FERC sets carbon pricing and offshore wind tech conferences

U.S. federal electricity regulators have scheduled technical conferences for this autumn to discuss issues related to two major policy initiatives: carbon pricing in organized wholesale electricity markets, and offshore wind integration in regional transmission organizations and independent system operators (RTOs/ISOs). The Federal Energy Regulatory Commission's scheduling of two technical conferences on these topics signals its interest in exploring the interplay between state energy and environmental policies and federally jurisdictional markets.

One technical conference regarding Carbon Pricing in Organized Wholesale Electricity Markets (Docket No. AD20-14-000) will be held on September 30, 2020, "to discuss considerations related to state adoption of mechanisms to price carbon dioxide emissions, commonly referred to as carbon pricing, in regions with Commission-jurisdictional organized wholesale electricity markets." The case has its genesis in a request for such an event, filed on April 13, 2020, by a broad coalition including Advanced Energy Economy, the American Council on Renewable Energy, the American Wind Energy Association, Brookfield Renewable, Calpine Corporation, Competitive Power Ventures, Inc., the Electric Power Supply Association, the Independent Power Producers of New York, Inc., LS Power Associates, L.P., the Natural Gas Supply Association, NextEra Energy, Inc., PJM Power Providers Group, R Street Institute, and Vistra Energy Corp. A number of other utilities, RTOs, and state interests also expressed support, prior to the Commission's issuance of a public notice on June 17 scheduling the event.

Another technical conference regarding Offshore Wind Integration in RTOs/ISOs (Docket No. AD20-18-000), to be held October 27, 2020, will be convened "to discuss whether existing Commission transmission, interconnection, and merchant transmission facility frameworks in RTOs/ISOs can accommodate anticipated growth in offshore wind generation in an efficient and effective manner that safeguards open access transmission principles and to consider possible changes or improvements to the current framework should they be needed to accommodate such growth."

Beyond the fact that the Commission issued notices of both technical conferences on June 17, 2020, the proceedings also share a common focus on the effects of state energy and environmental policies on federally-jurisdictional activities. For now, the prevailing carbon pricing mechanisms -- such as the Regional Greenhouse Gas Initiative adopted by many northeastern states -- and the strongest policies favoring or requiring offshore wind development are arising as a matter of state law and policy, as opposed to federal law.

The boundaries between federal and state jurisdiction are viewed by many as long-settled, although a series of federal court and agency decisions have found specific state electricity procurement and subsidy laws to be preempted by federal regulation, and a case pending before the Commission asks it to find that most state net metering programs are preempted by federal law. Whether the Commission grants or denies the pending request, the June 17 notices of technical conferences on carbon pricing and offshore wind integration suggest continued federal interest in exploring the implications of state policies on FERC-jurisdictional markets.

Transportation tops Maine greenhouse gas emissions

Cars, trucks and other vehicles used for transportation were responsible for most of the greenhouse gas emissions in Maine in 2017, according to a report released by state environmental regulators this week. Maine's transportation sector has emitted more greenhouse gases than any other sector every year for at least two decades, according to state data, and is the only tracked sector whose greenhouse gas emissions have increased since 1990.

A 2003 state law established a series of greenhouse gas reduction goals for Maine. The law set a target to reduce greenhouse gas emissions within the state, by 2010, to the levels of emissions recorded for 1990; to reduce emissions to 10% less than 1990 levels by 2020; and in the long term, "reduction sufficient to eliminate any dangerous threat to climate." The 2003 law required the Maine Department of Environmental Protection to issue a report every 2 years on progress toward these goals.

In 2019, the Maine State Legislature enacted An Act To Promote Clean Energy Jobs and To Establish the Maine Climate Council, which replaced these goals with requirements that Maine reduce its gross annual greenhouse gas emissions to at least 45% below the 1990 gross emissions level by 2030, and to at least 80% below 1990 levels by 2050. The 2019 law requires the Department of Environmental Protection to adopt rules to ensure compliance with these levels, and authorizes the Department of Transportation to adopt similar rules.

On January 13, 2020, the Maine Department of Environmental Protection issued its Eighth Biennial Report on Progress Toward Greenhouse Gas Reduction Goals. The report shows that Maine’s electric sector has largely been decarbonized, while transportation and heating remain laggards.

As it has for decades, transportation dominates Maine’s greenhouse gas emissions at 54% of the total, because nearly all vehicles burn gasoline or diesel. Homes are the second-largest emitters, contributing 19% of the total, mostly by burning oil for heating. Commercial businesses (11%) and industrial businesses (9%) contribute relatively smaller shares.

Meanwhile electric power generation contributed just 7% of Maine’s CO2 emissions in 2017 (down from 9% in 2015). As Figure 7 from the Department's report shows -- reproduced below -- no sector has cut its carbon emissions by a greater percentage than the electricity sector, while transportation stands out for its dominant and growing share of emissions.

Figure 7, Maine Department of Environmental Protection Eighth Biennial Report on Progress Toward Greenhouse Gas Reduction Goals

The 2019 legislation also created the Maine Climate Council to advise the Governor and state Legislature on ways to mitigate the causes of, prepare for and adapt to the consequences of climate change. Governor Janet Mills also issued an executive order calling for Maine to be carbon neutral by 2045. Achieving these goals will require substantial focus on decarbonizing Maine's transportation sector.

US energy-related CO2 emissions projected to decline

Energy-related carbon dioxide emissions in the U.S. are projected to decrease by 2.2 percent in 2019 relative to the previous year, according to the latest forecast by the U.S. Energy Information Administration.

EIA tracks energy-related carbon dioxide emissions from petroleum, natural gas, and coal. Petroleum made up nearly half of energy-related CO2 emissions in 2018, at 45 percent of all energy-related carbon dioxide emissions. Transportation, heating, and electric power generation sectors consume significant amounts of petroleum. EIA projects petroleum CO2 emissions will remain relatively flat in 2019, relative to 2018. 

According to EIA, nearly all of its forecast decrease for 2019 is due to reduced emissions from coal consumption. EIA forecasts that coal-derived CO2 emissions will decrease by 169 million metric tons (MMmt) in 2019. This represents the largest year-over-year decrease in coal-derived CO2 emissions since 2015. Nearly all the coal used in the U.S. -- 92 percent -- is consumed by the electric power sector; EIA attributes the decline to forecast changes in the electricity generation mix, with coal plants retiring and relatively milder summer weather expected to lead to overall lower electricity demand.

While coal-related emissions are projected to decline, EIA projects that forecast natural gas CO2 emissions will increase by 53 MMmt, largely due to increased use of natural gas to displace coal for electric power generation. According to EIA, the decrease in coal emissions will more than outweigh the increase in natural gas emissions, because natural gas-fired electricity generation is less carbon-intensive than coal-fired electricity generation.

Vermont PUC report on electric vehicles

Vermont utility regulators have recommended steps Vermont could take to accelerate the use of electric vehicles (EVs) in the state, including creating state incentives for EV purchases as well as encouraging electric utilities to adopt new rate structures.

Like most other states, Vermont's transportation sector contributes more greenhouse gas emissions than any other sector of the state's economy. Due in large part to emissions from cars and trucks powered by fossil fuels, the transportation sector is responsible for about 47% of Vermont's total greenhouse gas emissions; by contrast, Vermont's electricity generating sector is relatively small but nearly entirely renewable, and has the lowest carbon dioxide emissions of any state according to federal data. Other New England states are similar -- for example, Maine's transportation sector contributed 53% of the state's total greenhouse gas emissions in 2017, while electric power generation in Maine accounted for just 9 percent of the state’s total carbon emissions.

Indeed, the New England electricity grid has experienced significant decarbonized in recent decades, and renewable energy can now be consumed in the transportation sector through the use of EVs. In 2016, Vermont adopted a Comprehensive Energy Plan aiming to power 10% of transportation with renewable energy by 2025, and 80% by 2050, while reducing the sector's emissions by 30% by 2025. Vermont estimates that reaching these goals would require adding about 50,000 to 60,000 EVs to replace vehicles with internal combustion engines by 2025, for a compound annual growth rate of about 54%.

On June 27, 2019, the Vermont Public Utilities Commission released its report to various state legislative committees, "Promoting the Ownership and Use of Electric Vehicles in the State of Vermont." The report recommends that Vermont create incentives for EV purchases or leases, whether in the form of time-of-sale rebates or tax credits. It also recommends that Vermont buy EVs for the state vehicle fleet, and encourage the development of EV charging infrastructure through zoning or building code modifications.

The report also suggests that the Commission encourage electric utilities to take additional actions to promote EV adoption, such as funding EV purchase incentives through Vermont's Renewable Energy Standard program, or developing time-of-use retail rates to encourage car charging at off-peak times. It also noted that utility rate structures which impose demand charges on most commercial accounts but not on residential accounts make public direct-current fast-charging more expensive than at-home charging.

The report also notes that increased education and outreach efforts -- by utilities as well as by car dealers and other third parties -- could encourage consumer adoption of EVs.

New Mexico legislature passes 100 percent renewable power law

The New Mexico state legislature has passed a bill that requires public utilities other than rural electric cooperatives and municipalities to supply all retail sales of electricity in New Mexico with zero carbon resources by 2045.

The bill is SB 489, also known as the Energy Transition Act. Much of the Energy Transition Act focuses on procedures allowing utilities to obtain approval to abandon generating facilities which obtaining financing orders from the New Mexico Public Regulation Commission allowing the utilities to recover all of their energy transition costs through securitization -- issuing energy transition bonds whose costs the utilities pay by collecting an "energy transition charge" from their customers. The act creates funds to provide training and economic development in communities within 100 miles of abandoned facilities.

The law also revises New Mexico's renewable portfolio standard. It requires distribution cooperatives to sell at least 40 percent renewable energy by 2025 and at least 50 percent renewable energy by 2030, and sets a "zero carbon resource standard" target for distribution cooperatives by 2050, composed of at least 80 percent renewable energy, if feasible from technical, reliability, and affordability perspectives. For public utilities other than rural electric cooperatives and municipalities, the law requires similarly increasing percentages of renewable power, including 80 percent renewable energy resources by 2040 and 100 percent zero carbon resources by 2045. It allows public utilities to ask the Commission to provide financial or other incentives in excess of these amounts.

The bill passed the state senate with a vote of 32-9, and the state house with a vote of 43-22. It now goes to Governor Michelle Lujan Grisham for her signature. According to a statement Governor Lujan Grisham issued on March 12, "The Energy Transition Act is a promise to future generations of New Mexicans."

Other states are considering changes to their renewable portfolio standards, carbon emission limits, and other legal requirements affecting the electric power sector. If SB 489 is enacted into law, New Mexico will join California and Hawaii in having a future commitment or goal of 100 percent carbon-free electricity.

Holyoke utility imposes moratorium on new gas service, citing pipeline constraints

The municipal utility serving the town that hosts the headquarters for the operator of the regional electric grid has informed its customers that the utility “is unable to accommodate new natural gas service requests due to the lack of natural gas availability in the region.” Holyoke Gas & Electric adds, “Recent proposals that would increase natural gas capacity in the region have been met with opposition, and the current pipeline constraints are causing significant adverse environmental and economic impacts on the region's ratepayers."

Holyoke Gas & Electric is a consumer-owned municipal utility established in 1902 through the purchase of a gas and electric plant from the Holyoke Water Power Company. According to the utility, the town saw ownership of a municipal utility "as a way to stabilize rates and keep local control over their energy services." As a municipal utility, Holyoke Gas & Electric is operated as a not-for-profit concern, and is owned by the community it serves. The utility cites public power advantages from this structure including operating in the local public interest, with local control over rates and services, local ownership, and reliance on local employees. In 1999, the utility acquired the Holyoke Dam, the city's canal system, and the remainder of the Holyoke Water Power Company's assets. The utility touts its ability to produce over 65% of its electricity needs from these renewable hydropower resources and cites "some of the lowest utility rates in New England."

Holyoke's Gas Division provides natural gas service through about 9,900 meters in Holyoke and Southampton. But on January 28, 2019, the utility gave its customers notice that it had placed a moratorium on most new natural gas service installations. According to that notice, the utility's natural gas customers are served by an interstate pipeline "which has become severely constrained due to a dramatic increase in demand over the last two decades," with "no corresponding increase in pipeline capacity to deliver additional supply to the region." As a result of significant growth in demand for natural gas by Holyoke's customers, HG&E said it is "forced to impose a moratorium on new natural gas connections until the capacity issue is addressed."

The utility further explained, "While inexpensive natural gas has never been more plentiful in the United States, there is insufficient pipeline capacity in our region to deliver additional load. Recent proposals that would increase natural gas capacity in the region have been met with opposition, and the current pipeline constraints are causing significant adverse environmental and economic impacts on the region's ratepayers." In its notice, the utility noted that due to the lack of natural gas during peak demand periods, "more electric generators are forced to switch to oil, while coal generators are called upon to operate, causing significant spikes in greenhouse gas emissions." Regional electric grid operator ISO New England, which is headquartered in Holyoke, reported that during a 15-day cold spell in January 2018, over two million barrels of oil were burned to generate electricity due to the lack of natural gas, more than the total amount of oil burned in 2017.

Beyond increased emissions, the utility also used ISO-NE data to show how "the lack of natural gas has a significant impact on energy costs throughout New England." Citing data from ISO-NE, the utility observed that during the two-week period from December 26, 2017 to January 8, 2018, electricity prices experienced an "approximately $700 million increase in energy costs for New England ratepayers compared to the prior year."

Holyoke Gas & Electric says it is working with gas utility Columbia Gas of Massachusetts to explore a solution involving system upgrades in other communities to "address local capacity issues, which will help reduce regional carbon emissions, improve reliability, and support local economic development." In the meantime, HG&E says its moratorium on new natural gas connections will remain in place "until the capacity issue is addressed."

$11.5 trillion investors' group calls for European utilities to end coal use by 2030

A group of 95 investors organized as the “Institutional Investors Group on Climate Change” has issued an open letter to European power companies on December 19, 2018, asking firms to demonstrate they are implementing business strategies aligned with the goals of the Paris Agreement.

The investors participating in the Institutional Investors Group on Climate Change collectively have $11.5 trillion in assets under management or advise; 20 of the 95 signatories each have over $200 billion in assets under management, including Aberdeen Standard Investments, BNP Paribas Asset Management, DWS, Legal and General Investment Management, Nordea Group and M&G. Other signatories include the California Public Employees' Retirement System, California State Teachers' Retirement System, New York City Comptroller’s Office, and New York State Common Retirement Fund.

Citing the United Nations IPCC Special Report on Global Warming of 1.5 °C issued on October 8, 2018, the investors cite the risks to global markets and investments from 2 °C or higher temperature rises as “potentially catastrophic.” The IPCC report found that a number of climate change impacts could be avoided by limiting global warming to 1.5 °C compared to 2 °C or more. But the report also noted that limiting global warming to 1.5 °C would require “rapid and far-reaching” transitions in land, energy, industry, buildings, transport, and cities. In particular, the IPCC report concluded that to limit warming to 1.5 °C would require net global human-caused emissions of carbon dioxide to fall by about 45 percent from 2010 levels by 2030, reaching "net zero" around 2050. 

The group demands that power generators, grid operators and distributors “plan for their future in a net-zero carbon economy.” Specifically, they request companies to publish transition plans consistent with the goal of the Paris Agreement; develop explicit timelines and commitments for the rapid elimination of coal use by utilities in EU and OECD countries by no later than 2030; and support the development of “ambitious climate policy aligned with the Paris Agreement” directly and through their trade associations.

RGGI states propose tighter carbon budget

The nine states participating in the Regional Greenhouse Gas Initiative have announced consensus on proposed revisions to that program that would provide a further 30% reduction in the regional limit on emissions by 2030, relative to 2020 levels.  The proposed regional program changes are now available for stakeholder comment, after which each participating state will follow its own specific statutory and regulatory processes to propose updates to their own carbon dioxide budget trading programs.

Nine Northeast and Mid-Atlantic states -- Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont -- currently participate in RGGI, the first mandatory market-based regulatory program in the U.S. to reduce greenhouse gas emissions.  RGGI is composed of individual CO2 budget trading programs in each state, based on each state’s independent legal authority.  The program imposes an annual aggregate cap on greenhouse emissions from covered sources like fossil-fueled power plants in participating states.  For 2017, the cap is 84.3 million short tons (62.5 million short tons adjusted for banked allowances); it declines 2.5 percent each year until 2020.  Since 2008, participating states have reduced power sector carbon emissions by nearly 50 percent, while generating more than $2.7 billion in allowance auction proceeds for reinvestment in programs to benefit consumers.

RGGI participating states periodically conduct a "program review".  Following their 2012 Program Review, the RGGI states implemented a new 2014 RGGI cap of 91 million short tons -- 45 % below the prior 2014 cap of 165 million short tons. At that time, the participating states decided to commence the next program review no later than 2016.

RGGI's 2016 Program Review is ongoing.  According to an August 23, 2017 announcement, the participating states have reached consensus on proposed changes to the program design.  Proposed changes include a regional cap of 75,147,784 tons in 2021, which will decline by 2.275 million tons per year thereafter, resulting in a total 30% reduction in the regional cap from 2020 to 2030.  The proposed changes also include modifications to the existing Cost Containment Reserve and implementation of a new Emissions Containment Reserve which would add some flexibility to the cap size.

On behalf of participating states, RGGI, Inc. has announced a meeting on September 25 to gather stakeholder input.  According to the announcement, after reviewing stakeholder comments, conducting additional economic analysis, and updating materials, each participating state is expected to execute its own statutory and regulatory process to update its own carbon budget trading program.

Massachusetts energy storage report

A Massachusetts state energy office has issued a report finding that Massachusetts has the potential to develop for 600 MW of energy storage by 2025, which could lower costs, reduce carbon emissions, and improve grid reliability. Legislation earlier this year authorized the creation of an energy storage procurement target; the Department of Energy Resource’s State of Charge report could lead to further policy changes supportive of storage.

While electricity has traditionally been challenging to store efficiently, advanced energy storage technologies – such as batteries, flywheels, thermal and compressed air technologies – now allow utilities and consumers to store and release energy as needed. Last year, the Baker-Polito administration launched an Energy Storage Initiative to advance the energy storage segment of the Massachusetts clean energy industry.

This summer, the Massachusetts legislature enacted a broad energy diversification law, authorizing among other things the creation of an energy storage procurement target, if the Department of Energy Resources deems such a target prudent.  Section 15 of H.4568 requires the Department of Energy Resources to determine, by December 31, 2016, whether to set “appropriate targets for electric companies to procure viable and cost-effective energy storage systems” to be achieved by January 1, 2020. If the Department finds it appropriate to adopt procurement targets, the law requires it to do so by July 1, 2017, with reevaluations of the procurement targets not less than every 3 years.

Meanwhile, on September 16, 2016, the administration released its State of Charge report. The report found that energy storage could yield significant cost savings for Massachusetts ratepayers, reduce the impacts of peak demand on the state’s energy infrastructure, and enable improved integration of renewable resources and reduced carbon emissions.

The report recommends policy changes, ranging from regional coordination on energy storage, broadening the Alternative Portfolio Standard (APS) with respect to advanced energy storage, to using energy storage in existing energy efficiency programs or as a utility grid modernization asset, and seeking “renewables plus storage” contracts in future long-term clean energy procurements.

According to the report, adopting these recommendations could yield 600 MW of advanced energy storage technologies deployed on the Massachusetts grid by 2025, with projected ratepayer cost savings of over $800 million and approximately 350,000 metric tons reduction in greenhouse emissions over a 10 year time span.

The Department of Energy Resources will now hold a stakeholder engagement process relating to energy storage, starting with a meeting scheduled for September 27. DOER is expected to determine whether Massachusetts should establish an energy storage procurement target before the end of 2016.

NY Clean Energy Standard adopted

The New York Public Service Commission has issued an order adopting a clean energy standard.  The standard will require 50% of New York’s electricity to be generated by renewable sources by 2030.  This so-called "50 by 30" mandate is consistent with the State Energy Plan's strategy to reduce statewide greenhouse gas emissions by 40% by 2030.  It will also provide support for existing nuclear power plants said to be at risk for closure without state support.  This is a time of change for the New York energy industry, as the Clean Energy Standard adds to the regulatory and retail market changes that the state is already pursuing under its Reforming the Energy Vision or REV program.

The New York commission noted that the state has adopted "strongly proactive policies to combat climate change and modernize the electric system to improve the efficiency, affordability, resiliency, and sustainability of the system." The state's 2015 State Energy Plan called for the "50 by 30" goal for renewable energy.

In the Commission's words, it determined "that a series of deliberate and mandatory actions to build upon and enhance opportunities for consumer choice are necessary to achieve State environmental, public health, climate policy and economic goals; to enhance and animate voluntary retail markets for energy efficiency, clean energy and renewable resources; to preserve existing zero-emissions nuclear generation resources as a bridge to the clean energy future; to ensure a modern and resilient energy system; and to accomplish its objectives in a fair and cost-effective manner."

As a result, the Commission adopted a Clean Energy Standard or CES consisting of a Renewable Energy Standard and a Zero-Emissions Credit Requirement program.  The Commission also adopted supporting structures, which it describes as including:

(a) program and market structures to encourage consumer-initiated clean energy purchases or investments; (b) obligations on load serving entities to financially support new renewable generation resources to serve their retail customers; (c) a requirement for regular renewable energy credit (REC) procurement solicitations; (d) obligations on distribution utilities on behalf of all retail customers to continue to financially support the maintenance of certain existing at-risk small hydro, wind and biomass generation attributes; (e) a program to maximize the value potential of new offshore wind resources; and (f) obligations on load serving entities to financially support the preservation of existing at- risk nuclear zero-emissions attributes to serve their retail customers.

As described by Governor Andrew Cuomo, the program will feature a ramp-up of renewable power sourcing.  Utilities and other energy suppliers will be initially required to procure 26.32 percent of the state's total electricity load from renewable sources in 2017, increasing to 30.54 percent by 2021.  The Commission described the 50 by 30 goal as "not only part of a larger greenhouse gas goal, it is part of the State’s sweeping initiative to transform the way energy is produced, delivered, and consumed" through the REV process.

The Clean Energy Standard order also creates a Zero-Emissions Credit or ZEC requirement, along with a process through which state energy agency NYSERDA will offer qualifying nuclear facilities a multi-year contract for the purchase of ZECs, at a price ultimately derived from the calculations of "social cost of carbon."  NYSERDA will ultimately resell the ZECs to New York load serving entities, who will recover costs from ratepayers through commodity charges on customer bills.  The Commission described the ZEC mechanism as "the best way for the State to preserve the nuclear units’ environmental attributes while staying within the State’s jurisdictional boundaries. "

As described in the order, the Renewable Energy Standard and ZEC components "are interrelated but the goals are additive," meaning efforts to comply with the RES will not count toward the ZEC requirement, even if the combination will "contribute toward the State's comprehensive greenhouse gas reduction goals."

U.S., China to sign Paris climate agreement

The U.S. and China have announced plans to sign the international climate change agreement reached in Paris last December.

The White House.

The Paris Agreement, adopted at the "COP21" U.N. Conference on Climate Change, establishes a framework for reducing global greenhouse gas emissions.  It takes effect once 55 countries accounting for at least 55% of global emissions formally commit to undertaking the low carbon measures it outlines.

According to a March 31 joint presidential statement on climate change, over the past 3 years, "climate change has become a pillar of the U.S.-China bilateral relationship."  The statement notes domestic efforts by the U.S. and China to "build green, low-carbon and climate-resilient economies", as well as the international action culminating in the December 2015 conference decision to adopt the Paris Agreement.

The joint statement declares that U.S. and China "will sign the Paris Agreement on April 22nd and take their respective domestic steps in order to join the Agreement as early as possible this year." April 22 represents the first day that the Paris Agreement will be formally open for signature by adopting nations.

A White House blog post describes this step as a "critical milestone" because it represents a commitment by "the world's two largest polluters" who account for 40% of global emissions.  According to that blog, this commitment places the 55% threshold for implementation "well within reach," "demonstrating to the international community that there is no turning back on the path towards a low carbon future." 

Federal tax credits drive renewable power, CO2 reduction

A report by the U.S. Energy Department's National Renewable Energy Laboratory found that recent extensions to tax credits for wind and solar energy will drive a net peak increase of 48-53 gigawatts in installed renewable generation capacity in the early 2020s.

NREL is the U.S. Department of Energy's primary national laboratory for renewable energy and energy efficiency research and development.  NREL is operated for the Energy Department by The Alliance for Sustainable Energy, LLC.

In its February 2016 report, Impacts of Federal Tax Credit Extensions on Renewable Deployment and Power Sector Emissions, NREL examined the potential impact of recently extended federal tax credits on the deployment of renewable generation technologies and related U.S. electric sector carbon dioxide (CO₂) emissions.

At issue are federal tax credits for renewable energy: the wind production tax credit (PTC) and the solar investment tax credit (ITC).  Congress acted in December 2015 to extend by 5 years the expiration dates for these tax credits, with a phaseout or ramp down of tax credit value over time.

The NREL study examined two key questions, under models with high and low natural gas prices:

1.  How might renewable energy deployment in the contiguous United States change with these recent federal tax credit extensions?
2. How might this change in renewable energy deployment impact CO₂ emissions in the power sector?

Under both sets of natural gas assumptions, the NREL study found that tax credit extension scenarios show greater renewable technology investments through the early 2020s than scenarios without extensions:

The study found that scenarios with tax credit extensions also show lower CO2 emissions from the U.S. electricity system:

Cumulative emissions reductions over a 15-year period (spanning 2016-2030) as a result of the tax credit extensions are estimated to range from 540 to 1,400 million metric tons CO₂.

In all scenarios, nearly all of the estimated growth in renewable energy capacity was primarily comprised of new solar and wind capacity, as opposed to biopower, geothermal, or hydropower technologies.

The NREL study concludes that tax credit extensions can have a "measurable impact" on future renewable energy deployment and electric sector CO2 emissions under a range of natural gas price assumptions.

US Supreme Court stays Clean Power Plan

The Supreme Court of the United States has issued an order staying the U.S. Environmental Protection Agency's Clean Power Plan regulations limiting carbon emissions from electric power plants.  As a result, the rule's effect is frozen until legal challenges to the rule are resolved in federal court.

The Supreme Court of the United States.

EPA's final Clean Power Plan rule establishes emission guidelines for states to follow in developing plans to reduce greenhouse gas emissions from existing fossil fuel-fired electric generating units.  Developed by EPA pursuant to Clean Air Act Section 111(d), the regulation prescribes carbon reductions for states.

While state-level emissions reductions are federally prescribed, the rule places states in the role of developing their own compliance plans for how to reach the required emissions reductions.  The rule was published in the Federal Register on October 23, 2015, as Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units, 80 Fed. Reg. 64,662.  It gave states until September 6, 2016 to file a final plan, or an initial plan with a request for an extension, for EPA review.

If implemented, the EPA says the Clean Power Plan will reduce carbon emissions from power plants by 32% below 2005 levels, or about 870 million short tons.  EPA estimates the regulation could yield public health and climate benefits worth $54 billion in 2030 alone.  As states cut back on using carbon-intensive fuels such as coal and oil, EPA projects that renewable energy will grow, with utility-scale wind and solar expected to double by 2030 under the Clean Power Plan compared to 2013 levels.

But numerous lawsuits have been filed challenging the rule, along with petitions to stay or freeze its effectiveness pending judicial review.  Last month, the D.C. Circuit Court of Appeals denied petitions for stay from parties including states, utilities and trade groups such as the American Coalition for Clean Coal Electricity.

Parties then filed petitions for stay to the U.S. Supreme Court.  Under a 2012 Supreme Court precedent, Maryland v. King, a party seeking a stay must demonstrate (1) a "reasonable probability" that the Supreme Court will grant certiorari or agree to hear the case, (2) a "fair prospect" that the Court will reverse the decision below, and (3) a "likelihood that irreparable harm [will] result from the denial of a stay."  This is a relatively high burden.

Today a majority of the U.S. Supreme Court agreed to stay the Clean Power Plan rule, by order entered in the West Virginia, et al. v. EPA, et al. case and others consolidated into the West Virginia case.  In the Court's words:

The Environmental Protection Agency’s "Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units," 80 Fed. Reg. 64,662 (October 23, 2015), is stayed pending disposition of the applicant’s petition for review in the United States Court of Appeals for the District of Columbia Circuit and disposition of the applicant’s petition for a writ of certiorari, if such writ is sought. If a writ of certiorari is sought and the Court denies the petition, this order shall terminate automatically. If the Court grants the petition for a writ of certiorari, this order shall terminate when the Court enters its judgment.

The order notes that Justice Ginsburg, Justice Breyer, Justice Sotomayor, and Justice Kagan would deny the request to freeze the rule's effect.  This note reveals a 5-4 decision to issue the stay, with Chief Justice Roberts, Justice Scalia, Justice Kennedy, Justice Thomas and Justice Alito in the majority as supporting the stay.

With the Clean Power Plan's effect stayed, litigation over the rule will now proceed in the U.S. Court of Appeals for the District of Columbia Circuit.  The 27 states participating in challenges to the rule are likely cheering.  Those include Alabama, Arizona, Arkansas, Colorado, Florida, Georgia, Indiana, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Montana, Nebraska, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Texas, Utah, West Virginia, Wisconsin and Wyoming.  Meanwhile, the 18 states who filed in support of the EPA, along with those states who have started preparing compliance plans for the regulation, now find themselves on less certain footing.  So too do electric power generators, and others interested in energy markets.  If controversy persists, whatever decision the circuit court issues is likely to be appealed to the Supreme Court.

RGGI states comment on Clean Power Plan

The nine Northeastern and Mid-Atlantic states participating in the Regional Greenhouse Gas Initiative (RGGI) have submitted joint comments to the United States Environmental Protection Agency in connection with its Clean Power Plan rule.

RGGI is a cooperative effort among the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont to cap and reduce carbon dioxide emissions from the electric power sector.  The program establishes a regional cap on the amount of carbon dioxide that power plants can emit through the issuance of a limited number of tradable allowances.  RGGI's first three-year compliance period began on January 1, 2009, making it the nation’s first market-based emissions trading program to reduce greenhouse gas pollution.

On August 3, 2015, the EPA announced its "Clean Power Plan," new regulations limiting power plant carbon emissions under Section 111(d) of the Clean Air Act.  While states are free to build their own compliance plans, the rule establishes emission guidelines for states to follow in developing plans to reduce greenhouse gas emissions from existing fossil fuel-fired electric generating units.  The rule also encourages states and regions to work together in developing compliance plans.

States are now tasked with developing their compliance plans.  The Clean Power Plan gives states until September 6, 2016, to either submit a final carbon-cutting plan or to submit an initial plan along with a two-year extension request.  Many observers have noted that for states already participating in RGGI, that program may be able to serve as a mechanism for Clean Power Plan compliance.  This prospect is natural, as RGGI and the Clean Power Plan share some common goals and features.

This week, the nine RGGI states submitted joint comments to the EPA on the Federal Plan (FP) and Model Rules (MR) proposed as part of the Clean Power Plan.  In those comments, the RGGI states "welcome EPA's continued recognition that well-designed multi-state, market-based programs like RGGI can deliver cost-effective emissions reductions."

In an accompanying press release, the RGGI states note their own "track record of success."  As cited in the joint comments, the "RGGI states have seen benefits to the economy and public health, as well as consumer savings, experiencing 8 percent GDP growth across the region while reducing power sector carbon pollution by more than 40 percent since 2005," while maintaining electric reliability.

Based on this experience, the RGGI states encouraged EPA to select mass-based approaches as the most cost-effective, transparent, and reliable way to achieve emission reductions.  (Mass-based approaches set limits on the total mass of carbon allowed to be emitted -- like 100 million tons.  By contrast, rate-based approaches might limit the rate of carbon emissions per unit of useful electric energy.)

Recognizing that trading platforms can play an important role in markets, increasing participation, access, and liquidity, the RGGI states urged EPA to "adopt a trading platform that is flexible and customizable to encourage broader trading markets."

The RGGI states also asked EPA to encourage auctioning of carbon allowances, and reinvestment of the auction proceeds.  In so doing, the RGGI states pointed to their own reinvestment of RGGI auction proceeds in efficiency and consumer relief.

Finally, the RGGI states encouraged EPA to prevent "leakage" of carbon emissions from existing sources to new sources, by including new sources in a mass-based program or some other equally effective alternative method of allocation.

With states now working to develop Clean Power Plan compliance strategies, how will the RGGI experience shape state plans to comply with the Clean Power Plan?

FERC staff guidance for Clean Power Plan modeling

Staff of the U.S. Federal Energy Regulatory Commission have issued a white paper presenting guidance principles for modeling state plans to comply with the U.S. Environmental Protection Agency's Clean Power Plan carbon regulations from existing fossil fuel-fired electric power plants.

The EPA issued the Clean Power Plan on August 3, 2015 as a regulation under Section 111(d) of the Clean Air Act.  The Clean Power Plan limits carbon dioxide emissions from existing fossil fuel-fired electric power plants.  The final rule provides state specific goals for carbon dioxide emissions from affected electric generating units, including interim emissions goals from 2022 to 2029 and a final goal for 2030.

Due to congressional concern that environmental regulations not jeopardize the reliability of the electric grid, each covered state must demonstrate that it has considered reliability issues in developing its plan.  That consideration of reliability is certain to include modeling.  The Federal Energy Regulatory Commission has entered into an agreement with EPA and the U.S. Department of Energy to coordinate certain activities to help ensure continued reliable electricity generation and transmission during the Clean Power Plan's implementation.

In furtherance of that mission, on January 19, 2016, staff of the Commission released an 18-page white paper identifying four guiding principles that may assist transmission planning entities in conducting effective analysis of the Clean Power Plan and associated state, regional, or federal compliance plans.

These guiding principles address four areas:

• Transparency and stakeholder engagement: "transparency and stakeholder engagement in model development, model inputs and study designs can help identify policy alternatives and effectively evaluate assumptions, while also improving coordination across transmission planning regions."
• Study methodology and interactions between studies: "incorporating changes to current study methodologies can allow transmission planning entities to more effectively assess the impact of the CPP and associated compliance plans."
• Study inputs, sensitivities and probabilistic analysis: "using study inputs that account for uncertainty and test for sensitivity can help effectively assess the impact of the CPP and associated compliance plans."
• Tools and techniques: "adopting new modeling tools and techniques may help transmission planning entities better assess the overall impact of the CPP and associated compliance plans."

The FERC staff white paper notes that while "effectively evaluating the impacts of the CPP may present challenges, these challenges can be mitigated by using appropriate modeling tools and techniques."  Under the Clean Power Plan, states have until September 6, 2016, to submit either a final carbon-cutting plan or to request a two-year extension and to submit an initial plan for EPA review.

Climate and energy in 2016 State of the Union

President Obama delivered his final State of the Union address on January 12, 2016.  The White House has posted his remarks as prepared for delivery to Congress.  Climate change, and related energy and environmental issues, formed a prominent theme in this year's speech.

The White House.

Climate change first surfaced in the 2016 State of the Union as part of one of four "big questions" President Obama posed for the nation.

Second, how do we make technology work for us, and not against us -- especially when it comes to solving urgent challenges like climate change?

After announcing a "moonshot" medical research effort to cure cancer to be led by Vice President Joe Biden, President Obama said, "We need the same level of commitment when it comes to developing clean energy sources."

He then spent several minutes addressing climate change directly.  First, he noted effective consensus that climate change is a topic worth tackling:

Look, if anybody still wants to dispute the science around climate change, have at it. You will be pretty lonely, because you’ll be debating our military, most of America’s business leaders, the majority of the American people, almost the entire scientific community, and 200 nations around the world who agree it’s a problem and intend to solve it.

He then touted the economic and environmental effects of investment in renewable and distributed generation and energy storage:

But even if -- even if the planet wasn’t at stake, even if 2014 wasn’t the warmest year on record -- until 2015 turned out to be even hotter -- why would we want to pass up the chance for American businesses to produce and sell the energy of the future?

Listen, seven years ago, we made the single biggest investment in clean energy in our history. Here are the results. In fields from Iowa to Texas, wind power is now cheaper than dirtier, conventional power. On rooftops from Arizona to New York, solar is saving Americans tens of millions of dollars a year on their energy bills, and employs more Americans than coal -- in jobs that pay better than average. We’re taking steps to give homeowners the freedom to generate and store their own energy -- something, by the way, that environmentalists and Tea Partiers have teamed up to support. And meanwhile, we’ve cut our imports of foreign oil by nearly 60 percent, and cut carbon pollution more than any other country on Earth.

Gas under two bucks a gallon ain’t bad, either.

President Obama then called for changes to transition to clean energy sources:

Now we’ve got to accelerate the transition away from old, dirtier energy sources. Rather than subsidize the past, we should invest in the future -- especially in communities that rely on fossil fuels. We do them no favor when we don't show them where the trends are going. That’s why I’m going to push to change the way we manage our oil and coal resources, so that they better reflect the costs they impose on taxpayers and our planet. And that way, we put money back into those communities, and put tens of thousands of Americans to work building a 21st century transportation system.

Now, none of this is going to happen overnight. And, yes, there are plenty of entrenched interests who want to protect the status quo. But the jobs we’ll create, the money we’ll save, the planet we’ll preserve -- that is the kind of future our kids and our grandkids deserve. And it's within our grasp.

Climate change is just one of many issues where our security is linked to the rest of the world.

His final reference to climate change came while discussing international engagement, and "seeing our foreign assistance as a part of our national security":

When we lead nearly 200 nations to the most ambitious agreement in history to fight climate change, yes, that helps vulnerable countries, but it also protects our kids.

Climate, energy, and environmental issues thus featured prominently in the 2016 State of the Union speech.  Over the coming year, these themes -- domestic and international action on climate change, investment in renewable energy and distributed generation, transition away from oil and coal -- will likely continue to play out at the federal level.

Previewing climate and energy in 2016 State of the Union

President Obama is scheduled to deliver his final State of the Union address tonight. As in previous years, he is likely to address climate change, energy and environmental issues.  What will the 2016 State of the Union have to say about these topics?

We know from previous years' State of the Union speeches (2013, 2014, 2015) that energy, the environment, and climate change have played an increasing role in the Obama administration's priorities. While the administration released a "preview" video on Youtube for the 2016 address,  the brief clip doesn't include any substantive remarks about climate, energy, or the environment.

However, the Obama administration has been active on climate, energy and environmental issues, with key developments in the past year such as the adoption of the U.S. Environmental Protection Agency's Clean Power Plan regulations limiting power plant emissions of carbon dioxide and the denial of the Keystone XL pipeline's Presidential Permit application.  Indeed, President Obama has said that "no challenge poses a greater threat to our children, our planet, and future generations than climate change — and that no other country on Earth is better equipped to lead the world towards a solution."

Climate change, energy, and the environment are likely to be mentioned along with other administration priorities such as international relations, national security, gun violence, and the economy.  Indeed, the White House's State of the Union website features sections titled Economic Progress, Acting on Climate, Engagement in the World, Health Care Reform, and Social Progress and Equality.

Under the "Acting on Climate" heading, the administration website for this year's address notes the December 2015 Paris agreement on climate change, reduced domestic emissions, the largest investment in renewable energy in U.S. history, and associated job creation.  The website also provides a "Record on Climate Change", listing details of the administration's actions to address climate change.

President Obama's final State of the Union address to Congress will be streamed live at https://www.whitehouse.gov/sotu on January 12, 2016 at 9PM ET.

US Clean Power Plan adopted

President Obama will formally unveil the Clean Power Plan today, a set of regulations by the U.S. Environmental Protection Agency (EPA) to reduce carbon emissions associated with the electric power industry.  A blog post by EPA Administrator Gina McCarthy emphasizes the Clean Power Plan's protection of health and the environment, states' rights to choose their own implementation paths, reduction of future energy costs, and leadership on climate issues.  But some politicians, utilities and states have expressed concern about the regulations' impact, and could launch legal challenges -- or states might refuse to comply.  What's in store for the Clean Power Plan?

It has been just over a year since EPA first released its draft Clean Power Plan in June 2014.  These regulations under Section 111(d) of the Clean Air Act are designed to reduce the carbon intensity of the U.S. electric power sector -- essentially, how many pounds of carbon are emitted per megawatt-hour of electric energy produced.  Under the draft Clean Power Plan, EPA sets carbon intensity limits for each state, collectively designed to reduce carbon emissions by 30% below 2005 levels.  Each state then designs its own compliance plan using any combination of "building blocks": types of measures like improving the efficiency of fossil fuel power plants, switching out coal- and oil-fired power plants in favor of natural gas, and increasing low- and zero-carbon generation.

While the final Clean Power Plan's basic structure remains much the same, EPA has made some modifications in reaction to concerns about the greenhouse gas regulations' costs and impacts to grid reliability.

Changes from the 2014 draft include:

• Two extra years (until 2022) for states to meet their targets, and greater flexibility for states to form regional pacts to facilitate emissions-cutting projects across state lines, such as the Regional Greenhouse Gas Initiative.
• A new “safety valve” feature, to let states appeal for extensions and other relief if complying with the regulations causes disruptions to power supply.
• Increased social justice incentives for utilities to construct renewable energy projects in poorer neighborhoods, reducing pollution-related illness and eventually lowering electricity rates.
• Energy efficiency is still encouraged, but has been eliminated as one of the rule’s "building blocks” for states to use in building their own carbon-reduction plans.

How will the Clean Power Plan story continue to play out?  Will it be challenged in court?  Will states comply?  What impacts will it have on the U.S. electric power industry?

Maine RGGI report 2015: price impact "relatively modest", programs helpful

For 8 years, states in the Northeastern U.S. have participated in the Regional Greenhouse Gas Initiative.  RGGI, the first market-based greenhouse gas regulatory program in the United States, represents a cooperative effort by participating states to cap and reduce greenhouse gas emissions from the electric power sector, coupled with a market for auctioning and trading emission allowances.  While some groups feared that the RGGI program would increase electricity prices, a recent report by the Maine Public Utilities Commission found that the impact of RGGI on electricity prices in Maine has been relatively modest -- while finding that RGGI-funded programs contribute to economic development and reduce greenhouse gas emissions.

RGGI formed in 2007, when ten states -- Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont -- agreed to first cap, and then slowly reduce, the greenhouse gas emissions of their electrical energy sectors by 10% by 2018.  While New Jersey withdrew in 2012, the program has remained strong; in 2014, the remaining states subsequently tightened the RGGI cap for 2014 from 165 million short tons of carbon to 91 million short tons, then further declining 2.5% per year from 2015 to 2020.

While each participating state adopted its own laws implementing RGGI, in general the RGGI laws require certain generators of electricity to track their carbon emissions and acquire an “allowance” for every ton of carbon dioxide or its equivalent that they emit.  States conduct periodic auctions of allowances, and market participants are free to engage in secondary market trades.  Generators must purchase or trade for enough emissions allowances to match the number of tons of CO2-equivalent emitted.  The cost of acquiring these allowances gives generators an incentive to improve their efficiency or switch to fuels with a lower carbon intensity.

Each state also adopted its own laws governing the use of funds raised by state auctions of RGGI allowances.  In Maine, most funds go to the Efficiency Maine Trust for purposes including measures, investments and arrangements that reduce electricity consumption or reduce greenhouse gas emissions and lower energy costs at commercial or industrial facilities, and for investment in measures that lower residential heating energy demand and reduce greenhouse gas emissions.

RGGI has conducted 27 quarterly allowance auctions since September 2008, through which Maine has received a cumulative total of $ 62.22 million in RGGI auction proceeds.  Maine’s auction proceeds in 2014 totaled $11.37 million. According to the Maine Public Utilities Commission's report:

the annual cost to Maine ratepayers of the RGGI program was approximately $0.0024 per kWh. For the average Maine residential customer using 530 kWh per month, the 2014 RGGI program cost was approximately $ 1.27 per month. For a commercial customer using 25,000 kWh per month the 2014 RGGI program cost was approximately $60.00 per month. A large commercial or industrial customer using 500,000 kWh per month would have had a 2014 RGGI program cost of approximately $1,200 per month.

On the benefits side of the ledger, the Commission's report cites a finding that "all RGGI proceeds since 2008 are expected to return more than $2 billion in lifetime energy bill savings to more than 3 million households and more than 12,000 businesses across the eight states taking part in RGGI."  The Commission also cited its July 2014 report to the Legislature quantifying the increases in employment, real personal income, and gross state product expected to occur in Maine as a result of the cap tightening and other changes implemented in 2014.  That report found:

economic impacts for the New England region include a cumulative increase in Gross Regional Product of over $2 billion, a cumulative increase in employment of 38,900 job-years, and a cumulative increase in real personal income of $1.5 billion including a cumulative increase in Maine Gross State Product of $200 million, a cumulative increase in employment of more than 5,000 job-years, and a cumulative increase in real personal income of $100 million.

Based on these observations, the Maine Public Utilities Commission's 2015 report on RGGI concludes that "the impact of RGGI on electricity prices has been relatively modest, while RGGI-funded programs contribute to the gross state product, job growth, and personal income, and also reduce greenhouse gas emissions."

Obama links climate and health

President Obama has issued a Presidential Proclamation declaring this week, April 6-12, 2015, as National Public Health Week.  Climate change, and its impacts on human and environmental health, figure prominently in his proclamation.

The Obama administration has focused on climate change since taking office in 2009.  In 2013, President Obama released his administration's Climate Action Plan, calling for reductions in U.S. emissions of carbon and greenhouse gases, adoption of mitigation and adaptation measures, and global action.  He has also addressed climate change in his State of the Union speeches to Congress, and the U.S. Environmental Protection Agency has issued its proposed Clean Power Plan to reduce the carbon intensity of the nation's electric power sector.

While interest in addressing climate change arises from a broad range of factors, health plays an important role in the Obama administration's action on climate issues.  In this week's Presidential Proclamation on health, President Obama noted the interdependence of climate, environment, and human health:

America's public health is deeply tied to the health of our environment. As our planet becomes more interconnected and our climate continues to warm, we face new threats to our safety and well-being. In the past three decades, the percentage of Americans with asthma has more than doubled, and climate change is putting these individuals and many other vulnerable populations at greater risk of landing in the hospital. Rising temperatures can lead to more smog, longer allergy seasons, and an increased incidence of extreme-weather-related injuries and illnesses.

My Administration is dedicated to combating the health impacts of climate change. As part of my Climate Action Plan, we have proposed the first-ever carbon pollution limits for existing power plants -- standards that would help Americans live longer, healthier lives. And as we continue to ensure the resilience of our health care system, we are working to prepare our health care facilities to handle the effects of a changing planet. Climate change is no longer a distant threat. Its effects are felt today, and its costs can be measured in human lives. Every person, every community, and every nation has a duty to protect the health of all our children and grandchildren, and my Administration is committed to leading this effort.

This week the Obama administration announced further actions to protect communities against the impacts of climate change.  These actions include convening stakeholders to prepare for a White House Climate Change and Health Summit later this spring that will feature the Surgeon General, and an Adaptation in Action Report by the Centers for Disease Control and Prevention (CDC).

The Obama administration also announced an expansion of its Climate Data Initiative to include more than 150 health-relevant datasets on climate.data.gov.  President Obama unveiled the Climate Data Initiative in 2014 to host data related to climate change that can help inform and prepare businesses and citizens for the impacts of extreme weather.  The newly released datasets are designed to help the public answer questions, including:

• In what ways does the changing climate affect public health where I live?
• What risk factors make individuals or communities more vulnerable to climate-related health effects?
• How can public health agencies, communities, and individuals plan for uncertain future conditions?