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.

Declining demand for residual fuel oil?

Global demand for residual fuel oil is expected to decline, according to the U.S. Energy Information Administration.

A Maine State Ferry Service boat near Vinalhaven, Maine.

Residual fuel oil is basically what's left after gasoline and other lighter hydrocarbons are distilled from crude oil.  Industry recognizes several grades of residual fuel oil, including No. 5 (used in steam-powered vessels in government service and inshore powerplants) and No. 6 (used for the production of electric power, space heating, vessel bunkering, and various industrial purposes.) 

Because residual fuel oil is composed of the residue left after distillation, it can contain large amounts of contaminants such as sulfur, nitrogen, or heavy metals.  As environmental regulations limit emissions of pollution, residual fuel oil can become less attractive (or more expensive) as a fuel source for electric power generation or marine transportation.

The EIA notes declining global demand for residual fuel oil since the mid-1980s.  In a brief report, EIA projects that the electric power and heating sectors will likely be responsible for continuedlarge reductions in residual fuel oil demand.

EIA also points to tighter international emissions regulations for the marine transport sector.  Rules under Annex VI of the International Maritime Organization through the International Convention of Pollution from Ships (MARPOL, or Marine Pollution) require global controls on emissions of sulfur and nitrogen oxides.  While residual fuel oil with a sulfur level no more than 3.5% can be used to meet the MARPOL requirements throughout most of the oceans, stricter limits apply to designated emission control areas like the North Sea, the Baltic Sea, and coastal areas in North America and the Caribbean Sea.  These strict limits effectively require 0.1% sulfur content residual fuel oil or lower in the covered emission control areas.  EIA suggests that strategies for MARPOL compliance will likely include low-sulfur fuels (marine gasoil or intermediate fuel oil, or even liquefied natural gas or LNG), or using scrubbers or other technology to remove sulfur post-combustion from the exhaust.

At the same time, EIA notes that some developing countries' power sectors may rely on residual fuel oil as a "transitional fuel" if they are "more sensitive to price and less sensitive to environmental and health implications."

Energy and State of the Union 2015

President Obama delivered his 2015 State of the Union address on January 20, 2015.  In his remarks as prepared for delivery, he addressed energy-related themes including the growth of U.S. energy resource production and climate change.

As in his 2013 and 2014 addresses, increased domestic production of energy resources featured prominently in the 2015 State of the Union speech, for its economic, political, and national security benefits:

At this moment – with a growing economy, shrinking deficits, bustling industry, and booming energy production – we have risen from recession freer to write our own future than any other nation on Earth.  It’s now up to us to choose who we want to be over the next fifteen years, and for decades to come...

We believed we could reduce our dependence on foreign oil and protect our planet.  And today, America is number one in oil and gas.  America is number one in wind power.  Every three weeks, we bring online as much solar power as we did in all of 2008.  And thanks to lower gas prices and higher fuel standards, the typical family this year should save $750 at the pump.

During the past several years, U.S. production of oil and natural gas has increased significantly.  According to the U.S. Energy Information Administration, total U.S. crude oil production averaged an estimated 9.2 million barrels per day (bbl/d) in December 2014, and forecasts for oil productino continue to grow.  EIA predicts that projected crude oil production will reach 9.5 million bbl/d in 2016, constituting the second-highest annual average level of production in U.S. history (after 9.6 million bbl/d in 1970.)

EIA also predicts continued growth in the use of renewable energy resources to produce electricity and heat. In 2014, 6.4% of electric generation came from hydropower and 6.7% from nonhydropower renewables. EIA projects continued growth of nonhydropower renewables, reaching an electricity generation share of 7.9% by 2016.  Wind is the largest source of nonhydropower renewable generation, and it is projected to contribute 5.3% of total electricity generation in 2016.

President Obama also addressed climate change in this year's State of the Union address, and his administration's efforts to combat and mitigate its effects:

2014 was the planet’s warmest year on record.  Now, one year doesn’t make a trend, but this does – 14 of the 15 warmest years on record have all fallen in the first 15 years of this century. 

I’ve heard some folks try to dodge the evidence by saying they’re not scientists; that we don’t have enough information to act.  Well, I’m not a scientist, either.  But you know what – I know a lot of really good scientists at NASA, and NOAA, and at our major universities.  The best scientists in the world are all telling us that our activities are changing the climate, and if we do not act forcefully, we’ll continue to see rising oceans, longer, hotter heat waves, dangerous droughts and floods, and massive disruptions that can trigger greater migration, conflict, and hunger around the globe.  The Pentagon says that climate change poses immediate risks to our national security.  We should act like it.

That’s why, over the past six years, we’ve done more than ever before to combat climate change, from the way we produce energy, to the way we use it.  That’s why we’ve set aside more public lands and waters than any administration in history.  And that’s why I will not let this Congress endanger the health of our children by turning back the clock on our efforts.  I am determined to make sure American leadership drives international action.  In Beijing, we made an historic announcement – the United States will double the pace at which we cut carbon pollution, and China committed, for the first time, to limiting their emissions.  And because the world’s two largest economies came together, other nations are now stepping up, and offering hope that, this year, the world will finally reach an agreement to protect the one planet we’ve got.

His 2015 remarks on climate change reflect a belief or fear that Congress will not act on the issue, or will act to frustrate the Obama administration's efforts on climate change.  In 2013, President Obama asked Congress to develop a market-based solution to climate change, but said he would take executive action if Congress failed to act.  In 2014, he noted Congress's apparent unwillingness to act, and highlighted his administration's proposed new standards on power plant emissions of carbon.  This year's remarks continue the trend of featuring executive-branch solutions, and downplaying the likelihood of near-term legislative support.

Will U.S. production of energy continue to grow?  What economic, political, and national security impacts will flow from the shifts in and growth of the U.S. energy sector?  Will the U.S. continue to act -- or take more serious action -- on climate change?  The remainder of 2015 -- and of President Obama's term in office, which runs into January 2017 -- will show how these themes evolve.

Atlantic offshore wind energy targeted

A report released by the National Wildlife Foundation highlights the potential of U.S. states on the Atlantic Ocean to generate electricity from offshore wind -- and calls upon state leaders to take action to promote offshore wind development.

The 24-page report, Catching the Wind: State Actions Needed to Seize the Golden Opportunity of U.S. Offshore Wind Power, describes responsibly developed offshore wind as "a golden opportunity to meet our coastal energy needs with a clean, local resource that will spur investments in local economies."  In particular, the Atlantic coast offers a high-quality wind resource in close proximity to power-thirsty coastal cities.

Key findings in the report include:

• Offshore winds off New England and New York blow consistently during periods of high electric demand, including summer heat waves and winter cold snaps.
• Federal environmental reviews are complete for over 1.5 million acres of Atlantic sea space, with over 16,000 megawatts of potential wind capacity.
• Diversifying states' energy mix with offshore wind can reduce prices and offset volatility, citing a 2014 study showing New England would save $350 million per year in reduced energy costs, or 2%, if 1,200 megawatts of offshore wind is added.
• Offshore wind reduces air pollution, including carbon emissions.
• Offshore wind development creates jobs, and can be done in an environmentally responsible manner.

The report highlights Massachusetts and Rhode Island as leading America's pursuit of offshore wind, followed by Maryland, Virginia, New York, New Jersey, and Delaware, with Maine, North Carolina, South Carolina, and Georgia bringing up the rear.  New Hampshire, Connecticut, and Florida are noted as "states to watch" with no offshore wind planning activities.

The report calls on state leaders to:

• Set a bold goal for offshore wind in the state's energy plan.
• Take action to ensure a competitive market for offshore wind power.
• Advance power contracts for offshore wind.
• Ensure an efficient, transparent, and environmentally responsible offshore wind leasing process that protects wildlife.
• Invest in key research, initiatives, and infrastructure needed to spur offshore wind development.

Will Atlantic states develop their offshore wind resources? 

January 10, 2011 - Ballville Dam removal; Lake Erie wind

As many dams in America are approaching their centenary years, dam owners face pressures to maintain or upgrade their infrastructure to comply with safety or environmental regulations - or else face dam removal.  Located outside Fremont, Ohio, the Ballville Dam now faces this choice.

Constructed in 1911, the Ballville Dam was built on the Sandusky River about a dozen miles upstream from Lake Erie to impound and direct water into a downstream hydroelectric station.  The dam is 34.4 feet high and over 300 feet long.  In 1946, the downstream hydroelectric facility ceased generation.  In 1959, the city of Fremont bought the Ballville dam for water supply.  In the ensuing 50 years, issues including upkeep and maintenance costs for the dam led the city to create an alternative reservoir to replace the dam.  The dam has been implicated in fish passage problems, and its removal is anticipated to open up over 22 miles of habitat to gamefish like walleye.  The dam has also been implicated in problems with ice jams above Fremont.  All this, without a revenue stream from the dam, has led Fremont to work towards dam removal.  Fremont has since won approximately $6 million dollars in grant funding to support dam removal, which is slated for summer 2011.


If the dam is removed, large amounts of backed up sediment - including a contaminant burden of heavy metals and polyaromatic hydrocarbons - will either come with it or be swept downstream into Lake Erie.  A report suggests 350,000 cubic meters of sediment may need to be removed to establish the channel of the Sandusky River through the impoundment.  However, the report suggests that the sediment pollutant concentrations are less than or equal to those in existing Lake Erie sediment, and thus that mixing with the lake would dilute any effects.

Interestingly, the Ballville Dam has faced trouble before.  Two years after its construction, the dam failed due to poor anchoring into the sediment, causing serious flooding in Fremont.  Today's dam was rebuilt using a stronger foundation. In 1913, the dam served a useful purpose: supporting the nearby hydroelectric station.  In 2011, without that support for hydroelectric generation, will the Ballville Dam be removed?

Meanwhile, on Lake Erie, the Lake Erie Energy Development Corporation continues to make progress toward the nation's first inland offshore wind development: five wind turbines in state waters about 7 miles off Cleveland.  Great Lakes wind offers many of the advantages of both terrestrial and oceanic wind, while posing other challenges.  Will the Lake Erie project be the first to reach success?

November 30, 2010 - coal-burning Salem Harbor Power Station to close?

To generate electricity, humans rely on a variety of different technologies, ranging from burning coal to make steam, to combined-cycle natural gas turbines, to renewable resources like hydroelectricity and solar photovoltaics.  Over time, the portfolio of energy resources upon which we rely may shift to less environmentally harmful assets.

For an example of how certain generation technologies may fall out of the generation mix, take the planned closing of the Salem Harbor Power Station.  Located in Salem, Massachusetts (a city that sports solar photovoltaic-powered trash compactors on its sidewalks), this plant is one of several coal-fired power plants closing scheduled for the coming years.  Since it started operations in 1951, the Salem Harbor Power Station has expanded and now generates 745 megawatts by burning coal and oil.  Although the plant, currently owned by Dominion Resources, Inc. has increased its pollution control systems over the years, it was listed as one of the state’s “filthy five” dirtiest power plants in 2000, a hard reputation to shake.  A study by Harvard University researchers at about the same time blamed the plant for 30 premature deaths annually, primarily due to air emissions.

Dominion, which purchased the plant in 2005, took steps to reduce emissions such as switching to lower the sulfur content of the coal burned there.  However, the Salem plant has reportedly received $12 million in investments from Dominion since 2005—a marked contrast with the more than $1 billion Dominion invested into its 1,547 megawatt coal plant at Brayton Point in Somerset, Massachusetts.

As it is often the case, declining investments may result in the demise of production operations.  Also, I have seen in similar context, the declining investments arise in part from declining economics that are to be seen at that facility.  In the case of the Salem Harbor Power Station, the fact that Dominion could not shift the costs of new pollution controls to rate payers made further investment in the plant uneconomic.  As a merchant generator in the ISO New England system, Dominion takes a market clearing price for its power, and thus cannot raise its rates over other resources to cover future increases in pollution control expenses.

The Salem Harbor Power Station is also a good example of how an increase in environmental regulation may lead to higher costs for certain kinds of generation units (in this case, coal-fired generation stations).  Regulatory requirements to improve pollution control result in higher operational costs; these higher costs may in turn make even a relatively low fuel cost unit (such as coal) comparatively uneconomic.  By comparison, once pollution controls are imposed on coal-burning units, the fact that renewable units such as wind or hydro or natural gas-fired units may not require such expensive pollution controls makes them relatively more economic.

Over time, it seems the balance has shifted, the generation mix will shift piece by piece as less economic units such as the Salem plant close, and new more economic units come online.  Note that this does not always mean that the price of power goes down; rather, in this case, it is not that wind and hydro got cheaper, nor natural gas, but rather that the cost of coal now includes more expensive pollution control requirements, making it less economic.  In 2009, coal fueled 12.8% of the New England portfolio; we shall soon see what 2010 has brought.

One other note on what happens if the Salem Harbor Station goes dark:  ISO New England is now studying how to replace the plant, and true to its mission, is considering increasing transmission system upgrades in the region.  This is an interesting example of how ISO New England focuses on transmission solutions — perfectly natural given its mandate — to replace a generation asset.  While not all generation assets can be effectively replaced by transmission solutions, transmission between a remote generation resource and load may serve to replace at least some generation assets.  Whether this will be correct in Salem remains to be seen.  Within five years, the Salem station may be closed.