Vol. 7: Issue 7 | December 2019
This year was big for clean energy legislation, with six states—Colorado (SB 236), Maine (SF 457), Nevada (SB 358), New Mexico (SB 489), New York (SB 6599), Washington (SB 5116)—and Puerto Rico (PR S 1121) enacting 100% targets or goals in 2019. To date, nine states and two territories have enacted statutory 100% clean energy targets. Hawaii was the first to enact a 100% target in 2015, followed by California and Washington, D.C. roughly three years later. While a growing number of states are enacting 100% targets, no two policies are the same—states have taken varied approaches to define what resources count toward their respective percentage targets and the date by which such targets must be achieved. Some states, like Hawaii, opted for a renewables-only policy while others are implementing a 100% clean energy target that allows for non-renewable zero-emitting resources to count toward percentage requirements. State policies also vary in terms of the date when various targets must be met. Washington, D.C., for example, is implementing the most aggressive policy with 2032 as their target date, while the remainder of states or territories have set target dates of 2040 (New York), 2045 (California, Hawaii, New Mexico, Washington) or 2050 (Colorado, Maine, Puerto Rico).
To support their 100% clean energy goals, some states are implementing complementary policies designed to reduce greenhouse gas emissions economy-wide. For example, in addition to establishing a 100% clean energy target, in 2019 Colorado enacted economy-wide greenhouse gas reduction targets of 50% by 2030 and 90% by 2050 (HB 1261). Nevada Governor Steve Sisolak also recently signed an executive order, in support of the state’s recently enacted 100% clean energy goal (SB 358) and other clean energy legislation, that directs state agencies to develop plans reducing greenhouse gas emissions across multiple sectors of the state’s economy. In addition to broadly prioritizing programs that reduce emissions, the new executive order emphasizes policies that support transportation electrification, energy efficiency, and climate resilience.
This past summer Ohio enacted House Bill 6—sweeping energy legislation subsidizing coal and nuclear and rolling back the state’s requirements for renewables and energy efficiency. In response, a citizen group began gathering the signatures necessary for a referendum, but when their efforts fell short they filed suit in federal district court, arguing the state’s certification of their referendum petition 38 days after the law was passed provided an insufficient 52 days to acquire signatures. State law requires that those seeking referendum acquire the necessary signatures within 90 days. A federal judge denied the group's request and sent the case along with four questions of state law to the Ohio Supreme Court for review. While that challenge is still ongoing, the Ohio Supreme Court did weigh in on a separate—but related— suit rejecting a challenge filed by FirstEnergy Solutions (FES) arguing that as a tax levy, HB 6 could not be subject to a referendum. Under HB 6, FES’ two nuclear plants will receive $150 million annually between 2021 and 2026.
Meanwhile, the state legislature has renewed consideration of a policy placing additional restrictions on wind development that was struck from an earlier version of HB 6. As introduced in November, House Bill 401 would explicitly provide for township referendum of new wind farms that are economically significant. The proposed law would further extend the referendum power to apply to certain permit amendments that expand existing facilities. Compared to wind development in neighboring states, Ohio is lagging behind with less than 800 MW of wind capacity currently in service.
Property rights are at the center of the state’s wind energy debate, with some Ohioans supporting the increased local control over projects they argue should not be located in residential areas, and others opposing the additional regulatory obstacles that would make it harder for them to earn money for wind projects developed on their own land.
Several states have limited oil and gas drilling in certain areas, including in coastal waters and on protected lands. With the passage and signing of New Hampshire SB 76, the state joins Maine, New Jersey, New York and Oregon in banning drilling for oil and gas in state waters. On the other side of the country, the California legislature passed a new law (AB 342) that prohibits state agencies from issuing permits or leases for any new oil and gas infrastructure on lands that have—or once had—federally protected status, including national parks, monuments, wilderness areas or wildlife refuges. On the same day, the legislature passed AB 1057, which changes the name of the California Division of Oil, Gas and Geothermal Resources to the Geologic Energy Management Division, along with making changes to the division’s mission. The new law specifies that the division, in addition to its work related to oil and gas conservation, is tasked with protecting public health and safety, environmental quality and furthering the state’s ambition to reduce and mitigate the effects of greenhouse gas emissions.
In September, the National Highway Traffic Safety Administration (NHTSA) and the U.S. Environmental Protection Agency (EPA) finalized a rule preempting California’s authority to implement its vehicle emissions standards for greenhouse gases. Two days later, the District of Columbia and 22 states joined California in challenging NHTSA’s preemption of California’s Clean Air Act authority in federal district court. In November, this same coalition of states filed a separate petition for review of EPA’s role in the preemption rule, revoking California’s vehicle emissions waiver, in the D.C. Circuit. The U.S. Department of Justice has moved to dismiss the September lawsuit arguing that proper venue for the challenge is the D.C. Circuit, not federal district court.
Although the year may be winding down, state activity on oil and gas policies has not. In November, Colorado regulators approved new safety measures aimed at increasing citizen protections related to underground oil and gas pipelines. The rulemaking comes after a 2017 home explosion caused by an abandoned flow line. Under the new rules, the public is able to access more detailed maps for certain pipelines. In Pennsylvania, Governor Tom Wolf declared that his administration will spend $3 million on a pair of studies to explore the possible health impacts of the natural gas industry. The announcement of the studies comes in response to pleas from families near Pittsburgh, where many of the state’s oil wells are located and where dozens of children have been diagnosed with Ewing sarcoma and other forms of cancer. The studies will examine whether there is a link between these cases and the hydraulic fracturing taking place in the state. Finally, Puget Sound Energy in Washington state gained permit approval this month for a new liquefied natural gas facility at the Port of Tacoma, while demonstrators in Oregon flooded the state capitol opposed to a liquefied natural gas pipeline and marine export terminal in Coos Bay, Oregon.
While many states have pursued renewable power policies, a number of states with ambitious goals have left the door open to carbon-free and carbon-neutral technologies—carbon capture and sequestration (CCS) among them. New Mexico passed a 100% clean energy mandate last session. The bill was expected to lead to the early retirement of several coal plants in the state, but the city that’s home to the coal-fired San Juan power plant is now pursuing a plan to convert the plant into what would be the world’s largest CCS facility. Farmington, N.M., signed an agreement with Enchant Energy that would see the San Juan plant—currently slated to be shuttered in 2022—converted into a CCS facility that would qualify as a clean energy project under the state’s new law. Enchant claims it can convert the plant at a cost of $1.3 billion to capture 6 million tons of carbon annually by 2023. In neighboring Texas, a group is evaluating sites for a commercial net-zero natural gas power plant following a successful pilot project at a plant in La Porte, Texas. Meanwhile, a coal plant operator in North Dakota is studying whether CCS could work for the Coal Creek power plant after receiving a $4.2 million matching grant from the North Dakota Industrial Commission. The power plant has watched as a nearby ethanol plant drilled a test well for its planned CCS conversion.
A new rate approach adopted by a number of states is also set to take off in Colorado. A successful time-of-use (TOU) rate pilot has led Colorado’s largest utility, Xcel Energy, to propose making TOU rates default for customers in its rollout of smart meters in 2021. Time-of-use rates vary throughout the day based on whether it is a period of peak or low consumption. The pilot found that with the new rates customers with solar panels and electric vehicles were able to cut their peak demand in both winter and summer, leading to overall peak demand savings. This approach better reflects the actual daily variations in electricity prices for the consumer, allowing the market to function more efficiently and lowering overall grid operation costs.
A controversial $333 million agreement to upgrade an existing waste-to-energy facility in Hartford, Connecticut is facing opposition from local government leaders and environmental groups. The facility in question was converted from a coal power plant and has experienced a number of equipment issues, costing the state’s Materials Innovation and Recycling Authority millions in repairs. In addition to these costs, those opposed have also taken issue with the facility’s location. The WTE site located in Hartford, an area comprised of lower-income communities of color, accepts waste from a number of more affluent surrounding areas. In addition to environmental organizations and the Hartford City Council, Mayor Luke Bronin is opposed to the facility’s continued operation, describing it as “obsolete” and calling for alternatives that are more cost-effective and environmentally-friendly.
The fastest-growing source of electricity in Texas is wind, which is expected to grow nearly 50 percent between 2017 and 2020. The state will be adding 10 gigawatts of wind during this time period, which is enough to power about 7 million homes.
The low cost of wind combined with Texas wind resources and its foresight in transmission planning are contributing to this rapid growth. The U.S. DOE forecasts that wind will supply 20 percent of Texas’ energy needs this year and 24 percent in 2020, edging out coal-fired power generation.
Following calls from the White House to curb skyrocketing disaster cleanup costs the House of Representatives approved on Nov. 18 a bipartisan bill aimed at improving disaster resilience and recovery. The bill requires communities to use tougher building codes when they spend federal funds to restore damaged structures and is aimed in part at making government agencies account for the cost of climate change. Many states and municipalities across the country use outdated building codes that fail to account for worsening weather systems and extreme storms. As a result, buildings constructed under older codes are more susceptible to damage from dangerous weather patterns that come with increasing repair costs. The bill also attempts to eliminate the often-significant delays in getting disaster aid from the Department of Housing and Urban Development (HUD) released to recovering communities. Unlike other agencies, HUD disaster funding is approved intermittently by congress, without formal law. The bill would address this bog by creating specific laws governing HUD disaster funding. The bill, H.R. 3702, titled the “Reforming Disaster Recovery Act,” passed on a 290-118 vote, with 219 Democrats and 71 Republicans approving the measure.
Rep. Donald McEachin (D-Va.) is set to introduce new legislation setting a national greenhouse gas emissions reduction target. The “100% Clean Economy Act” would set a national goal to achieve net-zero greenhouse gas emissions by 2050 and direct federal agencies to develop plans to get there. Without authorizing any additional regulatory or tax authority to the federal government, the bill would create a “Clean Economy Federal Advisory Committee” comprised of experts positioned to advise on any potential federal process for cutting emissions. Proponents, including Representatives Donald McEachin (D-Va), and Debbie Dingle (D-Mich.), say the bill creates a set of targets and steps to monitor progress. Both representatives hope to have the bill brought to the House floor for a vote before the end of the current congressional session.
The U.S. Department of Energy (DOE) recently announced that up to $15 million in new funding would be spent through DOE’s Office of Indian Energy Policy and Programs aimed at deploying energy infrastructure on tribal land. The Office of Indian Energy is currently accepting applications through Feb. 6, 2020, from Indian tribes or their authorized tribal organizations relating to any one of four topic areas. The areas include 1. installing energy generating systems and/or energy efficiency systems for tribal buildings; 2. Deploying community-scale energy generation or storage systems on tribal lands; 3. Installing autonomous operation energy systems to power essential tribal facilities during emergency situations, or 4. Deploying energy infrastructure and integrated energy systems to electrify tribal buildings. Selected projects will share 50% of costs with the DOE. The funding is intended to support projects that reduce or stabilize energy costs while increasing energy security and resilience for Indian tribes and Alaska Native villages. Since 2017, the DOE Office of Indian Energy has invested over $32 million in nearly 60 tribal projects valued at $78 million.
On Nov. 25, the EPA ended a 60-day comment period on its proposed replacement for Obama administration regulations on oil and gas methane emissions. The agency plans to roll back regulations for methane leaked during the production, processing, transmission, and storage of oil and natural gas. In place of the existing methane regulations, the Trump administration is proposing new regulations targeting volatile organic compounds, a precursor of ozone. If approved, the decision would result in no regulation for new sources in the transmission and storage subsectors and would exempt existing sources from coming under future regulation. Proponents of the regulatory shift, including the Independent Petroleum Association of America, claim that the older regulations fall too harshly on small business operations and that new regulations are unnecessary to meet industry goals of cutting oil and gas methane leakage by 45% by 2025. Under the Trump administration, the EPA has argued that it requires a special finding proving methane from oil and gas sources endanger public health and welfare to regulate it. The Trump administration claims the Obama EPA inappropriately skipped the required finding while promulgating the current rules. However, in a joint, bipartisan letter, Senators Chris Murphy (D-Conn.) and Susan Collins (R-Maine) and Representatives Scott Peters (D-Calif.) and Matt Gaetz (R-Fla.) pushed back against the Trump administration, stating that the Obama-era regulations were neither duplicative nor burdensome to the oil and gas industry. During the comment period, EPA received over 500 public comments. They are expected to issue a final rule in March.
Energy storage has been on the ascendancy in recent years, thanks in large part to state policies. However, the Federal Energy Regulatory Commission (FERC) issued an order last year requiring markets to issue plans more fully incorporating energy storage systems to recognize its various attributes, a move that could enable storage to take on an even greater role in the nation’s wholesale electricity markets. Recently, FERC approved the first two plans by market operators—PJM Interconnection and the Southwest Power Pool (SPP)—to begin implementation. PJM has already begun to implement most of its plan and SPP will implement its plan over the next year. FERC found that the proposals will enable energy storage to provide a full range of services and be fairly compensated for doing so. The only hang-up is the “minimum run time” requirement—an issue that the storage industry has argued is unfair. PJM has established a 10-hour minimum run time for energy storage to qualify to participate in capacity markets—a benchmark that most storage systems would have a hard time meeting. Most storage systems currently have 4-hour discharge limits. In response, FERC has opened up a new docket to examine whether such minimum run-time requirements are just, reasonable and not discriminatory.
Much of the nation’s network of electricity generation, transmission and distribution resources is aging and major upgrades are needed for new technologies, changing market dynamics and shifting consumer preferences. A new NCSL report, “Modernizing the Electric Grid: State Role and Policy Options,” explores innovative policies for creating and regulating a modern grid.
States have taken a variety of policy approaches to mitigate greenhouse gas (GHG) emissions. The new web brief covers a range of statutory targets and requirements aimed at measuring statewide GHG emissions and achieving GHG emissions reductions across economic sectors. It also covers in-state and regional market-based policies implemented through legislative and administrative action designed to cap emissions from the U.S. economy’s two highest-emitting sectors: power and transportation. You can read about this and other Energy Program resources here.
The Nuclear Legislative Working Group met in Nashville in November, in conjunction with the annual Intergovernmental Meeting, hosted in conjunction with the Department of Energy. The Working Group meeting included more than 30 state legislators, who had the opportunity to speak with top DOE officials from the Office of Environmental Management and the Office of Nuclear Energy. The meeting also included sessions on nuclear’s role in the future of clean energy and how the industry is preparing the next generation of the workforce. The Intergovernmental Meeting provided opportunities for increased communication and coordination with DOE and among states, tribes and local communities affected by the ongoing cleanup of the nuclear weapons complex. You can find out more by visiting the meeting page.
States are finding it challenging to keep policy in sync with the rapid advances in energy technology that are transforming the electric gird. The podcast explores the recent NCSL report, “Modernizing the Electric Grid,” focusing on the challenges facing state policymakers as they attempt to create policies that promote cost-effective investment in the electric system while allowing innovative technologies and new energy management approaches to flourish and compete.
NCSL’s Environment, Energy and Transportation Department recently came together to offer a comprehensive look at the nation’s infrastructure needs, including investments in water, roads and the electric grid. The article, “On Shaky Ground” looks at the issue from a variety of perspectives—including the estimated $2 trillion needed to close the gap between current funding levels and the amount necessary to address many of these issues. It also touches on the role of state legislatures in addressing some of these pressing needs. One section of the infrastructure package, “Smart Power,” looked at how states and the electric industry are considering cybersecurity and grid modernization as they move to address some of the issues related to aging infrastructure.
On Nov. 20, the Center for Climate and Energy Solutions (C2ES) hosted a webinar discussing state and federal developments in clean energy standards. NCSL Energy Program policy associate Laura Shields presented on recent state legislative activity and state policy trends in the areas of renewable energy, energy efficiency, and power sector greenhouse gas emissions reduction. Additional information about the webinar and C2ES’s recent report on clean energy standards can be found here.
Stanford University is offering a course that delves into the basics and complexities of the finance, technology, and policy dimensions of building energy efficiency. In addition to covering these fundamentals, the course also focuses on the latest innovations in efficiency and building decarbonization. A full description of the course can be found here.
Deloitte recently released its 2020 Power and Utilities Industry Outlook for the U.S. highlighting major trends in 2019 and projections for 2020. Among those utility trends to watch in 2020 are climate change goals, increased investment in electric vehicles and distributed energy resource utilization.