Tribes & Renewables Part IV: Barriers to Tribal Renewable Development and Ownership

By Andrea Lang, Policy Analyst

Credit: Energy.gov

In Part III of this blog series on tribes and renewable energy resources, I explored the convoluted process for obtaining the Bureau of Indian Affairs’ approval before American Indian tribes can develop renewable energy on tribal land. Even if that process were remedied, tribes still face numerous other barriers to enjoying the full benefits that renewable development on tribal land would afford. According to a Sandia National Laboratory survey of tribal and federal Indian energy experts, lack of financing or funding and lack of customers are two of the most significant barriers to renewable energy development on tribal land. This fourth post in the Tribes and Renewables series briefly explains each of these barriers and suggestions for overcoming them.

Lack of Financing or Funding

One of the major barriers to tribal renewable energy development is lack of access to funding or financing. Even without the financing difficulties raised by the need for Bureau of Indian Affairs approval, tribes face considerable and inequitable barriers to financing their projects. Many renewable energy project owners are able to offset some of their tax liability by qualifying for the federal production tax credit or the investment tax credit, making the energy more valuable to them. However, since tribal governments have no tax liability, the credits do not provide any benefit to tribes directly. Tribes can attempt to find a third-party tax investor willing to finance their project in exchange for the tax credits, but it requires giving that investor ownership of the project for a time. This adds an extra step to the process and robs the tribe of the ability to fully own renewable energy projects, which is inequitable and raises concerns among some tribes with regard to sovereignty. Regardless, the federal government is currently phasing out the renewable tax credits over the next five years.

However, even if tribes could use the benefit of tax credits to save money and make renewable projects more financially beneficial, it would not solve the problem of being able to finance tribal renewable projects. Fortunately, the federal government is trying to overcome this particular barrier. Last March, the U.S. Department of Energy (DOE) announced a $9 million dollar investment in Native American “clean energy and energy efficiency programs,” including 12 solar photovoltaic projects, one wind energy project, and one tidal energy project. While this program will likely lead to additional renewable energy development on some tribal lands, such direct funding from the federal government should only be part of the solution.

Lack of Customers

The Sandia National Laboratories survey also found that a perceived lack of customers hinders tribal development of renewable energy resources. Prospective Native American renewable project developers could build projects to provide power to tribal residents, helping the tribe become more self-sufficient and reducing its need to purchase power from elsewhere. But the fact that the survey identified lack of customers as a significant barrier to development suggests that tribes are looking to also sell their electricity elsewhere.

The best way to ensure adequate demand for the output of renewable projects is to ensure that state renewable portfolio standards (RPSs) are sufficiently strong to create a market for renewable energy. RPSs are state mandates to obtain a certain amount of electricity from renewable resources. In states with high RPSs, utilities will be looking to buy more renewable electricity to meet their requirement, creating more customers for tribes. This is one of many reasons states should consider enacting ambitious RPSs. 

As I’ve explained in the last few posts in this series, there are certainly some barriers to tribal development of renewable resources, but there are also lots of reasons for hope. Plenty of policy options are available to overcome these barriers, and the fact that the Government Accountability Office and the Sandia National Laboratories are looking into the reasons for underdevelopment of tribal renewable resources is promising. The next post in this series will begin looking at a completely different aspect of tribes and renewables: how to develop renewable energy projects on non-indian land without destroying tribal cultural resources.

5 Years After Fukushima, PG&E Plans to Close California’s Last Nuclear Power Plant

By Sage Ertman, Policy Intern

 

Source: Nuclear Regulatory Commission

With many still reeling in the wake of Japan’s Fukushima Daiichi nuclear power plant disaster, Pacific Gas & Electric (PG&E), one of the largest natural gas and electric utilities based out of California, announced it will not be renewing its operating licenses for California’s last two nuclear reactors located at the Diablo Canyon nuclear power plant. The current licenses will expire in 2024 and 2025. Here, I will explore the aftermath of the Fukushima disaster as well as PG&E’s reasons for closing the reactors.

Lessons From Fukushima

Back in 2011, a 9.0-magnitude earthquake and resulting tsunami ravaged the Fukushima plant, causing a nuclear meltdown. Following the disaster, because the plant lost electricity (including its back-up power), the pumps responsible for bringing water to the reactors to keep them cool stopped functioning. Though Japanese crews spent weeks trying to keep the reactors’ temperatures down, primarily by injecting seawater, evacuations became more widespread as the extent of the true damage was uncovered. Eventually, workers discovered radioactive water was leaking from the plant. Nearby groundwater having flowed through the flooded basements and tunnels at the plant became radiated before emptying into the ocean at a rate of 400 tons per day. Today, though that number has been reduced significantly, Fukushima is still leaking radioactive water into the ocean. Exactly how wide-spread the latent effects of this disaster are is still unknown.  It didn’t take long before the plants and animals surrounding Fukushima began showing signs of defects. And because people were evacuated so quickly from the lands adjacent to the plant, many family pets and farm animals were left behind.  Some of the locals returned months after the meltdown to find many of these animals dead or dying. This led a number of farmers to return to the “exclusion” zone to open animal sanctuaries for the contaminated animals, most of which the Japanese government planned to slaughter since they could not be sold to market.

The Japanese government puts damage estimates for the Fukushima meltdown at around $300 billion. In early 2014, low levels of radiated water from the plant were even detected off the coast of Canada. Estimates on how long the clean-up is expected to take range anywhere from 40 years to 100 years. Even today, the clean-up crew still faces major problems containing what remains of the plant and its radioactive fuel. One thing we can take away from the Fukushima incident is that the proximity of these plants to the ocean and local ecosystems presents a major threat to public safety and the safety of our environment.

From Nuclear to Renewables

For those concerned that a meltdown like Fukushima could happen in earthquake-prone California, home to the infamous San Andreas Fault, PG&E’s announcement should trigger a sigh of relief. However, though still a major victory for the environment, the decision to close the Diablo Canyon reactors is still a business decision in the end. A number of nuclear operators have begun to shut down reactors as U.S. power prices have dropped with the price of gasoline; in fact, it will actually cost less to close the Diablo Canyon reactors than to keep them open.  Additionally, this will help PG&E comply with California’s ambitious energy policies because it plans to replace the power produced by the two nuclear reactors with investment in a greenhouse-gas-free portfolio of renewables and energy storage. California established its Renewables Portfolio Standard (RPS) program in 2002. The program has been accelerated numerous times, and most recently, a 2015 Senate Bill established, among other requirements, a mandate to obtain 50% of California’s electricity generation from renewable energy sources by 2030.

The Diablo Canyon plant sparked controversy since its inception. After construction began, the Hosgri Fault line was discovered in 1971, just three miles from the plant. Following the Fukushima disaster in 2011, lawmakers called for immediate reviews of the Diablo Canyon plant as well as the San Onofre nuclear plant near San Diego, California. Due to rising expenses, falling power prices, and heated controversy, the San Onofre plant was closed in 2013. And now, California is planning to say goodbye once and for all (in 2025) to its final nuclear plant.

My Introduction to Negotiating Renewable Energy Policy

By Brandon Kline, Energy Law Fellow

  

Earlier this month, California Gov. Jerry Brown signed the Clean Energy and Pollution Reduction Act of 2015 (SB 350) into law. SB 350 is landmark legislation that establishes world-leading energy efficiency and renewable energy goals for California. 

 

As an energy law fellow, I have watched California’s actions with great interest. I got my start as a California Executive Fellow, working under the legislative affairs secretary and deputy chief of staff to Gov. Arnold Schwarzenegger. This position followed my work at the California Energy Commission, where I cut my environmental teeth as an undergraduate research assistant. During my fellowship year, I was picked by Gov. Schwarzenegger’s deputy chief of staff to handle a wide range of projects in the Governor’s Office – from homelessness to the State Budget.

 

The most interesting part of my job was sitting in on meetings with legislators and others from the Administration. Indeed, it was in this setting that I received my introduction to high stakes negotiations in the context of renewable energy. I became interested in renewable energy after watching my mentor negotiate AB 32 (the Global Warming Solutions Act of 2006). I left my fellowship year with a clear understanding of how negotiators achieve meaningful reforms.  

 

I also came to understand that climate change mitigation hinges on policymakers finding common ground on complex issues. California’s actions on climate change have increased importance as world leaders seek common ground on climate, even as the countdown to the U.N. Climate Change Conference continues to run.

 

The U.N. Framework Convention on Climate Change’s goal is to reduce greenhouse gas emissions to limit the global temperature increase to 2 °C above pre-industrial levels. This requires negotiators to bridge the divide between rich and poor countries.

 

The new agreement will be adopted at the Paris climate conference in December and implemented from 2020. It will take the form of a protocol, another legal instrument or “an agreed outcome with legal force,” and will be applicable to all Parties. It is being negotiated through a process known as the Durban Platform for Enhanced Action (ADP).

 

California has provided global leadership on environmental policies and energy regulation since AB 32 established a market for carbon allowances and offsets. SB 350 now sets new aggressive targets for the state’s Renewable Portfolio Standards, and doubles the rate of energy efficiency savings in California buildings.

 

Balancing job growth and economic growth with environmental leadership requires a vision that understands that climate adaption measures are smart economic and ecological investments in our future. Because California’s legislative leaders found common ground with the private sector, an amended version of the bill emerged that builds on California’s environmental legacy.

 

No doubt similar dynamics animate global negotiations to achieve a legally binding international agreement on climate. With California’s actions on climate, there is cause for hope.

An Introduction to Offshore Wind: The Energy That Piqued My Interest

By Joni Sliger, Policy Extern

Credit: Siemens AG and NREL

As a policy extern with GEI, I am very interested in researching Oregon’s policies and possibilities for a renewable energy future. After all, state energy policies are what first piqued my interest in the field of energy law.

While studying Global Environmental Change & Sustainability at Johns Hopkins University, I got involved with a campaign to amend Maryland’s Renewable Portfolio Standard (RPS) to add offshore wind energy. The campaign brought together labor unions interested in wind turbine manufacturing jobs, public health groups interested in transitioning Maryland (and Baltimore especially) off asthma-inducing fossil fuels, and students and environmentalists like myself interested in ensuring a sustainable energy future without volatile fuel prices and without huge greenhouse gas emissions. Unfortunately, the campaign did not succeed before I graduated in 2012. However, the following term, the legislature finally passed a law to amend the RPS.

Most RPSs require utilities to obtain a certain percentage of retail electricity sales from eligible renewable energy sources. Instead of merely adding offshore wind energy to the list of eligible resources, Maryland’s Offshore Wind Energy Act of 2013 created what is known as a “carve-out.” The carve-out requires that, within the percentage from renewables mandated by the RPS, a certain percentage must come specifically from offshore wind energy, beginning in 2017.

While an RPS provides investors with the certainty that a market exists for renewable energy, an RPS carve-out provides even greater certainty for a particular type of power. That is critically important for an emerging technology like offshore wind. At least, the technology is still emerging in the United States; Europe, in contrast, has already invested in offshore wind energy projects with a combined capacity of 8,000 megawatts, according to 2014 data from the European Wind Energy Association. Meanwhile, the very first offshore wind farm in the U.S.—Block Island Wind Farm in Rhode Island—began construction just this past July. While the U.S. farm is not yet operational, wind enthusiasts like myself can still celebrate the construction as a sign of progress.

Some scientists has referred to offshore wind energy as a “missed opportunity” for the United States. But the opportunity has not passed. Offshore wind is coming. There have been growing pains, but as highlighted by last week’s Summit on Offshore Wind Energy, the White House is looking to streamline the permitting process. In its press release, the White House announced the creation of an Interagency Working Group on Offshore Wind to coordinate the permitting process. The Summit also announced the funding of a multi-state project in the Northeast, the creation of an International Offshore Wind Regulators Forum to learn from experiences abroad, and the recent approval of two more areas for leasing to developers.

The United States might be late to the offshore wind party, but the possibilities are strong. The Department of Energy says the nation could obtain 86,000 MW from offshore wind by 2050.  Last week, the American Wind Energy Association hosted a conference on Offshore Wind in Baltimore, Maryland. The event brought together industry leaders that are optimistic about offshore development. After all, plans are underway to build a 500 MW farm off the coast of Ocean City, Maryland. Maryland’s amended RPS was a major incentive for this project; the developers will be applying for the offshore energy credits this month.

I am thrilled to see offshore wind energy finally taking off in the U.S. Obtaining permits and financing may have slowed the industry’s development, but those obstacles have not stopped it. We need this renewable energy, and we are on our way to getting it. “Wind is here,” noted one commentator, “and [so is] the ripple effect.”

Green Defaults Help Consumers Choose Renewable Future

By Brandon Kline, Energy Fellow

“The future ain’t what it used to be,” the great Yogi Berra once said. In the world of energy policy, the existing path for getting to the future has usually come down to engineering a trade-off between the costs and benefits for the current generation and those of future generations. Rather than an “either-or” approach, what we need, of course, is a framework that provides a balance that is good for both.

The early development of renewable energy sources means decreased dependence on imported fossil fuels.Since the late 1990s, economists have cited this trade-off in calling for restructuring electricity markets to promote newer, clean, renewable energy resources (i.e., Renewable Portfolio Standards for wind, solar, biomass and geothermal). States have a variety of approaches to Renewable Portfolio Standards.

Since 2007, Oregon’s largest utilities have been obligated to source 25% of their electricity from renewable energy by 2025.

Earlier this year, Hawai’i became the first state in the nation to require its utilities to generate 100% of its electricity from renewable sources by 2045. Meanwhile, Ohio legislators are calling for an open-ended freeze to that state’s policy requiring utilities to meet annual increases in clean-energy production.

What’s in a Renewable Portfolio Standard?

According to the National Renewable Energy Laboratory, a Renewable Portfolio Standard refers to a state-level requirement, typically established through legislation, to provide a minimum amount of energy from renewable resources. These requirements are often defined as a percentage of renewable-energy use by a given date – for example, 20% by 2020. States define what technologies are eligible for RPS requirements and which utilities are subject to them.

But not every state has adopted a Renewable Portfolio Standard. As of the end of 2013, 29 states and the District of Columbia had an RPS in place, while eight states had voluntary renewable-energy goals.

With that backdrop, last week Portland General Electric announced a new limited program enabling customers to obtain their electricity from a solar energy project in Willamina that generates enough power to produce 2,935 “blocks” of solar energy.  This community solar program has the virtue of meeting PGE’s RPS requirement while allowing PGE customers to make a choice that reduces their carbon footprint.

Such community solar programs have gained popularity as utilities and developers have started to see a serviceable market for households that want to plug into renewable energy sources, but are precluded by their circumstances (e.g., renters, apartment dwellers, and others).

Why not implement an automatic green default? That way, utilities would have to automatically enroll customers in renewable-energy alternatives. By reversing the dynamic, consumers would have to opt-out to use fossil-fueled power, instead of having to opt-in to get clean electricity. Green defaults make it the norm to go clean rather than putting up a roadblock at the point of consumer decision-making.

In a thoughtful piece published in the Harvard Environmental Law Review, Harvard Law School professor Cass R. Sunstein and Copenhagen Business School Lucia A. Reisch make a strong case for the role of default rules in their article, “Automatically Green.” Their research suggests that public and private institutions can make great progress on environmental problems by becoming far more attentive to selecting appropriate defaults.

“If the goal is to protect the environment, and to save money in the process, default rules are an important tool in the regulatory repertoire, and they may well be able to achieve a great deal more than other tools, including those that would cost taxpayers or the private sector a great deal of money.”

Beyond energy policy, defaults play a pervasive role almost all of the choices we make in our daily lives – from fuel and emissions standards in new cars to paper receipts and plastic bags at the grocery store. In the face of weak preferences, we are often engineered to mindlessly consume as a matter of course.

Indeed, Sunstein and Reisch illustrate how this can be reversed in a range of domains.

At Rutgers University, for instance, a policy changing the computer lab’s default setting from “single-sided” to “print on front and back” reduced paper consumption by 44% – the equivalent of 4,650 trees.

Another example stands out in light of PGE’s new program. In Germany, utilities have achieved clean-energy usage rates well above 90% through green defaults. In the Black Forest community of Sch¨onau, local residents passed a referendum to establish an eco-friendly utility cooperative in the wake of the Chernobyl disaster. That company now promotes solar energy and places a great deal of reliance on renewables.

In contrast to Oregon’s PGE, Sch¨onau customers are allowed to opt out and to use other energy sources, but they have to find relevant information to identify alternatives. Almost no one opts out. Over the course of a number of years, the opt-out rate was less than 1%.

Sunstein and Reisch are certainly onto something. Clearly, green defaults are in the future.

For now, no state has gone as far as adopting a Renewable Portfolio Standard with a green default rule…although Hawai’i, with its 100% renewable RPS, comes pretty close. Or as Yogi would advise, “When you get to a fork in the road, take it.”