Editor’s Note: The Climate Post will not circulate next Thursday, April 26. It will return on Thursday, May 3.
The Regional Greenhouse Gas Initiative (RGGI), a nine-state carbon cap-and-trade program, continues to help lower emissions of carbon dioxide and benefit local economies, according to a new study by the Analysis Group. The study estimates that RGGI states gained $1.4 billion in net economic value from program during 2015–2017.
“I think this provides evidence of the fact that you can design a carbon-control program in ways that really are avoiding a drag on the economy and, in fact, actually helping to put more dollars in consumers’ pockets,” said Sue Tierney, a senior advisor with the Analysis Group and a member of the Nicholas Institute for Environmental Policy Solutions Board of Advisors.
RGGI, the first market-based regulatory program in the United States, is a cooperative effort implemented through separate authorities in Maryland, New York, Delaware, Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont to create a “cap” that sets limits on carbon dioxide emissions from the power sector—a cap lowered over time to reduce emissions. Power plants must purchase credits or “emissions allowances,” either from the regulators at auction or from other entities that can over comply, but the entire pool of such allowances is limited to the cap.
The study suggests that carbon dioxide emissions from power plants in the nine-state region have dropped by more than 50 percent since the program was launched in 2009. In the last three years, the program “has helped to lower the total amount of dollars member states send outside their region in the form of payments for fossil fuels by over $1 billion,” report authors write. “RGGI has lowered states’ total fossil-fired power production and their consumers’ use of natural gas and oil for heating.”
Brian Murray, a Nicholas Institute faculty affiliate and director of Duke University’s Energy Initiative, published a study in the journal Energy Economics in 2015 that had similar findings. It concluded that even when controlling for other factors—the natural gas boom, the recession, and environmental regulations—emissions would have been 24 percent higher in participating states without RGGI.
Nuclear Plants’ Economic Woes Could Threaten Clean Energy Growth
An analysis released by think tank Third Way explores the effect of three potential levels of premature nuclear plant closures (20 percent, 60 percent and 80 percent) on carbon emissions in the U.S. power sector. It finds that much of the shuttered generation will likely be replaced by natural gas, increasing emissions. Even if the lost capacity was entirely replaced by renewables, the analysis finds that the U.S. would still suffer a setback in its clean energy growth.
Failure to prevent early retirements of nuclear plants, it says, could unwind years of climate progress achieved by the U.S. power sector and jeopardize the Obama-era goal of reducing greenhouse gas emissions by 80 percent of 2005 levels by 2050.
Some 20 percent of U.S. electric power, and 60 percent of our zero-carbon electricity, comes from nuclear generation. Nearly half of U.S. nuclear plants are at or near the end of their 40-year licensed operating lives. These units have received 20-year license extensions, but starting around 2030 they will reach their 60-year limits. At this point, they must receive a second license extension or retire.
Nuclear power struggles to compete in an era of cheap natural gas and renewables. A few weeks ago, FirstEnergy announced that three nuclear plants will be prematurely deactivated by 2021. The utility asked for an order, under Section 202 of the Federal Power Act, to save them. On April 5, President Donald Trump said he would consider issuing just such an emergency order through the Department of Energy (DOE)—a move opposed by the American Petroleum Institute in a letter to the president, after the DOE opened an unofficial comment period on the matter last week.
If nuclear power is to be part of a U.S. climate change strategy over the next century, The Third Way argues that policymakers must address its increasingly precarious economics.
Their analysis concluded that more state-level policy efforts and expansion of zero-emissions credits programs could help curtail nuclear plant closures and incentivize growth in the clean energy source.
I recently wrote in The Conversation that extending federal tax credits to nuclear recognizes the societal benefits offered by that generation source and that without mechanisms for monetizing social benefits from carbon-free generation, new nuclear power plants are unlikely to be constructed. Such mechanisms could include a carbon tax to penalize high-carbon fuels and reward low-carbon and carbon-free sources and aggressive promotion of mature new nuclear reactor designs that could take up some demand currently met by retiring plants.
Emissions Standards Could Have Big Impact on California, Other States
Earlier this month, U.S. Environmental Protection Agency Administrator (EPA) Scott Pruitt, announced that greenhouse gas emissions standards for cars and light duty trucks should be revised. Although he did not indicate how far the rules should roll back, only that the EPA would begin drafting new standards for 2022–2025 with the National Highway Traffic Safety Administration, he did call out California, which is authorized under the Clean Air Act to set its own fuel standards. The move could spark a legal battle between the EPA and California about standards.
Privately, officials from the Trump administration and California, along with representatives of major automakers, may be searching for a compromise, The New York Times reports. Although a lawsuit is under consideration, Mary Nichols, the chair of the California Air Resources Board, said Tuesday she sees hope for a deal with the Trump administration over fuel economy and emissions standards.
“Reason could prevail,” Nichols said at Bloomberg New Energy Finance’s Future of Energy Summit in New York. “There’s a way to get to success, unless your goal is to roll over California and not allow us to have any standards.”
She told the Detroit Free Press that “if there are ways to eliminate things that aren’t contributing to overall environmental performance, we’re absolutely open to talking about them.”
For California, and the other states with transportation sectors that emit at least twice as much carbon as power plants—Massachusetts, New Jersey, New York and Washington––what happens with the vehicle emissions standards could affect states’ overall greenhouse gas emissions targets, reports ClimateWire.
The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions.
Hog waste is providing farmers and power companies with a new source of renewable natural gas, or what’s known as swine biogas. In North Carolina, the electric utility Duke Energy is capturing methane gas from the hog waste at area farms and piping it to a central location where the gas is cleaned and converted to pipeline-quality natural gas to meet a state-required mandate that 0.2 percent of energy come from hog waste by 2023.
The project kicked off late last month. Known as—OptimaKV—it uses a directed biogas approach to create enough renewable natural gas to power the equivalent of 1,000 homes a year.
“Optima KV is just the first of more projects where directed biogas will be used at Duke Energy power plants to create efficient renewable energy,” said David Fountain, Duke Energy’s North Carolina president. “Getting projects to a meaningful scale is important as we advance this innovative technology.”
The Optima KV project follows a model designed in a 2013 study by Duke University’s Nicholas Institute for Environmental Policy Solutions that provided individual and centralized approaches for meeting North Carolina’s Renewable Energy and Energy Efficiency Portfolio Standard mandate for swine gas. The study, which used the similarly named Optima model, found the directed biogas approach could lower the cost of swine biogas to as little as 5 cents a kilowatt hour, or roughly the same price as solar power.
The potential for biogas as a renewable power source is also being explored by Duke University. The campus, which aims to be carbon neutral by 2024, held a forum Tuesday night to explore the alternative energy source.
“What’s so attractive is this dual dividend idea,” said Tanja Vujic, Duke University’s director of biogas strategy, of the university’s plan to displace conventional natural gas—now the primary fuel source for the university’s current steam plants—with methane from hog farms. “You [don’t] just destroy the methane, but [also] make something valuable in its destruction.”
Duke University led a pilot project in 2010 to test the viability of this kind of biogas at Loyd Ray Farms in Yadkinville, NC, and it is now in discussions with potential suppliers to expand biogas production and delivery to the campus.
Southern Company Announces Decarbonization Strategy
At the Bloomberg New Energy Finance Future of Energy Summit, Southern Company CEO Thomas Fanning announced plans for the company to continue to transition away from coal-fired power plants to “low-to-no-carbon” electricity sources by 2050.
“We are transitioning the fleet,” Fanning said. “The dominant solutions will be nuclear … there will be renewables.”
Although few other details about the company’s decarbonization strategy were shared, Fanning told EnergyWire that more particulars about the transition of its fleet will be announced at the company’s next annual meeting.
Concentrated in four Southeastern states, Southern Company is responsible for nearly a quarter of the carbon pollution from southeastern utilities. The announcement makes Southern Company the first large utility in the region to publicly endorse a no-carbon pollution goal.
PJM to FERC: Rule on Proposals for Accommodating State Subsidies in Capacity Market
The PJM Interconnection, which operates the power grid in the U.S. Mid-Atlantic and Midwest region, on Monday asked the Federal Energy Regulatory Commission (FERC) to determine how the wholesale electric capacity market should handle state subsidies for power generators, whether aging nuclear and coal-fired plants or renewables sources such as wind and solar, and to issue an order by June 29.
“Left unaddressed the subsidies will crowd out efficient, competitive resources and shift to consumers the investment and operational risks of generation,” said PJM CEO Andrew Ott. “We seek the appropriate balance that respects state policy while avoiding policy impacts of a state’s subsidies on the market as a whole and on other states.”
The grid operator and some power producers have argued that subsidized generators are entering into the annual PJM capacity market, which allows utilities and other electricity suppliers to purchase power three years in advance, at prices below their actual generation costs, lowering overall market prices and potentially forcing other competitors to shutter their operations.
In a filing to FERC, the PJM asked the agency to decide between two proposals to deal with the issue and to identify which aspects of the proposals need to be revised, rather than send the issue to “trial-type proceedings.” One proposal—capacity repricing—would create a two-stage capacity auction to accommodate state subsidies without distorting market prices. All generators would participate in the first stage, and payments to subsidized plants that win in that round would be reduced in the second stage. The second proposal, which is preferred by some PJM member companies, involves removing the effect of subsidies from offers into the capacity market by effectively extending the Minimum Offer Price Rule (MOPR). Subsidized bids would be changed to reflect unsubsidized costs, as a result of which some subsidized plants might lose their capacity payment.
One clue about how FERC may view the proposals is offered by its March 2018 decision on Independent System Operator-New England capacity market reform. In that decision, FERC approved a two-part capacity market but designated the MOPR as the “standard solution” for dealing with subsidized resources in the absence of other policies.
The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions.