Friends,

Welcome to 2016!!!!  I hope you were able to enjoy a few days over the holidays to relax.  It sure seemed like it as the traffic was non-existent over the past two weeks.

2016 Looks to be a promising year for political banter so I will just mention it and remind you that we will be on top of it for you.  To that end, as usual, I am forwarding a few of the top issues we expect to see in 2016 in our energy and environment arena.  As you may recall last year, I had the top 15 for 15, but this year, I am just returning to a David Letterman-like Top 10 now that he has retired.

Looking forward, the 50th Super Bowl (Super Bowl L) plays on February 7th in Levi’s Stadium in Santa Clara and Coldplay will be on the halftime docket.   This year’s Stanley Cup Playoffs should be entertaining and as a hockey fan generally who happened to live in the Washington area, I am excited and intrigued by the Washington Capitals this year.  I know, it is only January and I still will take the Red Wings, but I am excited about the possibility of a long DC playoff run.

2016 also brings the Summer Olympics in Rio.  Already we’ve heard about the environmental problems, traffic woes and many other challenges to pulling this off – especially a developing economy country, but it is important to mark on the Calendar as there is always so much great fanfare and human interest at the Olympic Games.

In the concert scene, 2016 appears to see more resurgence from long-time hard rock acts as AC/DC, Tool, Iron Maiden, Black Sabbath, Def Leppard (w Styx), Megadeth (w Suicidal Tendencies) and Disturbed all will be on the road in the first half of this year.  We’ll keep you posted.

And as you review key 2015 energy, don’t overlook two important sleeper successes that will have lasting impacts:

Hot Water Heater Victory – In April Congress passed legislation to stop rules that would have blocked the use of grid-enabled water heaters. These are crucial to demand-response levers, loved by both utilities and energy conservation advocates. However, DOE’s planned new standards would have  banned their manufacture. Rather than an another top-down mandate, this legislation showed progress can be made when Congress, the president, industry and environmental groups work together.
Global HFC Deal – Before Paris, nations across the globe came together to limit hydrofluorocarbons, or HFCs, a greenhouse gas several times more potent than carbon dioxide. The agreement builds on the successful legacy of the Montreal Protocol, which has resulted in a 97% reduction in the production of ozone-depleting substances. The signatories have now agreed to work in 2016 to include HFC refrigerants under the purview of the treaty, and set a schedule to phase down the worldwide use of these refrigerants. The HFC reductions could have far more impact that the UN’s Paris climate agreement on cutting the release of compounds blamed for the Earth’s warming.

There are a few great event this week starting tomorrow when WCEE hosts Gina McCarthy for a breakfast chat at the Cosmos Club and API holds its annual State of the Energy Industry event featuring CEO Jack Gerard at the Reagan Trade Center.  Finally, mark next week’s launch of the world-renowned Detroit Auto Show, a Monday afternoon National Press Club discussion on the impact of the Paris accord on Electric Utilities with NYT Columnist Tom Friedman, EEI’s Tom Kuhn and SAFE’s Robbie Diamond and next Tuesday’s State of the Union Address as key events.

As usual, call with questions…and on to the Top 10!!!

Best,

Frank Maisano

(202) 828-5864

(202) 997-5932
Top 10 Issues In 2016

  • We’ll Always Have Paris – In December, nations agreed to a next step climate approach.  While hailed as a breakthrough, it is clearly not the historic agreement many advocates had hoped for.  In fact, it appears to be another incremental step that is much less bold and demanding than they would ever have found remotely acceptable.  Nobody is really bound to anything other than to keep trying and reviewing their progress every five years, with no prescribed penalties for missing them.   How this plays out this year globally will determine whether this is a turning point or the same old, same old.  Another test for the Administration’s position will be regarding the funding requests for the UN’s Green Climate Fund. While Congress has already hit the funding several times, it remains controversial especially as the developing world waits to be “Shown the Money” following Paris.
  • Legal Eagles for CPP Year – The linchpin to meeting Paris and addressing climate change for the Administration is centered around its Clean Power Plan, which regulates GHGs and requires existing power plants to slash their carbon emissions by 2030. Almost 30 states and a wide array of industry groups have challenged the rule, claiming EPA doesn’t have the legal authority to enact it.  Arguments will center around the contention that Congress never gave EPA the authority to encourage emission control methods outside the fence line of a power plant, such as forcing increased renewables.  They will also challenge regulating power plants under Section 111(d) after they already regulated them under Section 112, which covers hazardous air pollutants.  Also look for Rural Co-ops to weigh heavily in to the legal battle as they have a very strong case for being aggrieved the most by the rules.  Lots to do on this with key dates set for early this year and folks like my colleague Jeff Holmstead ready to discuss at any point.
  • Politics All The Time – As we progress through 2016, we will be under a full slate of political action starting this month in Iowa where the first-in-the-nation votes are well underway.  This year-long sweep will keep a target on the back of candidates, parties, Congress and President Obama for every little political move and its meaning.  It also will likely clear the Congressional schedule some time around mid-March or April to focus on theme legislating and political campaigning – always a dangerous time for both Congress and the Administration.    Who is standing at the end of the day on November 2nd remains a mystery, today but the road will be loud, twisting and bumpy.
  • Regs, Regs and More Regs – It is 2016…the last year of President Obama’s time in office.  And like with any end of a second-term President, expect a full regulatory dump.  While most are looking at gun safety, e-cigarettes and other social regs, the energy and enviro side will see the same barrage.  Already, DOE is pounding the pavement to rush out over 20-plus efficiency regulations that will tie appliance and HVAC industries in knots trying to comply.  Other key regulations like Methane from gas drilling, Federal land fracturing regs, tougher Ozone rules, a battle of EPA Water of the US rules and more individual climate rules will all be a part of the year-long sweep.   Many industry and regulatory watchdogs are on guard, but the sheer volume of the effort masked in the President election may allow some to side through.
  • Expanding the Innovation Agenda – Last year was a great year for the innovation agenda.  It picked up extra steam not only in our national labs but also with private companies investing millions in the effort.  Southern Company was the prime example promoting several bold and innovative individual  technologies like carbon capture, large-scale biomass and new generation nuclear.  They also started an innovation center to house the creative outcomes of its workforce.  We also saw its emergence on the global scene in the Breakthrough Coalition led by Bill Gates and the govt-to-govt “Mission Innovation” initiative.  Only a bold private-public innovation/technology partnership process like this by world and business leaders can achieve success.
  • Ozon‘ing Out – The Ozone/NAAQS instantly become one of the biggest political and policy fights of 2015 when the White House/EPA announced it would roll out a standard at 70 ppb.  Last year we predicted that the  Administration had only so much political capital at its disposal and it made clear that controlling greenhouse gases is its legacy issue.  Given the state and industry pushback and the symbolic Keystone victory the White House gave to enviros, the Administration clearly didn’t have the bandwidth to sustain a tougher ozone rule, especially as we venture into an election year.  There is no doubt that many in Congress and the states will still say the current EPA plan is unrealistic and enviros have already filed suited calling for 60 ppb.  Just before Christmas both sides hammered EPA with lawsuits.  The U.S. Chamber of Commerce and NAM are the loudest industry voices complaining that imposing new standards make no sense when many communities haven’t even complied with previous ozone reduction levels.  This battle will play out in the election year where state and local officials end up playing an oversized role since  they are impacted the most.
  • RFS, Ethanol: Same Old Sad Song – The disaster known as the Renewable Fuels Standard (RFS) continued last year with EPA finalizing its long-awaited rule in early December.  The original law establishing the RFS set in place an increasing level of use for ethanol expressed in terms of actual volume numbers.  As time has gone by, however, the actual total gasoline fuel pool has declined due to more efficient autos, more mass transit, and even electric cars.  As a result, the volume number – if EPA fails to adjust it downward – will exceed 10% by volume of gasoline.  But above that level, autos have significant performance issues.  The ethanol folks want the continued higher growth; fuel makers and consumers are queasy about the higher numbers.  There is little environmental case for higher ethanol use any more, especially as commercial   second-gen biofuels remain elusive.  Indeed, major enviro groups like EWG have produced studies showing the higher levels are actually worse for carbon emissions when the ethanol lifecycle is taken into account. It is likely the RFS won’t be repealed, but a wholesale revision is closer to a reality that ever.  Now, Congress will be expected to once again roll up its sleeves on a bipartisan basis and amend the law to a more functioning workable approach.
  • Crude exports, Iran: Catching the Garbage Truck? – The year–end budget deal achieved a goal of many in the oil industry and Congress to remove the decades-old ban of crude exports.  Going forward with market prices low and the world supply broad, there is some question as to how this policy will impact the markets going forward.  2016 will be a key year to see how this plays out.  Another warning sign is the role Iran will play as it comes off sanctions and moves to place it oil into the marketplace.
  • Renewable Reset – The year-end tax/budget deal also renewed the PTC/ITC for five years even though it will eventually phaseout.  The move was a long-standing wish for the renewable industry which has struggled to survive the boom and bust cycles of Congressional budget battles holding the tax credit hostage over the years.  One need only look at AWEA’s graphs charting the installation numbers to understand why the long-term approach will help Installation despite stiff competition from low natgas prices.  2016 looks to be a strong year for renewables especially in light of the Administration efforts to push utility switches with its GHG regs.  It remains an uncertain question though as to whether folks will build more renewables though because of other factors like costs, local NIMBY opposition, state regulatory woes or infrastructure challenges.   Certainly, the technologies are bursting onto the scene in the developing world where China and India (and many others) are already building a number of projects with infrastructure and without opponents at every turn.
  • Build It…Infrastructure – Our continued failure to seriously invest in our transportation and energy infrastructure is costing us jobs and putting our global competitiveness at risk.  Today, we are producing more oil, natural gas and renewable energy than ever before, yet we cannot get that energy efficiently to where it is needed because of we lack the transmission lines, pipelines, roads, rail, trucks, and ships that can move it .  Not investing in our outdated infrastructure will stifle our energy growth, leave us vulnerable to supply disruptions, and weaken our energy security.   Industry trade associations and DOE’s Quadrennial Energy Review underscored this challenge.  Yet at the same time, the Keystone opponents were handed a symbolic, but important victory on the most high-profile infrastructure project in 2015.  Expect a reinvigorated attack in 2016 on energy projects and infrastructure, using Keystone as the template.

ON THE SCHEDULE THIS WEEK

WCEE to Host EPA’s McCarthy – Tomorrow morning, the Women’s Council on Energy and the Environment (WCEE) will host a Leadership Breakfast with EPA Administrator Gina McCarthy at the Cosmos Club.  McCarthy will share her insights about her path to leadership and remark on recent policy events in the field of energy and the environment including the Clean Power Plan and COP21.

API State of Energy Set – API will host its annual State of Energy event tomorrow at 11:30 a.m. at the Ronald Reagan Building Atrium Ballroom featuring API head Jack Gerard.  The event will kick off America’s energy policy discussion ahead of the critical 2016 elections.   In order to take best advantage of America’s tremendous energy potential, API will continue to keep the national energy conversation focused on the facts for the public and for lawmakers, both current and prospective.

WCEE To Host Planning Session for Event Agenda – On Wednesday at Noon, WCEE will holds its 4th annual “Brainstorming” event at Exponent (1150 Connecticut Ave NW, Suite 1100).  As the new year kicks off, the Women’s Council on Energy and the Environment would also like to kick off planning for 2016, brainstorming about the topics for WCEE’s coming year’s “Lunch & Learn” (brown-bag) events.

CSIS To Look at Paris
Agreement – The CSIS Energy and National Security Program will host a discussion on Thursday looking at the Paris Agreement reached at the 21st Conference of Parties meeting under the UN Framework Convention for Climate Change (COP21). To help understand what the new climate agreement means for future U.S. and international efforts to combat climate change, Paul Bodnar, Senior Director for Energy and Climate Change at the White House’s National Security Council will discuss what the agreement entails and what actions the U.S. government and the international community are likely to focus on in the coming years.

 

FUTURE EVENTS

Detroit Auto Show Set to Go – The North American International Auto Show (NAIAS) run from January 11th to 24th in the Motor City.  The official press conference schedule for the 2016 NAIAS begins with Press Preview, Jan. 11-12. With more than 5,000 credentialed journalists from 60+ countries expected to attend the upcoming show, automakers and suppliers exhibiting at NAIAS garner considerably greater global visibility and impact when compared to other domestic shows.  The 2016 NAIAS Press Conference Schedule is available on the NAIAS website under the main Press tab.  In its 28th year as an international event, the NAIAS is among the most prestigious auto shows in the world, providing unparalleled access to the automotive products, people and ideas that matter most – up close and in one place.

Press Club to Host Forum on Paris Utility Impacts – Next Monday at 2:30 p.m., the National Press Club will host a discussion on the impact of the Paris accord on Electric Utilities with NYT Columnist Tom Friedman in the First Amendment Lounge.   Friedman will lead a panel discussion on the impact of the recent UN Climate Conference in Paris and what it will mean for the U.S. Electric Utility industry and their customers. The panel will includes EEI’s Tom Kuhn, Larry Kellerman of 21st Century Utilities LLC,  former Florida PSC Chair Joe Garcia and Robbie Diamond, the founder of an energy non-profit SAFE.

BPC to Host Allowance Forum on GHG Rules – The Bipartisan Policy Center
will host a discussion next Monday looking at the allowance allocations in the Administration’s GHG rules.   BPC will introduce some of the key issues related to allocation. Through moderated discussion, panelists will explore options for distributing allowances, lessons learned from past policy experience, the implications of electricity market structure, and the expected impacts on companies and customers. Panelists will weigh the benefits of a simple allocation approach versus a more complex design, including how allocation might attempt to address leakage of emissions to non-covered sources and the potential for disproportionate impacts on communities, companies, and/or industries.  Participants will be announced.

State Of The Union Address – Next Tuesday, January 12th at 9:00 p.m., President Obama will hold his final State of the Union Address before Congress.

Stories to Watch 2016 – On Wednesday, January 13th at 9:00 a.m. at the National Press Club,
the World Resources Institute will present the big stories that will shape the world in 2016.
WRI President Andrew Steer will look at the Paris Agreement, major trends in energy, finance, business, food and cities and many other items.

Cato Forum Look at Book on Oil –
On Wednesday, January 13th at Noon, the Cato Institute
will host a Book Forum in its Hayek Auditorium
on “Blood Oil” featuring the author Leif Wenar of King’s College London, Bruce W. Jentleson of Duke University and Cato’s Ian Vásquez. The benefits from development and global connectedness — in which we are all inescapably complicit — have been huge. However, the natural resources that enabled that development also benefited people who systematically made the lives of others desperate and miserable, fueled violent conflicts, and funded many of the world’s autocracies.

This cycle continues today, but there is hope. In his book, Blood Oil, Leif Wenar explores this great moral challenge of our time, and “shows how citizens, consumers, and leaders can act today to avert tomorrow’s crises — and how we can together create a more united human future.”

Wenar, the chair of philosophy and law at King’s College London, has written a timely and provocative book.

WCEE to Continue at NatGas Drilling Series – On Wednesday, January 13th at 12:00 p.m., the Women’s Council on Energy and the Environment (WCEE) will host its third in a series of Lunch & Learn seminars looking at the topic of hydraulic fracturing. Part 3 of the series will focus on induced seismicity, which are the earthquakes associated with energy development, particularly in the states of Kansas and Oklahoma. 

This event will have an in-person option; and for those unable to attend, a webinar option.  Speakers will include Julie Shemeta, President and Founder of MEQ Geo, an independent micro-seismic consulting company based in Denver, Co. She has experience with conventional and unconventional oil development, geothermal energy and mining and has worked on projects in North America, Australia, India, Argentina, Columbia, Germany and Mexico. Julie was one of eleven authors of the National Academies National Research Council’s 2012 Study, Induced Seismicity Potential in Energy Technologies. 

Also speaking will be Rex Buchannan, Interim Director of the Kansas Geological Survey. He was appointed Interim Director in 2010 and has been with the Survey since 1978. In this role, he also chairs the Kansas Taskforce on Induced Seismicity. In addition, Mr. Buchannan serves as Secretary of the American Association of State Geologists and has been a past Chair of the Geology and Public Policy Committee of the Geological Society of America.

NAS to Host Arctic Sessions – On Thursday, January 14th, National Academy of Sciences Polar Research Board will host a series of lively, public-friendly presentations from top scientists and other experts who study the connections between Arctic-region changes and impacts that can affect people and places around the globe. Attendees can also explore a series of interactive exhibits and displays.  The event is free and open to the public. Some of the topics/speakers at this event will include:
 Permafrost carbon: a climate change amplifier
by Max Holmes of  Woods Hole Research Center; The Polar vortex: Impacts of arctic warming on the weather where we live with
Jennifer Francis of Rutgers University; Plants and animals: How arctic warming can affect global ecological dynamics
by Natalie Boelman of the  Lamont-Doherty Earth Observatory; Sea level rise from the loss of polar ice
 featuring  Penn State’s Richard Alley; the Arctic Ocean implications of the shrinking polar ice cap
by US Navy Admiral Jonathan White and Arctic as a new frontier for sustainable development
by Gwen Holdmann of the Alaska Center for Energy and Power.

ASE to Host Congressional Briefing on Cutting Edge Technologies, Businesses – On Thursday, January 14th at Noon, the Alliance to Save Energy will host a Congressional Briefing on Cutting Edge Technologies and Businesses: Opening the Door for Energy Efficiency Deployment at Scale. This event will focus on technologies, systems efficiency, and the keys to bringing energy efficiency to scale in the built environment.  The purpose of the briefing is to educate and engage congressional staff and energy efficiency professionals on the work and progress being done in this area, while also discussing solutions and best practices that can help further advance energy efficiency in the built environment.

Forum to Look at G20, Green Finance – On Friday, January 15th at 10:00 a.m., the
Carnegie Endowment for International Peace
will look at public policy and private institutional innovations for a more sustainable global financial system. A new report from the United Nations Environment Program (UNEP), The Financial System We Need, captures this momentum to harness the world’s financial system for the transition to a low-carbon, green economy.  Following the launch in 2015 of the Sustainable Development Goals, along with the successful Paris climate agreement, 2016 looks set to be the ‘year of green finance,’ focusing on the operational measures needed to mobilize the trillions of dollars required for the transition. Spearheading this movement, China intends to place a special focus on green finance in 2016 under its G20 presidency. The United States now has an historic opportunity to advance leadership on green finance internationally, as well as to scale-up domestic innovations already in place.  Participants will include former IMF director John Lipsky, Carnegie’s David Livingston, former Obama NSC official Michelle Patron and Jay Shambaugh, current member of the White House Council of Economic Advisers.

Washington Auto Show Sets Policy Bar Green Car Journal has announced finalists for the 2016 Luxury Green Car of the Year™ and 2016 Connected Green Car of the Year™ awards that will be presented at the 2016 Washington Auto Show on January 21. Focused on aspirational vehicles with exceptional green credentials, nominees for 2016 Luxury Green Car of the Year™ include the BMW X5 xDrive40e, Lexus RX 450h, Mercedes-Benz C350e, Porsche Cayenne S E-Hybrid, and Volvo XC90 T8 PHEV. Vying for the all-new 2016 Connected Green Car of the Year™ award are the Audi A3 e-tron, BMW 330e, Chevrolet Malibu Hybrid, Toyota Prius, and Volvo XC90 T8 PHEV.  Finalists previously announced for the 2016 Green SUV of the Year™ award that will also be presented at The Washington Auto Show® are the BMW X1 xDrive 28i, Honda HR-V, Hyundai Tucson, Mazda CX-3 and Toyota RAV4 Hybrid.  The 2016 Green Car Awards recognize vehicles that exhibit laudable environmental achievement. Along with improved environmental performance, traditional buyer touchstones like functionality, safety, quality, value, and performance are also considered. Affordability and availability are important to ensure honored models are accessible to a wide range of buyers. Honoring continual environmental improvement places emphasis on new vehicles and those in the very early stages of their model lifecycle. The Connected Green Car of the Year™ award considers these elements plus the integration of connected technologies that enhance efficiency, safety, and the driving experience.