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.

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.

Trump Nominates CEQ Lead

On October 19, 2017, in Uncategorized, by timprofeta

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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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.