Special Energy Update: February 13

Friends,

Wow, it is a special early climate-laced Valentine Thursday for all of us today.  

Not only did we see the first vestiges of a Republican climate policy (and conservative pushback) but the Business Council for Sustainable Energy released its 2020 Sustainable Energy Factbook and the Climate Leadership Council also rolled out its roadmap (which looks similar to what we’ve seen before) for carbon dividends. While carbon dividends (TAXES) are pretty-much dead on arrival politically, it never stops the MACHINE – especially when there is rhetoric of an impending “Republican Jailbreak” on it.

And the BCSE/Bloomberg NEF report shows that we are making solid progress already in reducing emissions. Finally, this success already underscores a new approach that Repd. David McKinley and Kurt Schrader rolled out last week in a USA Today opinion piece that may have better luck long-term.

In this email, I am providing some background information on the Republican climate plan some details on the BSC sustainability report more info on McKinley Schrader and a quick summary of the CLC's carbon dividend plan.

Feel free to call if you have questions. We are happy to discuss all of this: its importance, its practicality, and its potential for success.  BTW, I did get two sets of Rage Against the Machine tickets this morning for both Aug shows in DC. 

Frank Maisano

202-997-5932

House Republican Climate Legislation

1. Leader McCarthy and others announced yesterday a three part strategy:  carbon capture; clean-energy investment and “conservation” which is essentially plastics recovery and recycling.
2. Specific to carbon capture, the Leader made a presentation to discuss the component parts.  It’s useful and can be found on YouTube at https://www.youtube.com/watch?v=HPaVmRSM15Q&feature=youtu.be  Takes about 20 minutes in total.
3. The proposed legislation on carbon capture is in four bills:
   1. Permanent extension of 45Q, the carbon sequestration tax credit.  Sponsored by Dave Schweikert and Brad Wenstrup.  Section 45Q of the tax code currently provides a tax credit for firms that permanently sequester carbon (either underground or inside of other products). The credit is tiered so that carbon sequestered as part of enhanced oil and gas recovery is worth $35 per ton and other sequestered carbon is worth $50 per ton. Current law requires that projects be started before 2024 to qualify. This legislation would enhance the value of the 45Q credit by 25% for both tiers for carbon that is sourced from direct air capture. It would also reduce the minimum amount of carbon that must be sequestered for a direct air capture project to qualify from 100 thousand tons of carbon to 50 thousand tons of carbon. Finally, this legislation would extend the credit permanently. 
   2. The Carbon Capture, Utilization, and Storage Innovation Act, sponsored by Rep. David McKinley.  The bill would promote the development and deployment of CCUS technologies, including by making related pipelines and direct air capture projects eligible for guaranteed loan support from DOE. The legislation also seeks to ensure quicker permitting of carbon pipeline infrastructure and would establish a 10-year program within the EPA to award funds for direct air capture research, according to a release from McKinley's office. Furthermore, the bill would provide "tax deferral parity" between CCUS and other infrastructure projects and aims to avoid duplication between EPA- and DOE-funded research efforts on that technology.
   3. The New Energy Frontiers Through Carbon Innovation Act of 2020, sponsored by Rep. Dan Crenshaw.  The bill would support the use of CCUS technology at natural gas-fired power plants. The Act would establish a DOE-run "Carbon Innovation Hub." The legislation would direct $50 million of existing DOE funds toward research, development and deployment of carbon capture technology at gas plants, with another $25 million per year of existing DOE funds to be set aside for the innovation hub to examine solutions for carbon utilization.
   4. The Trillion Trees Act, sponsored by Rep. Bruce Westerman.  This bill reflects a biological form of sequestration and was cited with approval by POTUS at Davos and during the State of the Union.  It’s based on a July 2019 Swiss report featured by the American Academy for the Advancement of Science that concluded planting 1 trillion trees across the world could sequester 205 gigatonnes of carbon. That’s roughly the equivalent of two-thirds of all manmade carbon since the Industrial Revolution. The bill has three parts: (1) Plant more trees in urban areas and on marginal agriculture land domestically while offering technical support and assistance for other countries to maximize forest growth internationally and reverse deforestation; (2) Grow more wood in existing forests and make them more resilient to insects, diseases and catastrophic wildfires; and (3) Store more carbon by incentivizing innovative building practices with a sustainable building tax credit.  Since none of these bills establish a direct or indirect limit on emissions, the Trees bill does not authorize an “offset.”  But if biological offsets are ever allowed at the state or federal level, this bill would make such offsets more cost-effective. 

 

McKinley-Schrader: Innovate/Regulate: A Real Bipartisan Solution

Reps. David McKinley (R-WV) and Kurt Schrader (D-OR) recently announced a framework to curb the effects of climate change through innovation and regulation of the energy sector. This is the first time that a bipartisan proposal of this kind, dealing directly with the effects of climate change has been considered. They expect to introduce something this month.ge legislative concept that was recently published op-ed in USA Today. Read their op-ed here.  

The NRDC said of the effort:  “The fact that a West Virginia Republican and an Oregon Democrat have teamed up reflects a potentially significant shift here in Washington.” 

OVERVIEW: Representatives David B. McKinley (R-WV) and Kurt Schrader (D-OR) are joining together to develop bipartisan legislation to reduce emissions in the power sector. This fresh approach to address climate change will break through the current partisan stalemate and lead to pragmatic, durable policy that will benefit the environment and the economy. The framework is as follows:   

1.            Innovation & Investment

• To reduce the cost of mitigation and promote fuel diversity within the electric power sector, the federal government shall undertake a sustained and substantial initiative to accelerate innovation in a broad portfolio of clean energy technologies and to promote public and private investment in their development, demonstration, and infrastructure development.
• The scale of federal investment would be in the tens of billions of dollars annually (via measures such as grants, loans, tax credits, etc.) for a decade or more, with many billions of dollars in complementary private investments.
• Initiatives would accelerate research, development, demonstration, and commercialization of advanced technologies for the entire spectrum of clean energy: carbon capture for fossil fuels; direct air capture; nuclear power; renewables including wind, solar, hydropower, and geothermal; storage; efficiency; transmission and grid resilience.

2.            Clean Energy Standard

• Legislation would establish a federal Clean Energy Standard (CES) for the power sector that will achieve an 80-percent reduction in emissions by 2050. Modeling indicates that standard means the power sector will be 95-percent clean by 2050 (allowing for growth in demand).
• The first compliance period for the CES will start no later than 10 years after legislative enactment, and may be sooner if triggered by sufficient commercialization of competitive, firm clean energy technologies (as determined by measures of cost or scale of deployment).
• The CES’s compliance obligations would fall upon load-serving entities, which would receive Clean Energy Credits (CECs) for clean generation.
  • Credits would be tradeable, and an alternative compliance price (“safety valve”) would be established.
  • The CES will be technology neutral, and regional diversity would be recognized.

3.            A transition from Clean Air Act-driven regulations to a Clean Energy Policy

• The CES is designed to be a superior alternative to regulation under the Clean Air Act, producing significantly deeper emission reductions at a much lower cost along a more predictable and efficient timeline, and eliminating the need for multiple successive rulemakings and prolonged litigation.
• To encourage faithful implementation of the law, there will be annual reviews of implementation, compliance, and emissions trends, leading up to a Mid-Point Review five years after enactment.
  • If CES regulations aren’t being promulgated, funds for innovation aren’t being appropriated, or emissions in the power sector are rising significantly, actions will be taken to reduce emissions using the Clean Air Act or other authorities.
• During the ten-year innovation phase, as long as the law is being faithfully and successfully implemented, the federal government will not exercise its authorities under the Clean Air Act or take other new regulatory actions to compel emissions reductions from the electric power sector.

 

BloombergNEF, BCSE Release 2020 Sustainable Energy in America Factbook

The 8^th annual Sustainable Energy in America Factbook from BloombergNEF (BNEF) and the Business Council for Sustainable Energy (BCSE) says the U.S. overhauled how it produces, delivers, and consumes energy over a momentous decade of change. In the process, we posted 10 straight years of economic growth, while cutting both power-sector CO2 emissions and consumer energy costs to their lowest levels in a generation. 

The Sustainable Energy in America Factbook chronicles a profound transformation in U.S. energy that is still very much underway. The report, which includes over 130 slides, provides users with straightforward charts to understand how the change has impacted most segments of the energy sector. 

“The transformation we have seen in the last decade has far exceeded expectations,” said Lisa Jacobson, BCSE President. “The facts show that we grew the economy, improved energy security, and cut emissions at the same time – all while making energy more affordable to consumers.”

Utility-scale renewables were just emerging in 2009, and now they win generation contracts on economic grounds. Battery technology is one tenth of its cost in 2009. Today, there are nearly over 85 million “smart meters” in U.S. homes and businesses, up from 9.6 million a decade ago. The number of residential natural gas customers grew by 8% in the last decade while overall residential consumption of gas rose by 5% due to energy efficiency. Consumers are now spending record low proportions of their household budgets on energy costs, a 22% decline since 2009.

The 2020 Factbook showcases the impact of sustainable energy* over the last decade and highlights findings for 2019 that follow the macro trends of the 2010s:

• Renewable energy became the cheapest new generation source in many U.S. power markets. The U.S. has over 2 times more renewable power generating capacity today than a decade ago. Solar capacity in 2019 was 80 times greater than what it was at the end of 2009.
• Energy efficiency choices have proliferated, with federal programs helping high-efficiency appliances reach mass markets and state codes bolstering building efficiency. The economy grew every year in the past decade and energy use fell in five of the ten years. U.S. energy productivity (GDP/energy consumption) improved 18% between 2010 and 2019, benefiting businesses and households.
• Natural gas became the primary source of U.S. power generation and shifted the scales in the global market. Between 2010 and 2019 domestic natural gas production jumped 50%, and natural gas went from providing 24% of the nation’s electricity to 38%. The U.S. increased its export capacity to exceed its import capacity, building stronger trade relationships around the world. In 2019, the U.S. exported more gas than it imported.

The  Factbook outlines key trends in sustainable energy that provides a comprehensive overview of the American energy marketplace, including energy efficiency, natural gas and renewable energy. The report is available for download from the BCSE website http://www.bcse.org/factbook.  The Factbook serves as a reference guide of sustainable energy statistics for use by media, business and industry.

 

Climate Leadership Council

The Climate Leadership Council – a broad coalition of leading companies, environmental NGOs and thought leaders from across the political spectrum – released its Bipartisan Climate Roadmap today. The Roadmap is the result of over two years of dialogue among the Founding Members of the Climate Leadership Council. The Council also announced today that JPMorgan Chase, Goldman Sachs and two prominent policy leaders – Christiana Figueres and Ernest Moniz – have joined this effort as Founding Members of the Council. They join a remarkably broad coalition, including 26 corporate sector leaders from a wide range of industries.

They also released a new poll released by Morning Consult that says voters across the spectrum strongly favor a bipartisan approach to solving climate change (6:1 margin overall, including 58% of Republican voters) and are growing more concerned about the issue (8:1 margin). The poll finds strong support across the board for carbon dividends (4:1 overall | 2:1 Republicans | 3:1 Republicans under 40 | 4:1 Independents | 16:1 Democrats). It also reveals robust support across all demographics for each of the four pillars of the Council’s plan.