Tag: FERC

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Companies Look to Swine Biogas as Renewable Fuel Source

The Nicholas Institute for Environmental Policy Solutions at Duke University

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.

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Regional Grid Operators Weigh in on Resilience

The Nicholas Institute for Environmental Policy Solutions at Duke University

Regional grid operators filed comments on efforts to enhance the resilience of the bulk power system in a proceeding initiated by the Federal Energy Regulatory Commission (FERC) after rejecting a Notice of Proposed Rulemaking by U.S. Department of Energy (DOE) Secretary Rick Perry to subsidize coal and nuclear power plants. The comments by the nation’s federally overseen regional transmission organizations and independent system operators (ISOs) came in response to two dozen questions FERC asked about resilience.

The message of operators to FERC: allow them time to develop additional resilience measures and respect their existing efforts aimed at ensuring that grids can cope with man-made and natural disasters that pose a risk of electricity service disruption. None of the operators suggested that resilience requires preservation of uneconomical power plants. All appeared to be open to, in the words of the New York ISO, “additional dialogue regarding concepts for market-based resilience services and practices.”

Nevertheless, the PJM Interconnection filing departed from the other operator filings. In essence, PJM wants FERC to direct operators to update market compensation for power plants to reflect resilience attributes. The request comes amid concerns that PJM’s resilience filing and ongoing price reforms could basically have the same effect as the DOE subsidy proposal rejected by FERC in January—a proposal that would have benefited coal and nuclear generators.

Those concerns were echoed in a “joint statement on power market principles,” released last week by U.S. public power and rural electric co-ops, state utility advocates, wind and solar energy groups, the Natural Resources Defense Council and the American Council on Renewable Energy. The group asked FERC to apply technology-neutral and market-based solutions to the resilience docket.

The Perry proposal and the FERC proceeding it inspired are likely to lead to some kind of change. Last week at CERAWeek in Houston, FERC Chairman Kevin McIntyre said the lack of compensation to power plants for resilience contributions would be of concern to FERC and a particularly complicated element of the proceeding. He also said that “only hypothetically is nothing an option. I will be very surprised if we go through all that process and take no action.”

At the heart of that action could be how FERC defines resilience. In its filing, the California ISO questioned FERC’s working definition of resilience. It wrote that FERC’s reliance order “does not address any potential overlap between resilience and reliability, clearly articulate the differences between the two, state why a new, wholly separate concept is needed, or indicate what specific requirements a resilient system must meet.”

Two of my colleagues at Duke University’s Nicholas Institute for Environmental Policy Solutions made a similar point last month, noting that whether resilience is “a stand-alone concept or just a component of the well-recognized concept of reliability” is a “foundational question”—one that spells the difference between new market and regulatory responses or tweaks to existing reliability mechanisms. They conclude that “A well-functioning market that clearly defines and values the attributes needed for grid reliability and resilience—in a fuel-neutral, technology-neutral fashion—will comply with the law and support both concepts.”

China Unveils Environmental Restructuring Plan

A draft plan, introduced Tuesday, reorganizes China’s government into a State Council composed of 26 ministries and commissions. Compared with the current setup, the number of ministerial-level entities is reduced by eight and that of vice-ministerial-level entities by seven.

One of the changes is renaming the Ministry of Environmental Protection. The new Ministry of Ecological Environment would take over responsibility for climate change policy and become the only entity in charge of policies related to climate change, water resource management, and pollution.

“China’s decision to create a new environment ministry in China, which includes the country’s climate change agenda, is a big shake up in the country but may well be a positive long-term development,” said Jackson Ewing, senior fellow at Duke University’s Nicholas Institute for Environmental Policy Solutions and adjunct associate professor at the Sanford School of Public Policy. “Although the practical impacts of China’s reorganization are not yet apparent, the Ministry for Ecological Environment appears poised to carry a strong mandate to strengthen the country’s air, water, soil and ecological focus.”

Tonny Xie, director of the Secretariat for the Clean Air Alliance of China noted that the change is “ … also a sign that China will continue the unprecedented commitment and investment to improve environmental quality in future, which will generate significant market potential for clean technologies.”

The plan, submitted by the government to parliament is expected to be approved this weekend after deliberations by the National People’s Congress, China’s parliament.

China, the world’s largest polluter, is in the midst of launching a nationwide emissions trading system to set emissions quotas for companies in the power sector. Announced in December, the program could more than double the volume of worldwide carbon dioxide emissions covered by tax or tradable permit policy.

Trump Fires Tillerson, Nominates New Secretary of State

President Donald Trump on Tuesday announced the exit of Secretary of State Rex Tillerson and the nomination of Mike Pompeo, the present director of the CIA, to replace him.

“Rex and I have been talking about this for a long time. We got along actually quite well, but we disagreed on things,” Trump said. “When you look at the Iran deal, I think it’s terrible, I guess he thought it was OK … So we were not really thinking the same. With Mike Pompeo, we have a very similar thought process. I think it’s going to go very well.”

Tillerson stood as a lonely voice in the Trump administration urging the president not to withdraw from the Paris Agreement, a global treaty that aims to limit global warming to well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit that increase to 1.5 degrees Celsius. But Trump announced last year that the United States would be the only nation in the world not party to the agreement, though it cannot formally withdraw until 2020.

As a former Congressman, Pompeo described the new 2015 Paris Agreement as a “costly burden” to the United States. He noted then that “Congress must also do all in our power to fight against this damaging climate change proposal and pursue policies that support American energy, create new jobs and power our economy.”

Pompeo will appear before the Senate Foreign Relations Committee for his confirmation hearing in April, but his path to confirmation is uncertain.

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.

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Complicated Economics Challenging Nuclear

Duke University
The Nicholas Institute for Environmental Policy Solutions at Duke University

Speaking at the International Petroleum Week conference in London on Wednesday, International Energy Agency (IEA) Executive Director Fatih Birol voiced concerns that the United States and Europe aren’t investing enough in nuclear power, while China is charging ahead.

“China is coming back strong. Today there are about 60 nuclear power plants under construction and more than one third of them are in China,” said Birol, noting that U.S. leadership in nuclear power is threatened by two trends, few additions to nuclear capacity and no lifetime extensions for existing plants.

In The Conversation, I write about how policymakers must address increasingly precarious economics of nuclear power if it is to be part of a U.S. climate change strategy over the next century.

Many experts predict that Vogtle—now the only large-scale nuclear construction underway in the United States—will be the country’s last commissioned traditional light-water reactor. According to the Department of Energy, the cost of generating electricity from newly constructed nuclear plants is almost double that from a new natural gas combined-cycle plant.

Natural gas combined-cycle plants aren’t just outcompeting nuclear power on price. They also give power system operators flexibility to adjust quickly to the ebbs and flows of intermittent renewable sources, such as wind and solar power. Nuclear plants are designed to run more than 90 percent of the time, but they can’t ramp up or down on short notice.

It is hard to make a business case for building new nuclear plants, even in regulated states like Georgia and South Carolina, where utilities are allowed to recover construction costs from their customers. In deregulated Northeast and Midwest power markets, where generators compete to deliver electricity at the lowest cost, no new nuclear unit has been permitted for construction since 1977.

Many analyses suggest that nuclear generation is essential for reducing U.S. carbon emissions. In late 2016, the Obama administration published a Mid-Century Strategy for Deep Decarbonization, designed to reduce U.S. greenhouse gas emissions 80 percent or more below 2005 levels by 2050. Every scenario called for expanding nuclear power. A 2016 study by the Rhodium Group, an international consulting company, projected that if all “at risk” U.S. nuclear plants retire by 2030, greenhouse gas emissions from the U.S. power sector will double from 2020 to 2030.

What’s the best way to resolve this tension between nuclear power’s failing market prospects and its importance to U.S. climate strategy? The Vogtle decision offers some lessons and demonstrates how proactive and aggressive strategies will be necessary to maintain nuclear power’s role in the electric grid and to avoid opening a gaping hole in U.S. climate change strategy.

FERC Attempts to Boost Grid Resilience with New Rules on Electric Storage Resources

In Utility Dive, Norman Bay, former chairman of the Federal Energy Regulatory Commission (FERC) and a senior fellow at Duke University, wrote that utilities and green groups can advance each other’s aims “if the power industry commits to an even cleaner grid in exchange for support from environmentalists on electrification.” Utilities need electrification to counter flat demand, Bay said, and environmentalists seek investments in technologies for a cleaner grid.

FERC may have just facilitated investments in one such “win-win” technology: energy storage. Last week FERC members unanimously approved rules to remove barriers to batteries and other storage resources in U.S. power markets, a potential game-changer for integration of renewables onto the grid.

FERC directed the regional transmission organizations (RTOs) and independent system operators (ISOs) that run wholesale electricity markets to establish market rules that “properly recognize the physical and operational characteristics of electric storage resources” after finding in November 2016 that existing market rules created barriers to entry for those resources.

The new rules will “enhance competition and promote greater efficiency in the nation’s electric wholesale markets, and will help support the resilience of the bulk power system,” FERC said.

Under the rules, grid operators can use technologies such as batteries and flywheel systems to dispatch power, to set energy prices, and to offer capacity, energy, and ancillary services.

Commissioner Cheryl LaFleur called storage a “Swiss army knife” because of its capacity to provide energy alongside variable renewable generation, to regulate frequency, and to help defer distribution and transmission needs.

The new rules take effect 90 days after publication in the Federal Register. At that point, RTOs and ISOs have 270 days to provide compliance findings and then one year to implement tariff revisions.

Judge Orders DOE to Implement Energy Efficiency Standards

A federal judge ordered the Trump administration to put into effect energy efficiency standards adopted in the last days of the Obama administration. Last week’s ruling arose out of two lawsuits, one filed by 11 states and the other by environmental groups. The U.S. Department of Energy (DOE) now has 28 days to publish the standards in the Federal Register, which would make them legally enforceable.

The standards languished after the Trump administration failed to publish final efficiency standard rules. U.S. District Judge Vince Chhabria said in his ruling that the DOE’s failure to publish the standards “is a violation of the department’s duties under the Energy Policy and Conservation Act.”

Chhabria said he would consider putting his ruling on hold if it was appealed by the DOE, which said it was “looking into next steps.”

The states in the suit (California, Connecticut, Illinois, Maine, Maryland, Massachusetts, New York, Pennsylvania, Vermont, Oregon and Washington) argued that the standards reduce greenhouse gas emissions and conserve enough energy to power some 19 million households for a year.

The new standards relate to appliances such as commercial packaged boilers as well as to portable air conditioners, air compressors, and “uninterruptible power supplies,” all three of which, according to the states’ lawsuit, lack a federal energy standard.

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.

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EIA: Coal-Fired Electricity Generation, Coal Production to Decrease in 2018

The Nicholas Institute for Environmental Policy Solutions at Duke University

A near record amount of coal-fired electricity is poised to go offline this year, according to recently released data from the U.S. Energy Information Administration (EIA). Set to retire in the United States this year are some 13 gigawatts (GW) at more than a dozen units—that’s an amount second only to the nearly 15 GW of coal power shut down in 2015. The falling fortunes of coal are also evident in the EIA’s projections for its production: a decline from 773 million short tons last year to 759 million in 2018 and 741 million in 2019. By contrast, natural gas production is expected to match a record set in 1970.

According to the EIA’s Short-Term Energy Outlook, coal’s share of the electricity generation mix, which only a decade ago was close to 50 percent, is projected to fall below 30 percent this year. The primary reason? Cheap natural gas, which this year could see the largest single-year increase since 2004 with the addition of roughly 20 GW of new natural gas-fired power generation. The EIA expects these trends to continue in 2019, when it projects that gas-fired plants will generate 34 percent of the country’s electricity and coal, just 28 percent.

Inexpensive and plentiful natural gas is not the only factor influencing coal plant closures. Other factors, according to the EIA, are plant age and size—most coal plants retired since 2008 have been older and smaller than their competition—changes in regional electricity use, federal or state policies that affect plant operation, state policies that require or encourage the use of certain fuels, and improving competitive generation technologies.

Other EIA forecasts for 2018: nuclear power will provide 20 percent of U.S. electricity, non-hydropower renewables, nearly 10 percent; and hydropower, slightly less than 7 percent. U.S. wind power generation capacity will rise to 96 GW, up from about 88 GW in 2017, while solar power generation capacity will hit 50 GW, up from 43 GW last year.

Chatterjee, LaFleur Discuss FERC Order

The U.S. Federal Energy Regulatory Commission’s (FERC) Neil Chatterjee said Tuesday that a new FERC investigation into grid resilience could take longer than the 90-day timeframe established by regulators last week when they unanimously rejected a Notice of Proposed Rulemaking from the Department of Energy (DOE) to change its rules to help coal and nuclear plants in the electricity markets FERC oversees.

FERC gave regional grid operators 60 days to detail how they could enhance grid resilience, after which other “interested entities” will have 30 days to reply—considerably faster than most major market reform discussions at FERC.

“One of the reasons I thought the record warranted the short-term [coal and nuclear payments] is … it’s going to take time to sort through this,” Chatterjee said during a panel discussion hosted by the Bipartisan Policy Center where he and FERC Commissioner Cheryl LaFleur discussed FERC’s Jan. 9 ruling as well as previewed the docket that the panel created to investigate regional transmission organizations (RTOs’) resilience practices. “I am under no illusion that this process will end in 90 days.”

Both Chatterjee and LaFleur were reluctant to prejudge the outcome of the proceeding or to speculate on the kind of responses that RTOs will give, but they stressed that they will continue to consider the country as a whole in making decisions to improve resiliency and reliability in the power sector. (subscription)

“We’ll see what comes forward in the docket,” said LaFleur, noting that it is possible that different proposals could come out of the different regions, which have unique challenges.

As Public Hearings Begin, Governors Voice Opposition to Offshore Drilling Plan

Ever since the Trump administration revealed a draft five-year plan that would expand oil drilling to previously protected areas in the Atlantic, Pacific and Arctic oceans, governors of nearly every state on those seaboards—including South Carolina, Rhode Island, Oregon, California, Washington, New York, New Jersey, Delaware and North Carolina—have expressed opposition. Under the proposed plan, more than 90 percent of the continental shelf would be available for drilling rights and only one out of 26 planning areas across the three oceans and the Gulf of Mexico would be entirely off limits to oil drilling.

U.S. Department of the Interior Secretary Ryan Zinke has been in talks with many of the coastal state governors since he agreed to exclude Florida from the plan days after its release. Governors and lawmakers have sent letters pointing to the importance of tourism as a reason to exclude their states from the plan—the tact taken by Florida’s governor.

“The long-term health of New York’s economy is inextricably linked to protecting our ocean resources,” New York Gov. Andrew Cuomo wrote in a letter to Zinke. “Much like Florida, New York’s ocean coast is unique and plays a vital role in our economy.”

Maine’s Gov. Paul LePage and other Gulf Coast governors who already have drilling off their shores are among those open to new exploration.

The proposal presently includes 47 lease sales from 2019 to 2024 in 25 of the nation’s 26 offshore planning areas. Among them: 19 sales off the coast of Alaska, 12 in the Gulf of Mexico, 9 in the Atlantic, and 7 in the Pacific.

This week, the public also began weighing in during the first of several meetings planned in the capitals of affected states.

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.

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FERC Rejects Proposed Grid Resiliency Rule, Issues New Order

The Nicholas Institute for Environmental Policy Solutions at Duke University

The five members of the U.S. Federal Energy Regulatory Commission (FERC) on Monday unanimously rejected a Notice of Proposed Rulemaking from the Department of Energy (DOE) to change its rules to help coal and nuclear plants in the electricity markets FERC oversees (subscription). Instead it opened a new proceeding in which it calls on regional transmission organizations (RTOs) and independent system operators (ISOs) to submit information to FERC on certain resilience issues and concerns within 60 days (subscription).

Since Sept. 28, when DOE Secretary Rick Perry proposed mandating that plants capable of storing 90 days of fuel supplies at their sites get increased payments for providing “resiliency” services to the grid, a broad array of power sector stakeholders have raised concerns about the legality and vagueness of the proposed rulemaking and the short timetable to implement it.

In voting against the DOE proposal, FERC found that neither the proposal nor comments on it revealed a problem with existing market rules.

“While some commenters allege grid resilience or reliability issues due to potential retirements of particular resources, we find that these assertions do not demonstrate the unjustness or unreasonableness of the existing RTO/ISO tariffs,” FERC wrote. “In addition, the extensive comments submitted by the RTOs/ISOs do not point to any past or planned generator retirements that may be a threat to grid resilience.”

FERC went on to note that even the DOE’s own grid reliability study, cited to justify the DOE proposal, “concluded that changes in the generation mix, including the retirement of coal and nuclear generators, have not diminished the grid’s reliability or otherwise posed a significant and immediate threat to the resilience of the electric grid.”

FERC’s Jan. 8 order means electric grid operators must answer questions from the commission about how they define resilience, what they do to ensure it and how they evaluate threats to it.

Although FERC could issue a new order after receiving that information, The Washington Post suggests that the language in the current order would support the trend toward free competitive electricity markets.

One issue not raised in the debate, which centered on market concerns, was changes to the electric system to reduce emissions of carbon dioxide. Researchers at Resources for the Future projected significant emissions increases and negative effects on social welfare had the DOE Notice of Proposed Rulemaking gone forward.

Trump Administration Unveils Plan to Vastly Increase Oil Drilling Off U.S. Shores

The Trump administration revealed a draft plan that would greatly expand oil drilling to areas in the Atlantic, Pacific and Arctic oceans that were previously protected.

“This is a start on looking at American energy dominance,” said U.S. Department of the Interior Secretary Ryan Zinke, adding that the proposal would make the United States “the strongest energy superpower” (subscription).

Previous administrations had largely limited offshore oil and gas production to the Gulf of Mexico, but Zinke’s proposal would make more than 90 percent of the Outer Continental Shelf open for leasing. His proposal includes 47 lease sales from 2019 to 2024 in 25 of the nation’s 26 offshore planning areas. Among them: 19 sales off the coast of Alaska, 12 in the Gulf of Mexico, 9 in the Atlantic, and 7 in the Pacific (some off the coast of California).

“Today’s announcement lays out the options that are on the table and starts a lengthy and robust public comment period,” Zinke said (subscription). “Just like with mining, not all areas are appropriate for offshore drilling, and we will take that into consideration in the coming weeks.”

The Bureau of Ocean Energy Management, which would oversee the leasing process, will hold a 60-day public comment period on the plan.

Although embraced by oil and gas industry groups, the proposed plan is expected to face opposition from governors of many coastal states and many U.S. lawmakers.

On Tuesday, a group of 37 senators called the proposal “the height of irresponsibility” (subscription).

“This draft proposal is an ill-advised effort to circumvent public and scientific input, and we object to sacrificing public trust, community safety, and economic security for the interests of the oil industry,” the senators wrote in a letter to Zinke.

The proposal follows an April 2017 executive order by President Donald Trump requiring that the Interior Department reconsider former President Barack Obama’s five-year offshore drilling plan.

If finalized, the proposal would reverse Obama’s ban on drilling on the Atlantic coast and in the Arctic, but, in addition to Florida waters which Zinke this week closed to drilling, it would keep off-limits the waters near Alaska’s far-western Aleutian Islands, which were protected by former President George W. Bush.

People’s Hearings on Clean Power Plan Begin

Several “people’s hearings” planned by states to discuss the U.S. Environmental Protection Agency’s (EPA) repeal of the clean Power Plan took place in New York, Maryland and Delaware this week. Proposed to be repealed in October, the rule aimed to set state-by-state carbon reduction targets for power plants.

The hearings follow an announcement last month by the EPA that it will hold three more hearings on its proposal to repeal the Clean Power Plan—in California, Wyoming and Missouri—after criticism for not conducting a transparent review process and previously holding only one public hearing over two days in Charleston, West Virginia.

Transcripts and comments associated with the hearings will be sent to the EPA as part of its rulemaking—EPA is presently taking input on what should replace the rule. In an interview with Reuters, EPA Administrator Scott Pruitt listed replacement of the Clean Power Plan as one of his top 2018 priorities—alongside plans to greatly reduce EPA staff and rewrite the Waters of the United States rule.

“A proposed rule will come out this year and then a final rule will come out sometime this year,” Pruitt said of the Clean Power Plan’s replacement.

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.

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Trump Nominates CEQ Lead

The Nicholas Institute for Environmental Policy Solutions at Duke University

President Donald Trump last week nominated Kathleen Hartnett White, a former Texas Commission on Environmental Quality (TCEQ) commissioner, to serve as head of the Council on Environmental Quality. If confirmed, White who is presently a distinguished senior fellow in residence and director of the Armstrong Center for Energy and Environment at the Texas Public Policy Foundation, would head a key White House office that coordinates environmental and energy policies across the government.

Prior to Governor Rick Perry’s appointment of White to the TCEQ in 2001, she served as then Gov. George Bush’s appointee to the Texas Water Development Board. She has served on the Texas Economic Development Commission and the Environmental Flows Study Commission and sits on the editorial board of the Journal of Regulatory Science, the Texas Emission Reduction Advisory Board, and the Texas Water Foundation.

Nomination of White, originally a contender to head the U.S. Environmental Protection Agency (EPA), seems to follow the pattern of other Trump cabinet members: she denies climate change and has questioned the findings of the United Nations Intergovernmental Panel on Climate Change.

At the Texas Public Policy Foundation, White works on the Fueling Freedom project, which seeks to “explain the forgotten moral case for fossil fuels.” In a Q&A with the Orlando Sentinel she discussed the superiority of fossil fuels over renewables.

“At this point in time, there are no alternative energy sources capable of providing the endless goods and services that fossil fuels now handily provide,” said White. “Our abundant, concentrated, affordable, versatile, reliable, storable and controllable energy from fossil fuels is far superior to renewable energy . . . Adding more and more variable, uncontrollable renewables to the electric grid will serve only to necessitate backup power from reliable coal or natural gas to stabilize the mix.”

FERC Chairman Speaks on Department of Energy Directive

Department of Energy (DOE) Secretary Rick Perry has received criticism from lawmakers and Federal Energy Regulatory Commission (FERC) staff following last month’s proposal that FERC establish reliability and resilience pricing for certain power plants in regional trading organization markets.

“This proposal is just a first step in seeking to ensure that we truly have an energy policy that first and foremost protects the interests of the American people,” Perry told the House Energy Subcommittee about the change that would mandate increased payments for plants capable of storing 90 days of fuel supplies. “Following the recommendations of the Staff Report, the department is continuing to study these issues and, if, necessary, will be prepared to make a series of additional recommendations to improve the reliability and resiliency of the grid.”

Neil Chatterjee, acting FERC chairman, pledged not to “blow up the market” as FERC acts in the prescribed 60-day window on the proposed rule, which would benefit coal and nuclear plants and which some have said could upset decades of electricity market reform.

Chatterjee suggested to GreenWire that FERC could do an advance notice of proposed rulemaking or a notice of proposed rulemaking superseding the DOE proposal. FERC could also extend the comment period, convene technical conferences, or initiate Federal Power Act Section 206 review proceedings.

“There are many tools available to the commission to act within 60 days to address and put a process in place … determining whether or not there are attributes that need to be properly valued, in a legally defensible manner, that doesn’t blow up markets,” Chatterjee said.

The proposal adds complexity to ongoing discussions of whether and how FERC-regulated wholesale electricity markets should evolve in light of a changing generation mix and evolving state policy objectives. In recent years, some states have sought to subsidize some generation sources to meet their particular energy and environmental goals, raising questions about what such policies mean for FERC-regulated wholesale markets. Last month the Nicholas Institute for Environmental Policy Solutions hosted a workshop examining challenges and recent proposals for harmonizing state policies and regional market design in the PJM region.

Atlantic Coast, Mountain Valley Pipelines Approved

FERC has issued separate orders granting approval permits for the Mountain Valley Pipeline and the Atlantic Coast Pipeline in two 2–1 votes. The two projects are among a collection of pipeline projects proposed or under construction that are intended to take advantage of the Marcellus gas boom, but they are not without critics.

FERC rejected calls for more public comment on the proposals, writing “all interested parties have been afforded a full complete opportunity to present their views to the commission.”

The Mountain Valley Pipeline would run through West Virginia and is proposed to span 303 miles and cost $3.7 billion.

The Atlantic Coast Pipeline, a $5 billion project by Duke Energy and Dominion Energy, will carry gas through West Virginia, Virginia, and eight counties in eastern North Carolina, crossing 600 miles of the Southeast to transport about 1.5 billion cubic feet a day of natural gas to customers in North Carolina and Virginia.

“Natural gas from the pipeline will increase consumer savings, enhance reliability, enable more renewable energy and provide a powerful engine for statewide economic development and job growth,” said Duke Energy CEO Lynn Good. “It also supports our plan to produce cleaner energy through newer, highly-efficient natural gas plants and allows more capacity for Piedmont Natural Gas to serve new homes and businesses.”

Cheryl LaFleur was the dissenter, highlighting the projects’ potential environmental impacts.

“I recognize that the Commission’s actions today are the culmination of years of work in the pre-filing, application, and review processes, and I take seriously my decision to dissent,” LaFleur wrote in a statement. “I acknowledge that if the applicants were to adopt an alternative solution, it would require considerable additional work and time. However, the decision before the Commission is simply whether to approve or reject these projects, which will be in place for decades. Given the environmental impacts and possible superior alternatives, approving these two pipeline projects on this record is not a decision I can support.”

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.

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Renewables and Grid Reliability Focus of Court Ruling, Report

The Nicholas Institute for Environmental Policy Solutions at Duke University

This week the U.S. Court of Appeals for the District of Columbia Circuit unanimously upheld the Federal Energy Regulatory Commission’s (FERC) approval of new performance rules for power plants, rejecting environmentalists’ arguments that the rules discriminate against intermittent energy sources such as wind and solar (subscription). The court said FERC acted in a reasonable way when it allowed the PJM, the independent transmission operator in 13 Mid-Atlantic and Midwestern states and Washington, D.C., to charge penalties to power plants that clear its capacity market but fail to provide continuous capacity. The rule change was prompted by the PJM’s grid reliability concerns in the wake of the East’s unusually cold winter in 2014, when a significant amount of natural gas generation became unavailable.

Concerns about grid reliability were also the subject of a new report, published in anticipation of a forthcoming study ordered by U.S. Department of Energy (DOE) Secretary Rick Perry on the electricity grid. The DOE study is planned to be released next month and is feared by environmentalists to undercut support for renewables (subscription).

The report released this week by consulting firm Analysis Group concluded that the addition of new natural gas-fired units and renewable energy capacity are increasing the nation’s electric reliability, not undermining it. According to the report, commissioned by the Advanced Energy Economy Institute and the American Wind Energy Association, efficient natural gas-fired generation and renewables increase reliability by increasing electric system diversity.

In calling for the grid study, Perry had suggested that renewable energy subsidies and related policies were jeopardizing reliability by decreasing the financial viability of baseload resources such as coal plants. The Analysis Group study said such policies were “a distant second to market fundamentals in causing financial pressure” on coal plants without long-term contracts. The biggest contributors to coal plants’ inability to compete, the report found, are new and efficient natural gas plants, low natural gas prices and flat electricity demand.

Moreover, the analysis challenged Perry’s statement, in the April 14 memo ordering the grid study, that “Baseload power is necessary to a well-functioning electric grid.” The report authors found that fears about the risks renewables pose to “baseload generation” don’t reflect understanding of a properly functioning electricity grid. They said “‘baseload resources’ is an outdated term in today’s electric system,” which seeks a combination of generation assets and grid-service technologies to allow for continuous power delivery.

Or as report co-author Susan Tierney, an Analysis Group senior advisor (and Nicholas Institute for Environmental Policy Solutions Advisory Board member), summed it up, “The transformation now under way in the electric power system is driven primarily by market forces. . . The result is a more diverse set of energy resources on the grid that is being capably managed in a way that provides reliable electric power.”

At a DOE budget hearing on Tuesday, Perry skirted details on his forthcoming policy declaration on baseload power and grid security.

Asked about his grid report, Perry said electric power security “requires a baseload capability that can run 24/7,” adding that the administration supports an “all of the above” approach to energy and that it is “[n]ot trying to pick winners and losers, but let the facts fall where they may” (subscription).

DOE Secretary Disputes Core Climate Science Finding

Department of Energy (DOE) head Rick Perry denied on Monday that carbon dioxide emissions from human activities are the main driver of the earth’s record-setting warming. Instead, Perry said, the driver is most likely “the ocean waters and this environment that we live in.”

“The idea the science is somehow settled, and if you don’t believe it’s settled you’re somehow or another a Neanderthal, that is so inappropriate from my perspective,” he said. “If you’re going to be a wise intellectual person, being a skeptic about some of these issues is quite all right.”

Those comments came a week after the DOE confirmed it was shuttering its international climate office and just days before Perry began defending to Congress the agency’s $28 billion budget request, which would slash many clean-energy programs, make a 17 percent cut in DOE’s Office of Science, and reduce by more than half research and development funding at the Office of Fossil Energy, which supports carbon capture and sequestration technology.

Oil Majors Sign on to Carbon Tax Proposal

Nearly a dozen multinational corporations, including oil giants Exxon and Shell, on Tuesday backed a plan from senior Republican statesmen to replace the Obama administration’s greenhouse gas regulations with a revenue-neutral carbon tax—that is, one that gives revenue directly back to citizens—a concept popular with economists. In a newspaper ad, the companies called for a “consensus climate solution that bridges partisan divides, strengthens our economy and protects our shared environment.” Exxon and the others were listed as founding members of the plan, along with the green groups Conservation International and the Nature Conservancy.

The proposal calls for a rising tax, starting at $40 for every ton of carbon dioxide pollution from fossil fuels, and a charge on imports in exchange for the Environmental Protection Agency being stripped of most powers to issue new emissions control regulations and repeal of the Clean Power Plan. Its proponents say this approach would create deeper emissions cuts than regulations—more than enough to meet the U.S. pledge under the Paris Agreement on global warming—and that in the first year the average family of four would receive approximately $2,000 as a carbon dividend.

The proposal was put forward by the Climate Leadership Council in February as part of a “free-market, limited government” response to climate change. It would require action from Congress, but the GOP, which controls both chambers, has shown no indication it would take it up. In fact, the House last year passed a nonbinding resolution—supported by every Republican member—to denounce a potential carbon tax.