State of Washington Takes Executive Action to Regulate Carbon Emissions From Largest Polluters

By Ed Jewell, Energy Fellow

Photo Credit: National Renewable Energy Laboratory

The Washington Department of Ecology recently finalized regulations that place limits on the amount of greenhouse gases (GHGs) that can be produced by the most GHG-intensive industries in the state of Washington. The Clean Air Rule, as the regulations are known (hereinafter “the Rule”), covers entities that emitted an average of 100,000 metric tons or more of carbon pollution annually over the baseline period of 2012–2016. Covered entities will be required to lower their emissions by an average of 1.7% per year over three-year compliance periods. By 2035, the Rule aims to achieve carbon emission levels 25% below 1990 levels. The Rule has drawn criticism from both industry groups and environmental groups for diametrically opposite reasons.

Climate activists, such as the youth and legal team at Our Children’s Trust (OCT), who have filed numerous lawsuits in federal and state courts around the country asserting that a stable climate is a fundamental human right, among other legal claims, are unhappy with what they see as a lack of ambition in the Clean Air Rule. They insist, for good reason, that the agency’s actions must be aggressive enough to putthe state on a path to 8% annual reductions in GHG emissions, the rate that the latest and best available climate science says is required for humanity to have a decent shot at maintaining stable ecological systems on Earth. Meanwhile, industry groups have already filed suit against implementation of the Rule, claiming that the Rule violates the dormant Commerce Clause, regulates extraterritorially, and unduly burdens interstate commerce.

The Rule is set to go into effect on Oct. 17, 2016 and will apply to the state’s 24 largest emitters. This number is likely to grow as the cap drops 5,000 metric tons each year beginning in 2020. Entities covered by the rule include natural gas distributors, petroleum fuel producers and importers, power plants, metal manufacturers, and waste facilities. The Rule contains special provisions for business sectors that the Department of Ecology determines to be vulnerable to out-of-state competition, such as pulp and cement manufacturers. Businesses in such industries are deemed “trade-exposed” and given leeway under the plan in order to prevent leakage (the flight of carbon polluters across state lines to avoid pollution regulation).

The Rule gives trade-exposed businesses an extra three years before they must be in compliance with emission standards. Additionally, trade-exposed businesses can choose to allow the Department of Ecology to set individual production-based emissions targets specifically for their businesses based on how they compare to others in their industry.

The Rule is an executive action under the authority of Washington’s Clean Air Act, and is quite clearly a political compromise. Governor Jay Inslee was not able to win legislative support for a full-fledged cap-and-trade program that would have established a cap on overall emissions. Concurrent to Gov. Inslee’s failure to gain a legislative majority for cap-and-trade, the legal team for Our Children’s Trust won a court decision last April in King County Superior Court that affirmatively declared that the Department of Ecology has a “duty to engage in rulemaking to reduce greenhouse gas emissions in Washington” and that it “shall issue the rule by the end of calendar year 2016.” The order contains strong language about the dangers of climate change and the duties of the Department of Ecology, but because of separation of powers doctrines inherent in the U.S. legal system, stops short of telling the agency how it must write the rules.

Rather than a full-blown cap-and-trade program, the Clean Air Rule instead takes a more streamlined approach and puts an individual cap on each of the state’s largest emitters. The covered sources can still buy and sell emission reduction credits from one another, but there will not be a central market to trade allowances, nor an auction of allowances by the state. The state will, however, maintain a registry of emission allowance transactions so as to ensure integrity in the trading system. Because the rule does not establish a state-run public auction of emission allowances, the rule avoids many of the complexities and administrative burdens associated with a full-on cap-and-trade program.

The Clean Air Rule is designed to help the state achieve and even surpass compliance with the EPA’s Clean Power Plan. The Clean Air Rule goes beyond the requirements of the Clean Power Plan in a few key respects. First, it goes into effect in 2017, whereas the CPP, if upheld against legal challenges, will go into effect in 2022 at the earliest. Second, the Washington Clean Air Rule possibly reaches a broader cross-section of the economy than will EPA’s CPP, which only directly targets emissions from power plants (though states can choose how to reduce GHG emissions across their respective economies). Finally, the GHG emission cuts mandated by the Rule are deeper than the cuts mandated by the CPP.

If Washington chooses a rate of emissions compliance path for the CPP, the average rate of Washington’s GHG emissions (represented in pounds of CO₂ per megawatt-hour, or lbs. CO₂/MWh) must fall from its current level of 1,566 lbs. CO₂/MWh to 983 lbs. CO₂/MWh—a 37.2% emissions rate reduction by 2030 compared to Washington’s 2005–2012 baseline. If Washington chooses a mass-based compliance path for the CPP, its overall CO₂ emissions must drop from 15,237,542 short tons to 10,739,172 short tons, a 30% drop over the state’s 2005–2012 baseline. Each state may decide whether it wants to be subject to the mass-based or the rate-based limit under the CPP, or alternatively take no action and be subject to a federal implementation plan dictated by the EPA. Under the Clean Air Rule, Washington mandates that each individual covered entity reduce GHG emissions by 25% below 1990 levels by 2035 (or purchase compliance credits equal to that amount of emissions reductions).

If the Clean Power Plan is upheld in court and goes into effect, Washington’s Clean Air Rule contains a provision that specifies that it will no longer apply to power plants in the state. Power plants will be subject only to the federal regulation and its lower emission targets. According to the Department of Ecology’s air quality program manager, the nine baseload power plants that are covered under the CPP make up only about six percent of Washington’s emissions, highlighting the important role that industry in general—and not just the power generation sector—will have in fighting climate change.

While the Clean Air Rule does not give climate activists everything they were looking for, it is a step in the right direction. It is a program that can be built upon in the future. There is much groundwork that needs to be laid in terms of building institutional capacity and political will to regulate GHG emissions, and the Rule helps to further that process. Additionally, the severely entrenched opposition to GHG regulation from industry makes immediate transformative change politically untenable.

Incremental changes, such as the Clean Air Rule and even the Clean Power Plan, which contain the seeds of transformative action but are not by themselves revolutionary, are important pieces that must be put into place in order to create a comprehensive framework for mitigating GHG emissions. While those of us who are deeply concerned by the threat of climate change would like to see all the change happen at once, the nature of the political and economic beast demands that we will have to continue to rack up small but meaningful (and hard fought) victories such as the Clean Air Rule and the Clean Power Plan. With continued pressure on officials, advocacy (and increasingly, defense) in the courts, and refinement of programs, there is hope that such incremental changes will add up to transformative change before the science and physics of climate change slam the door shut on the hope of human civilization living harmoniously within ecological limits.  

The Path of Unprecedented and Unusual Occurrences: The Clean Power Plan Goes to Court

By Edward Jewell, Energy Fellow

Credit: Energy.gov

On Tuesday, September 27, the U.S. government will defend EPA’s Clean Power Plan (CPP) in front of an en banc panel of judges at the U.S. Court of Appeals for the District of Columbia. The CPP regulates the amount of carbon emissions that a state’s energy generation sector can emit into the atmosphere, and is considered the signature component of President Obama’s domestic efforts to mitigate climate change. It is under legal attack from 27 states and industry representatives (referred to herein as petitioners).

Tuesday will be the first time that a court will hear the merits of the petitioners’ case, West Virginia v. U.S. Envt’l Prot. Agency, but the CPP has already accumulated a lengthy and unique procedural history. This blog post will provide a brief primer on the legal drama thus far.

The first chapter in the CPP’s legal saga took place before EPA had even finalized the rule establishing the CPP. Despite clear statutory text in the Administrative Procedure Act stating that there must be a final agency action before a suit can be brought in federal court to challenge an agency action, 12 states and industry representatives sued on the proposed rule. Petitioners argued that due to the long planning time inherent in the electricity sector, states would have to start taking actions to comply with the proposed rule immediately. Therefore, they argued, they ought to be allowed to sue on the proposed rule. The D.C. Circuit readily denied this longshot (borderline superfluous) argument.

As soon as the final rule was released, petitioners again filed suit. Petitioners asked the D.C. Circuit to halt implementation of the CPP by granting a stay, but the D.C. Circuit denied the motion. However, as Staff Attorney Amelia Schlusser blogged about at the time, the U.S. Supreme Court (SCOTUS) itself stepped in to put a stay on the implementation of the CPP. Chief Justice Roberts and Justices Scalia, Thomas, Alito, and Kennedy voted to enjoin implementation of the rule pending disposition by the Supreme Court or denial of cert. This move was unprecedented and was also one of Justice Scalia’s last judicial actions before his death. His absence from the SCOTUS bench certainly alters the complexion of the case.

After SCOTUS issued the stay, the D.C. Circuit Court of Appeals decided to go straight to an en banc panel rather than the usual three judge panel, meaning that all judges on the D.C. Circuit would hear the case. Staff Attorney Amelia Schlusser covered this development here.

Until just this week (mere days before oral argument) it appeared that two of the twelve D.C. Circuit judges, including SCOTUS nominee Merrick Garland, were not going to hear the case, making the CPP’s en banc panel a nine-judge panel. However, continuing the theme of legal twists and turns that this case has taken before even reaching oral arguments on the merits, Judge Pillard, who did not participate in the court’s announcement of an en banc hearing and was therefore considered unlikely to sit for the case, was added to the panel. Thus, the panel (as it is currently constituted) sits at ten judges.

The three-judge panel initially scheduled to hear the case was considered by most observers to be an advantageous draw for the future of the CPP because two of the three judges were Democratic appointees. With the nine-judge panel, five judges were Democratic appointees and four were Republican appointees, more or less maintaining the ideological balance of the three-judge panel. Judge Pillard, however, is an Obama appointee, and thus the panel now sits at six Democratic and four Republican appointees. If you consider the party that appoints a judge to be a decent proxy for determining a judge’s ideology, then the panel appears favorable to the government.

Regardless of the makeup, the ten-judge en banc panel will certainly change the dynamics of the courtroom and how the case will be argued. With ten judges instead of three, advocates will be less able to target their arguments directly toward the sensibilities of particular judges.

Furthermore, a ten-judge panel obviously creates a much greater potential for a tie at the D.C. Circuit than did the three or nine-judge panels. Normally when an en banc panel in the D.C. Circuit results in a tie, the opinion of the original three-judge panel is upheld. There is no original opinion of a three-judge panel in this case. What happens in the event of a tie in this situation is not altogether apparent. Perhaps the case would be scheduled for rehearing and there would be an eleventh judge eligible to hear the case by that time. Perhaps not.

While the CPP is almost certainly destined for review in front of the U.S. Supreme Court, the ruling of the ten-judge panel at the D.C. Circuit Court of Appeals is nonetheless an important step in the CPP’s tumultuous journey. For starters, the current eight member composition of the U.S. Supreme Court creates the potential for another tie, this time a 4-4 split. Depending on how long the D.C. Circuit takes to issue an opinion, the earliest SCOTUS could hear the case would be next February or March. But more likely, the case would not be scheduled until October. Therefore, it’s possible that there will be a ninth justice when and if SCOTUS hears the case.

In the case of a 4-4 split, the opinion from the D.C. Circuit would be upheld without an opinion from SCOTUS. However, many observers have cautioned that SCOTUS is unlikely to issue a split opinion with no majority on a case of such extensive nationwide consequence. Ideologically speaking, a 4-4 split is by no means out of the question. Justice Kennedy, the ever critical swing vote, and essential piece to the liberal wing of the court being able to gain a 5-3 majority, is known as being sympathetic to states’ rights arguments. If SCOTUS lands on a 4-4 draw, the Chief Justice could then reschedule arguments on a rehearing for a later date and hope that reason prevails on the Hill and Justice Scalia’s vacancy is filled.

The ramifications of the case for the national economy and the global atmosphere are significant (though prone to hyperbole as well as legitimate debate). The substantive legal questions at the heart of the case are likewise significant. The high stakes and tough questions combined with the perplexing political climate and unexpected passing of Justice Scalia have all combined to make quite the buildup.

Tune in Tuesday morning to see how the plot thickens.  

Oregon Company Delivers Hydrokinetic Power to Hawaiian Naval Base

By Joni Sliger, Energy Fellow

A wave power device off the coast of Scotland.
Credit: Ocean Power Technologies

September has been a great month for offshore renewables. Earlier this month, construction was completed on the U.S.’s first offshore wind farm at Block Island, Rhode Island. More recently, at a naval test site for hydrokinetic power in Hawaii, Portland-based company, Northwest Energy Innovations (NEI), connected its wave power device to a nearby military base and the local grid, achieving another first for the nation. Hydrokinetic power is now generating electricity for the grid.

Like the Block Island Wind Farm, Hawaii’s new tidal power plant is a small project with only two test buoys. One buoy designed by a Norwegian company generates about 4 kW. NEI’s buoy, the Azura, can power about a dozen homes by generating up to 18 kW from wave energy. Like an iceberg, the tidal power generator hides most of its mass underwater, exposing only 12 of its 62-foot length. NEI plans to enlarge its design for a larger generator capable of generating over 500 kW and powering a few hundred homes.

Hawaii offers a welcoming market for new renewable energy. Like many islanders, including the Block Islanders I mentioned in my last post, Hawaiians face high electricity prices. In fact, Hawaii has the highest electricity rates in the U.S. at a whopping $0.33/kWh, more than three times the national average. Facing high rates from reliance on imported fossil fuels, Hawaiian legislators last year passed laws to increase the islands’ Renewable Portfolio Standard, establishing “the most aggressive clean energy goal in the country.” Hawaii now aims to obtain 100% of its electricity from renewable energy sources by 2045.

The Solutions Project, which analyzed how countries and all fifty United States could reach 100% renewables, suggests Hawaii should obtain 2% of its electricity from tidal turbines and wave power devices by 2050. To achieve this, the state needs another 326 MW from tidal and wave power. That would be about 652 of NEI’s proposed 500 kW devices.

Alternatively, Hawaii could follow Scotland’s example as the world leader in tidal power. Construction has begun on the MeyGen project, a tidal energy farm capable of generating up to 398 MW, off Scotland’s coast. This project aims to be the world’s first large-scale tidal energy farm.

Unfortunately, political debate has cast doubts on the MayGen project’s financial viability, since the United Kingdom reduced its renewable energy subsidies after it decided to withdraw from the E.U. in the so-called “Brexit” vote. Without the subsidies, the MayGen project may not be able to install all of the planned turbines. Since Tuesday, however, renewable advocates have more reason to hope for a cleaner future when Prime Minister Theresa May announced at the U.N. talks in New York that the U.K. is still committed to tackling climate change, promising that the U.K. will ratify the Paris deal.

Climate change continues to rock the global boat, but by investing in clean, low-emission renewable energy sources like tidal and wave power, we can better weather the storm.

Offshore Wind: Costs and Considerations for Future Development

By Joni Sliger, Energy Fellow

A floating wind turbine near Portugal.
Credit: Senu Sirnivas / NREL

As I reported last week, offshore wind energy will soon be flowing to the residents of Block Island, Rhode Island. Yet some continue to question the costs of Block Island Wind Farm (BIWF): will this project benefit the electricity consumers as much as it benefits the industry?

Financing renewable energy projects is no small feat. Developers typically need to lock in a contract proving to stockholders and regulators that the investment will be recovered. In part, financial difficulties explain some of the failed offshore wind projects of the past, such as Oregon’s WindFloat Pacific. The WindFloat Pacific project would have created floating offshore wind turbines near Coos Bay, Oregon (where the ocean floor is too deep for anchored turbines like at BIWF). Competing with low electricity prices from cheap hydroelectric, however, the project was unable to secure a contract from a power purchaser. (Note though that hydroelectric power generation has its environmental problems and is not a guaranteed long-term electricity source.) Without such a contract and lacking regulatory approval, the Windfloat Pacific Project stalled.

At Block Island, BIWF did not have to compete with cheap hydroelectric power. Instead, the islanders rely on imported diesel fuel, costing about $0.50/kwh currently, or five times the average electricity rate in the U.S. of $0.10/kWh. Under BIWF’s contract with utility National Grid, rate-paying islanders’ current electricity prices will drop to $0.30/kWh. Mainlanders, in contrast, who receive the excess wind energy, will face above-market rates in order to finance the $440 project. But some continue to question whether the price difference for the islanders reflects the whole story and will truly result in greater savings for the islanders or the state. (For an inside look at some of the intricacies of ratemaking, you can read about one of the Public Utility Commission meetings discussing BIWF here.)

According to the Rhode Island Public Radio, the true value of BIWF will not be clear for several years. While analysts can consider the current price of diesel fuel (the island’s previous fuel source) and compare it to the contractual price for offshore wind energy, the price of diesel varies. Long-term price stability is one of many benefits of renewable energy sources. Renewables offer additional benefits as well, many of which have not historically been considered in ratemaking, such as lower emissions and greater independence from global markets. For example, consider this proposal to build offshore wind farms in order to mitigate hurricane damage by reducing wind speed at a projected net cost of...zero. Yet whatever the net cost of a project, it is the upfront cost that can be daunting to developers, utilities, and regulators.

Fortunately, according to a new study just published in Nature Energy, the cost of each type of wind energy (onshore, offshore, and offshore floating) is projected to drop substantially in the coming decades. From 2014 to 2030, experts project a 24-30% reduction in costs; by 2050, they project a total reduction of 35-41%. While future costs are difficult to predict with much accuracy, the study surveyed 163 experts, the largest elicitation study on energy ever conducted. 

In addition to rising market confidence and falling market prices, offshore wind also has the benefit of the federal government’s attention: the Department of Energy and Department of the Interior recently released the National Offshore Wind Strategy: Facilitating the Development of the Offshore Wind Industry in the United States. Calling offshore wind energy development a “significant opportunity” for the nation, the report identifies 34 actions for the DOE and DOI to take in order to “facilitate responsible, robust, and sustainable offshore wind development in the United States.” With supportive governance, competitive market prices, and visionary developers already taking the plunge into offshore wind development, offshore wind energy may soon be coming soon to a coast near you. 

Tribes & Renewables VII: Fostering Better Relationships Under the National Historic Preservation Act

By Andrea Lang Clifford, Policy Analyst

The last few posts on this blog series on Tribes & Renewables have explained the role of the National Historic Preservation Act (NHPA) in ensuring that federal agencies take into account the effects of federally approved renewable energy projects on tribal cultural resources. In particular, the last post in this series used the proposed Cape Wind Project on the Nantucket Sound in Massachusetts as an example of poor NHPA implementation, suggesting that federal agencies should include tribes in the decision process as early as possible so that their concerns can be better taken into account. While the NHPA does not require that federal agencies take action to protect cultural resources, it does require them to consult with tribes about the effects of their decisions on tribal cultural resources. This final post in the Tribes & Renewables series examines what federal agencies have done and can do in the future to improve tribal consultation and reach more informed decisions.

My blog post on the Cape Wind project highlighted the perils of poor consultation with tribes concerning renewable energy projects; making tribes feel as though they are a mere afterthought in such decisions may make tribes distrustful both of federal agencies and of renewable energy projects moving forward. Besides the straightforward recommendation that agencies should do a better job implementing the NHPA on a project-by-project basis, both tribes and federal agencies should also increase efforts to strengthen their relationships and build understanding outside the context of individual projects. 

For example, five years ago in 2011, the Advisory Council on Historic Preservation and the National Association of Tribal Historic Preservation Officers coordinated the “Tribal Summit on Renewable Energy:Protecting Tribal Cultural Resources.” Both federal agency and tribal representatives attended the event, where both sides spoke about their priorities, concerns, and thoughts on how future renewable energy projects should move forward. Such a collaborative effort, occurring outside the context of a specific project—where the stakes are often raised, particularly for tribes trying to protect a specific important cultural or sacred resource—is exactly the kind of event that may help tribal and agency representatives understand each other’s concerns and consult more meaningfully on future projects.

Participants at Forest Service Region 8’s 13^th annual

 “To Bridge a Gap” conference. Credit: U.S. Forest Service

Although no similar renewable energy development-focused summits have taken place, at least one of the Forest Service’s nine regions has taken steps to improve working relationships with tribes more broadly, and does so on an annual basis. Region 8 of the Forest Service, which manages all national forests in the Southeastern U.S., has for 15 years hosted its annual “To Bridge a Gap” conference  to help build positive working relationships with tribes. This kind of working relationship can help an agency, when faced with a decision, to understand which tribes might be interested and how their concerns might be addressed.

In trying to balance renewable energy development with protecting tribal cultural resources on federal land, consultation under the NHPA plays a key role. The purpose of the NHPA is to result in better decision making through procedural means; that is, consulting with tribes to understand concerns about protection of culturally significant resources allows agencies to come to more informed decisions about how, where, and whether to site renewable energy projects on federal land. However, that process only works where both sides have a positive working relationship. These two examples of summits and conferences are an excellent model for building those relationships. Hopefully, more federal agencies, tribes, or other interest groups will organize similar events in the future. 

Conclusion:

This blog series has covered a range of issues relating to tribes and renewable energy. As a starting point, it’s important to recognize that American Indian tribes face disproportionate and unique problems as the Earth’s climate warms (Part I). Fortunately,  developing renewable energy on tribal land not only helps combat climate change, but may also provide significant economic benefits for tribes (Part II) that can overcome some of the barriers to development on their land (Parts III & IV) . In terms of renewable energy development on federal land, tribes are often concerned that such projects may pose a risk to tribal cultural resources (Part V). Hopefully, as this post and Part VI covered, earnest consultation on individual projects and better working relationships between federal agencies and tribes can help renewable development occur in a way that does not compromise important tribal cultural resources.