarily double the amount of procurement from eligible sources required. A utility covered under two portfolio standards might, however, face increased administrative costs associated with compliance.

Although few technical barriers exist to the simultaneous operation of state and federal portfolio standards, other concerns may make this undesirable. Administrative cost burden for covered entities is one such concern. Another might be confusion for eligible sources about whether and how to receive credits for two portfolio standards. If Congress chose to preempt state programs, this could potentially disrupt project finances for recently developed or proposed sources and lead to investment losses in clean energy industries. Congress might also consider exempting utilities facing state portfolio standards of equal or greater stringency than the federal portfolio standards. Congress could also allow credits issued by states to be used for compliance with a federal program. This option would, effectively, allow a utility to use one credit to demonstrate compliance with two portfolio standards, though it could also reduce the policy outcomes relative to a utility having two distinct compliance obligations. An option included in some of the bills listed in the Appendix is to compensate utilities facing a state standard with a specified number of federal credits. Alternatively, Congress could choose not to explicitly address the question, and instead let state governments or judicial review decide whether state programs would be suspended if a national one were implemented.

Interaction with Other State Energy Policies

Under current law, state and local governments have authority for approving electricity generation and transmission assets. Compliance with a national portfolio standard might require new generation and transmission assets, but it is unclear to what extent state approval processes would consider national clean energy policy goals. Some stakeholders have argued that state approval processes for new electricity transmission lines, in particular, create barriers for deployment of certain electricity generation sources, especially wind. To the extent that a national portfolio standard required new transmission capacity, interest might increase in a stronger federal role in approving electricity transmission infrastructure. Congress has considered this in the past. For example, the Energy Policy Act of 2005 ( P.L. 109-58 ) authorized federal approval for some transmission infrastructure under certain conditions, though this authority has never been used. As noted in " Potential Environmental Effects " a national portfolio standard might alternatively incentivize distributed energy development or projects in other locations that might not require new transmission capacity.

Some states have adopted policies to create competition among electricity generators, an effort known as deregulation or restructuring. In these states (and some portions of states), competitive electricity markets create price signals meant to, among other things, drive long-term investment decisions. Congress demonstrated support for restructuring efforts in the Energy Policy Act of 1992 ( P.L. 102-486 ). Portfolio standards require utilities to purchase electricity from sources that might be more expensive than other sources. This creates so-called out-of-market payments, sometimes characterized as subsidies, for eligible sources that could distort the operation of electricity markets. Eligible sources would still compete with each other for market share, creating some competitive pressure on prices among eligible sources.

Appendix. Legislative Proposals in the 105th-116th Congresses

This section lists previously introduced legislation that would have established national portfolio standards. CRS searched congress.gov using the phrases "renewable portfolio standard," "clean energy standard," "renewable energy standard," "renewable electricity standard," "renewable energy," and "clean energy," in full bill text or bill summaries for all Congresses. The earliest bill identified in this search was introduced in the 105 th Congress. Search results were refined by including only the Subject-Policy Area terms "Energy" and "Environmental Protection." Table A-1 provides selected policy design elements of the bills that would have established national portfolio standards that were identified using this search methodology. Bills are listed in order of introduction by Congress, with House bills listed first and Senate bills listed second. This table only provides information related to the bills' portfolio standards. Some of the bills in the table had multiple provisions, including some that might also affect the electric power sector, but those are not described here.