The Nicholas Institute for Environmental Policy Solutions at Duke University

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As part of the Paris Agreement—a global treaty that aims to limit global warming to well below 2 degrees Celsius above preindustrial levels and to pursue efforts to limit that increase to 1.5 degrees Celsius—China pledged to peak its carbon dioxide emissions by 2030. A new study in the journal Nature Geoscience suggests China’s emissions peaked in 2013 and have declined in each year from 2014 to 2016.

“The decline of Chinese emissions is structural and is likely to be sustained if the growing industrial and energy system transitions continue,” said Dabo Guan, a University of East Anglia climate change economics professor and lead author. “China has increasingly assumed a leadership role in climate-change mitigation.”

The study suggests that slowing economic growth and a decline in the share of coal used for energy has aided in the rapid decrease in China’s rising emissions. These changes in industrial activities and coal use, along with efficiency increases, have roots in the changing structure of China’s economy and in long-term government policies, in particular, creation of China’s nationwide emissions trading scheme.

The policy context and initial program design of that scheme is reviewed by my colleague, Billy Pizer, a faculty fellow at Duke University’s Nicholas Institute for Environmental Policy Solutions, in an article in the journal AEA Papers and Proceedings. It highlights important concerns, discusses possible modifications, and suggests topics for further research.

FERC Rejects PJM Capacity Market Proposals

The Federal Energy Regulatory Commission (FERC), in a 3–2 decision, rejected two proposals filed by PJM as well as a proposal filed by a group of generators operating in PJM’s footprint about how the wholesale electric capacity market should handle state subsidies for power generation. FERC did, however, find that the PJM’s existing capacity market rules are unjust and unreasonable and outlined a framework for a new rule.

PJM, which oversees the grid in parts of the Mid-Atlantic and Midwest, operates a capacity market that allows utilities and other electricity suppliers to procure power to meet predicted demand three years into the future in order to ensure grid reliability. The grid operator and some power producers have argued that subsidized generators are entering into PJM’s capacity market at prices below their actual generation costs, lowering overall market prices and potentially forcing some competitors to shutter their operations.

The order rejects both of PJM’s proposals because FERC found that “they have not been shown to be just and reasonable, and not unduly discriminatory or preferential.” But FERC was “unable to determine, based on the record of either proceeding, the just and reasonable rate to replace the rate in PJM’s Tariff.”

FERC then proposed a framework for a replacement rule—resource offers that are deemed subsidized would be subject to an expanded Minimum Offer Price Rule (MOPR) with few or no exceptions, so as not to artificially lower capacity prices. On the other hand, PJM would have to expand the ability for utilities to purchase less from PJM’s capacity market so they wouldn’t be forced to buy capacity to comply with state policies and then procure a duplicate amount of capacity from PJM’s market.

In PJM’s April filing to FERC, PJM asked FERC to decide between two proposals to deal with the issue of how to address potential pricing impacts of state energy programs in its capacity market and to identify which aspects of the proposals need to be revised. Generators subsequently filed a complaint at FERC, alleging that the PJM capacity rules violate the Federal Power Act and proposing their own solution. But in FERC’s order, filed late on June 29, FERC rejected PJM’s two-part capacity repricing scheme and revisions to the MOPR that aimed to bump up capacity offers into the market from new and existing resources receiving state assistance, subject to certain proposed exemptions. It also rejected the generators’ proposal for a MOPR for a “limited set of existing resources.”

PJM, its stakeholders, and other commenters now have to answer FERC’s questions about how to flesh out FERC’s proposed replacement rule framework. Initial comments are due within 60 days and reply comments are due within 90 days of the publication date of the FERC order in the Federal Register.

Study Zeroes in on Hard-to-Decarbonize Sources

About a quarter of global carbon dioxide emissions from fossil fuels and industrial sources come from hard-to-cut sources, according to a study published in the journal Science.

The authors focused on long-distance shipping and transportation, on cement and steel production, and on provision of a reliable electricity supply, that is, the need, given the variable nature of renewables, for climate-neutral ways to increase output when needed. The demand for these services and products is projected to increase over this century, the study said, allowing absolute emissions from them to grow to equal the current level of global emissions.

“If we want to get to a net zero energy system this century, we really need to be scaling up alternatives now,” said lead author Steven J. Davis of the University of California.

What are those alternatives? Some analyzed by the study are the synthesis of energy-dense hydrogen or ammonia-based fuels for aviation and shipping, new furnace technologies for concrete and steel manufacture, and tools to capture and store hydrocarbon emissions. But deploying these technologies will be costly, say the authors, who also point to another obstacle: the inertia of existing systems and 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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