Wednesday, June 24, 2015

Texas Fights Efforts to Reduce Greenhouse Gas Emissions While Facing Billions of Dollars in Damages From Severe Weather Events

By Amelia Schlusser, Staff Attorney
A boat sits on the dry lake bed of Texas's Lake Travis.
Credit: Erik A. Ellison 2011

The Environmental Protection Agency’s proposed Clean Power Plan calls for states to reduce carbon dioxide emissions from coal-fired power plants by 2030. In Texas, the draft rule directs the state to reduce power-sector emissions by 38% before the rule’s proposed 2030 deadline. EPA determined that Texas could reduce emissions by nearly 20% by switching from coal-fired power to natural gas. To achieve its remaining emissions reductions, EPA recommended that Texas increase coal-plant efficiency rates (cutting emissions by 3.8%), generate power from zero-emitting sources, like renewables (cutting emissions by 9.2%), and increase energy efficiency (cutting emissions by 5.5%). 

Texas, however, opposes the federal government’s efforts to mitigate climate change by reducing power-sector greenhouse gas emissions. In May, Texas Attorney General Ken Paxton announced that he intends to sue the Obama administration over the Clean Power Plan, which EPA is expected to finalize in August of this year. This forthcoming lawsuit will require the state to spend additional taxpayer money on legal challenges against the Obama Administration’s regulations. According to the Texas attorney general’s office, the state has spent more than $850,000 over the past five years challenging EPA air quality regulations and more than $400,000 on challenges to federal climate change regulations.

While the Texas government devotes hundreds of thousands of dollars to lawsuits challenging federal efforts to reduce greenhouse gas emissions, the state is racking up tens of billions of dollars in damages from extreme weather events. From 2011 to 2012, Texas suffered from one of the worst droughts in the state’s history, with total damages estimated between $60 billion and $100 billion, according to LiveScience. Over Memorial Day weekend of this year, Texas experienced record-setting flooding—according to meteorologists, enough rain fell in Texas in May to cover the entire state in eight inches of water. The state is still tallying up the damages from this flooding, which will likely exceed one hundred million dollars. In Houston alone, flood damages are estimated at more than $45 million. According to the Austin Statesman, the flooding caused more than $80 million in damages to public property, and the International Business Times estimated at least $27 million in infrastructure damage statewide.

While individual weather events cannot be directly attributed to climate change, the Intergovernmental Panel on Climate Change (IPCC) concluded that climate change does increase the risk of both floods and droughts. The climate models evaluated by the IPCC consistently projected that precipitation extremes would increase as the climate warms. Over a five-year period, Texas experienced both a 150- to 200-year flood event and one of the worst droughts in the past 500 years. Yet rather than accept and confront the destruction that climate change is inflicting on the state, Texas officials are choosing to spend more money fighting federal efforts to reduce greenhouse gas emissions. Texas has enormous potential to generate electricity from renewable sources—it already leads the nation in installed wind capacity, and the state has access to abundant wind and solar resources. However, instead of promoting policies to increase renewable energy development, the state government is considering policies that would stifle future renewable energy growth. In April, the Texas senate voted in favor of a bill that would eliminate the state’s Renewable Portfolio Standard. It is time for Texas to wake up to the realities of climate change and work to be part of the solution rather than part of the problem.

Monday, June 22, 2015

Popular Bipartisan Support for Federal Renewable Energy Policies

By Nick Lawton, Staff Attorney
A recent study by Cass Sunstein at Harvard Law School, Which Nudges Do People Like?, revealed popular bi-partisan support for hypothetical federal policies that promote adoption of renewable energy. The study focused on “nudges,” or “interventions that preserve freedom of choice but that nonetheless influence people’s decisions.” Professor Sunstein described the study in a recent New York Times op-ed, noting that “most Americans approve of these reforms and want more of them.” For me, the most noteworthy result is that federal interventions to promote utility sales of renewable energy attract strong bipartisan support.

Professor Sunstein’s study examined two closely related renewable energy “nudges” (along with many other topics). The survey first asked whether respondents would support a federal policy to encourage, but not require, electricity providers to automatically enroll customers in a “green” power purchasing program that customers could opt out of. The survey also asked whether respondents would support the federal government requiring electricity providers to adopt the same automatic enrollment in green power purchasing.

A majority of respondents supported both hypothetical policies, although federal encouragement received stronger support than a federal requirement. 72% of respondents favored federal encouragement for utilities to adopt automatic enrollment in green power purchasing, while only 67% favored a federal requirement for the same type of program. Interestingly, majorities of respondents in both parties supported each policy: 82% of Democrats and 61% of Republicans supported federal encouragement, while 79% of Democrats and 51% of Republicans supported a federal requirement.

These findings echo those from a University of Michigan study I blogged about a few weeks ago, which showed strong support for state-level Renewable Portfolio Standards. Together, these studies show strong support for policies to promote renewable energy at both the state level and the federal level. Elected officials should take heed.  

Thursday, June 18, 2015

The Obama Administration Cultivates More than $4 Billion in Clean Energy Investments Over Four-Month Period

By Amelia Schlusser, Staff Attorney

In February of 2015, the Obama Administration announced its Clean Energy Investment Initiative, which aimed to mobilize $2 billion in private-sector investment in clean energy and climate technologies. Earlier this week, the Administration announced that over the last four months it had far exceeded this goal and received commitments for more than $4 billion in clean energy investments. The Administration shared the news at a Clean Energy Investment Summit hosted at the White House on Tuesday, June 16. During the Summit, Vice President Biden highlighted recent public and private sector efforts to expand investment in clean energy and climate change solutions, which include a $500 million investment commitment from the University of California, $500 million from Goldman Sachs, $350 million from the New Zealand Superannuation Fund, $200 million from the Alaska Permanent Fund, and $100 million from TIAA-CREF.

In conjunction with Tuesday’s Summit, the Obama Administration also announced a series of executive actions designed to facilitate clean energy investments. These actions include the launch of a new Clean Energy Impact Investment Center within the Department of Energy. This center will provide the public and mission-driven investors with information on developments in clean energy technologies, and will share relevant research and analysis produced by the Department of Energy and its National Laboratories.

The White House’s announcements illustrate the Obama Administration’s efforts to decrease the renewable energy industry’s reliance on taxpayer-funded subsidies and increase the industry’s access to private-sector capital.  Rather than suggest a lack of public support for renewable energy, the Administration’s focus on private investment relates to the promising economic conditions within the clean energy marketplace. Renewable energy technologies are rapidly approaching cost parity with conventional fossil fuel generation, and even major Wall Street players like Goldman Sachs recognize the investment potential of smart grid and energy storage technologies.

Perhaps more importantly, investors are beginning to view clean energy investments as a hedge against climate change-related investment risks, according to Energy Secretary Ernest Moniz. The Obama Administration recognizes that clean energy will help drive the U.S. transition to a low-carbon economy, and is confident that an influx of private-sector funding will help fuel innovation and technology development within the industry. In a press release announcing Tuesday’s Summit, the White House Press Secretary emphasized the need for private investment in clean energy: “America’s world-class researchers and entrepreneurs are developing the next breakthrough technologies that will transform how we generate, store, and consume energy. We need to continue to invest in innovation to reduce carbon pollution while growing the economy—and creating entirely new industries here in America.” With more than $4 billion committed to date, it seems that the private investment community is finally starting to accept that fossil fuels are exposing our economy to unprecedented risk. Clean energy offers a far better investment for the American environment and economy, and the $4 billion invested over the last four months shows that the American economy is starting to come around to this fact.  

Tuesday, June 16, 2015

Hawaii Heading 100% Renewable

By Nick Lawton, Staff Attorney 

Hawaii has become the first U.S. state to set a goal of developing a 100% renewable power grid. On Monday, June 8, Governor David Ige signed HB 623 into law, directing the state’s utilities to sell only renewable energy by 2045. Hawaii’s new Renewable Portfolio Standard (RPS) is the most ambitious in the nation, and serves as an excellent example for the many states that are already meeting their RPS targets. 

Hawaii is a good proving ground for a fully renewable power grid for several reasons. The state has excellent solar, wind, geothermal, and tidal resources, making the transition to renewable energy technically quite feasible. Additionally, the high cost of imported fossil fuels leads the state to have the nation’s highest energy prices, stimulating demand for renewable energy. Currently, Hawaii spends roughly $5 billion each year on importing fossil fuels to generate electricity. As Governor Ige notes, “making the transition to renewable, indigenous resources for power generation will allow us to keep more of that money at home, thereby improving our economy, environment, and energy security.”

The Hawaiian Electric Companies (HECO), the state’s major electric utility, claims it is backing the new 100% RPS. HECO’s president Alan Oshiman stated that the new RPS represents “the clean energy transformation we all want for Hawaii.” He also noted that the company is working toward “a diverse portfolio of renewable energy resources” and that the proposed merger between HECO and NextEra Energy can help facilitate the transition. However, HECO does not have a spotless history of support for renewable energy. In the past year, it has been responsible for significant delays in residential solar development and has proposed an electricity rate structure that would likely hobble the solar industry. While the utility has since moved to clear the backlog of solar PV systems waiting to connect to the grid, it has done so only at the direction of state regulators.

The state is doing an admirable job of beginning the transition to 100% renewable energy and of helping the state’s main utility understand how it will need to grow and change to serve the new grid. The state’s Public Utilities Commission is contemplating a fundamental restructuring of the state’s utilities, which would change how the utilities will operate and make money. To its credit, HECO “welcome[s] the PUC’s clear direction and roadmap,” according to CEO Dick Rosenblum.

As many other states achieve their RPS targets, they should look to Hawaii for guidance on how to set more ambitious renewable energy goals. Most states are already on track to meet their RPS goals, and many are ahead of schedule. These states should keep a close eye on how the transition goes in Hawaii. Policy tools developed on the islands may be exactly what mainland states need to make their transitions to renewable energy efficient and successful. 

Friday, June 12, 2015

Using Smart Home Technologies to Build a Smarter Grid

By Amelia Schlusser, Staff Attorney

Summer has arrived in the United States, and rising temperatures are causing electricity demand to rise across the nation. U.S. electricity demand typically peaks during the summer months, as homes and businesses rely on energy-intensive air conditioning units to combat rising temperatures.  This increase in energy demand creates challenges for electricity providers, which often must rely on expensive and inefficient “peaking” plants—typically fueled by natural gas—to provide sufficient power to satisfy consumer energy needs.

Electricity users can help to offset the need for back-up peaking power by reducing the amount of energy they consume. However, many consumers may be unable or unwilling to voluntarily reduce consumption during peak demand periods. To motivate consumers to reduce their energy demand during these periods, many utilities are deploying smart grid technologies as components of their demand response programs. Demand response programs encourage electricity consumers to shift or reduce their energy consumption during peak demand periods. Smart grid technologies facilitate demand response by providing consumers with real-time information on their electricity rates and usage, or allowing utilities to directly control certain types of customer load during peak demand periods. Demand response programs and related smart grid investments can reduce electricity rates for participating consumers, and they have the potential to lower costs for all ratepayers by reducing the need for additional peaking generating units that only operate during periods of high demand.

In Illinois, Commonwealth Edison (ComEd) recently announced the launch of an innovative demand response program in partnership with Nest Labs and Comcast’s Xfinity Home program. Under the new program, ComEd is offering customers up to $40 to use connected “smart” thermostats that enable the utility to remotely adjust customers’ thermostat settings during peak demand periods. To participate in the program, customers must first enroll in Nest’s Rush Hour Rewards or Xfinity Home’s Summer Energy Management Program. Xfinity customers are also eligible to receive a free Xfinity Home thermostat when they enroll in the ComEd program.

According to Utility Dive, the program presents a simpler, less expensive opportunity to increase demand response from ComEd’s customers. While the program is a bit less reliable than demand response programs that give utilities direct control over customer appliances, it requires far less participation from ComEd itself, which results in cost savings for the utility and its ratepayers. The utility doesn’t have to install or operate any extra equipment in participants’ homes, and Nest and Comcast are helping to market the program to customers. 

Given the recent proliferation of smart home and smart grid technologies, the partnership between a utility, an internet provider, and a “smart” product manufacturer feels like a logical progression for our evolving electricity sector. These types of corporate relationships should help grid operators integrate renewable energy resources onto the grid, by enabling utilities to balance variable renewable output through adjustments in customer energy use. ComEd’s program relies on smart thermostats, but given the current rate of deployment of “smart” home products, future demand response programs could enable utilities to control other energy-hungry appliances, such as refrigerators, dishwashers, and hot water heaters. To help build a smarter grid, utilities should follow ComEd’s lead and integrate smart home technologies into their demand response programs.

Thursday, June 4, 2015

Renewable Portfolio Standards are Effective and Politically Popular

By Nick Lawton, Staff Attorney

A solid majority of Americans favors government mandates for renewable energy development, according to a new study by the University of Michigan’s National Surveys on Energy and the Environment. The study found that 74% of Americans “agree that state governments should require a set portion of all electricity to come from renewable energy sources such as wind and solar power.” In short, the study reveals that despite the political turmoil around Renewable Portfolio Standards (RPSs), these effective, economically efficient policies enjoy strong support from the American people.

However, many Americans do not actually know what policies are already in place. Of those surveyed, 59% did not know whether their state had an RPS in place, and . of the 41% who claimed knowledge of their state’s policies, “only half answered correctly.” The survey thus reveals a lack of effective communication from governments and the renewable energy industry about existing policies.

The survey also revealed that support for RPSs depends strongly on their perceived costs. In the absence of information about costs, 74% of respondents support RPSs. If respondents were told that RPS policies increase electricity bills by $25 per year, only 58% were in support. And if told that RPS policies increased rates by $50 per year, only 45% were in support. In reality, the average cost premium of RPS policies is roughly $15 per year, and the average utility bill increase from an RPS policy is under 3%, which is the average national rate increase even in states that lack these policies.  Since RPS policies do not raise rates beyond business as usual, a majority should support these policies

This study should also undermine the political campaign against RPSs that is underway in many states—assuming politicians respond to popular will rather than special interests. Kansas recently rescinded its mandatory RPS, instead opting for an aspirational target. The RPS in Texas narrowly survived the legislative session. West Virginia and Ohio repealed and froze their RPS requirements, respectively, in the past year. The movement against RPSs does not, it appear, represent the will of the people.

Success stories around RPSs are mounting as well. A new report from Clean Edge reveals that Iowa, Kansas, and South Dakota generated more than 20% of their energy from wind power in 2014. Each of these states has a RPS, although South Dakota’s is aspirational and Kansas’s just lost its legally binding status. Meanwhile, California became the first state to reach 5% solar power in 2014, also driven by an RPS.

This progress and the University of Michigan survey suggest that effective communication is essential for more renewable power deployment. RPSs clearly work well, but many citizens do not know that they are even in place. Moreover, renewable energy advocates are working against a misinformation campaign. The renewable energy industry’s best bet for improving the situation is effective communication of accurate information.