Busy weekends always seem to precede the August recess and the White House leaking its Climate rule for Sunday morning only made us work more. It is hard to believe all the rhetoric. I just heard Josh Earnest on MSNBC this morning blindly repeating the same talking points heard throughout the day yesterday (unbelievably even more ineffectively). Anyway, it is part of an orchestrated, all-out campaign over the next few months that will attempt to run up to UN talks in Paris…
Following the just concluded White House Event, there are a bunch of react calls. While I wouldn’t advise tuning into many of them, one I would listen in on is the rural co-ops. NRECA has a few CEOs from Kansas, Arizona, Florida and Arkansas weighing in at 3:30 and they (along with a good portion of rural America) is unfortunately hit hard by the rule. You can get the call-in number here.
Finally, while there is little going on here after today, the 27th Annual Texas Environmental Superconference goes on Thursday and Friday in Austin at the Four Seasons Hotel.
As you know, we were cranking starting Friday and throughout the weekend. I am sending a full report on the EPA Rule is below. We can help you with sources, background and reactions. Who you gonna call????
THE BIG NEWS: GHG Rule Out
EPA Rule Out – EPA rolled out its climate rule on Sunday will set the nation’s first-ever limits on power-plant carbon emissions, mandating ambitious and controversial cuts that exceed the targets laid out in a proposal released last year.
President Going All Out – President Obama made a personal plea for greenhouse gas emissions rule over the weekend. “Climate change is not a problem for another generation — not anymore,” he said in a video that the White House posted to its Facebook page.
Changes Anyone – The major changes include cutting power plant carbon emissions 32% below 2005 levels by 2030, an increase from the draft proposal. Other changes include:
- Give states two extra years to submit plans and start making cuts.
- Ease interim goals into a “glide path.”
- Contain grid reliability assurance mechanisms.
- Provide states with a model plan and with “trade-ready” elements for swapping compliance credits.
- Adopt a uniform emissions rate and assign states’ goals based on their energy mixes.
- Even out disparate state targets.
- Incentivize early action to build renewable energy and implement user-side energy efficiency programs in low-income communities.
- Aim to shift toward renewables rather than encourage an early surge toward natural gas-fired electricity.
- No longer count under-construction nuclear plants in state targets but will give states credit for them and for increases in existing nuclear generation.
- Require carbon capture and storage for new plants but at a lower rate than previously proposed.
White House Releases Fact Sheets – The EPA posted “fact sheets” on its carbon rule for power plants.
The documents posted to EPA’s website today include an overview of the plan, a “by-the-numbers” breakdown, a summary of “benefits to the power sector”, a legal justification, a description of the new clean energy incentive program, and details on local effects.
The Industry Side of the Details – My colleague Scott Segal led a substance-filled, quick reaction on Sunday. He says the assumptions behind the actual required reductions in the final rule have gotten worse, not better. They have made a proposed plan which strains the power system even more restrictive, calling for reliable and cost effective energy sources to be replaced by intermittent, costly sources largely incapable of meeting base load power needs in the US. While the additional time to prepare plans and begin compliance are welcome – and a tacit acknowledgment of how unreasonable the original timelines were – the resulting federal mandate is dangerous. It still presents significant intrusions into state affairs, endangering consumers, manufacturers, hospitals, schools, and the very reliability of the system.
What About General Increase in Stringency – EPA has dropped out one of the building blocks, and made adjustment to others to reflect input. And yet overall stringency is claimed to increase. This seems like regulatory sleight of hand, designed more to impress friends at the Paris conference than to react in good faith to what’s in the actual rulemaking record. The Supreme Court recently told EPA that it would be irrational for the Agency to regulate before considering cost. Here, EPA has a final rule with less justification for greater stringency but without the kind of robust analysis the Supreme Court clearly desires.
Extended Compliance Timelines – Segal and my colleague Jeff Holmstead have frequently criticized the proposed rule as having highly unrealistic timelines for compliance. And while the final rule reflects some concession from EPA on this point, it should be noted that the final rule remains a very difficult task over a very compressed time period. Further, the fact that the draft compliance plans from the states remain due with 12 months of finalizing the rule creates an initial unnecessary chokepoint for the rule that ensures immediate pain from implementing the rule. Segal says more time is a good thing as over the last year, EPA clearly has come to realize that the timelines in their original proposal just weren’t feasible. Even states and companies that were generally supportive of the proposal were telling EPA that states needed more time to develop their plans, and that very few states could actually meet their interim targets by 2020. As a result, EPA has now pushed back the dates by one or two years. However, EPA’s deadlines are still unrealistic. As just one example of why, after 49 states submit their plans in 2018, EPA must analyze those plans in writing and then issue a proposal for each state plan to explain why EPA believes the plan should be approved, in whole or in part, or disapproved. After taking public comment, EPA must then issue a final rule that responds to all the public comments it received and explains why it is either approving or disapproving 49 state plants. Under EPA’s schedule, this is supposed to occur within just one year. But years of experience with other, much simpler types of state plans suggests that this process will take several years at least. In any event, EPA has still not made the case of any intrusive form of interim obligation. Other Clean Air rules do not have this feature, and EPA has not justified this additional chokepoint in the final rule.
Addition of “Safety Valve” Mechanism to Address Reliability Concerns – While a safety valve designed to address reliability crises is necessary, no safety valve can fix a poorly-crafted rule that harms reliability as it is implemented. That’s like relying on an emergency brake after an accident is already under way. You need to prevent the accident in the first instance. And as the D.C. Circuit has ruled, if emergency authority alone fixed rules then “no rule, no matter how irrational, could be struck down, provided only that a waiver provision was attached. A rule with no rational basis…cannot be saved in this fashion.”
New Incentives For Utilities to Construct Renewable-Energy Projects In Poorer Neighborhoods – While this provision may be well intentioned, it is based on several flawed assumptions. First, major renewable projects of the sort necessary to augment base load power are difficult to undertake in any urban environment. Second, the reliable base load power plants already serving these neighborhoods are subject to permit and regulatory requirements already fully protective of human health and the environment. Last, the effects of the rule taken as a whole are likely to particular disadvantage those living in poverty.
Key Legal Questions – Segal also addressed several legal questions:
- EPA doesn’t have authority under Section 111(d), whether it’s no ambiguity over the language of the 1990 CAA amendments, or the issue of power plants already being regulated under Section 112. Does the final version of the rule invite additional, significant legal questions, or will the crux of litigation remain EPA’s authority under the CAA? Answer: The final rule does very little to change the central thrust of the legal objections. The weakest part of the EPA proposal is that the Agency is attempting to use the Clean Air Act to regulate far afield from the actual facilities that are the target of the rule. In the parlance of the rule, that’s called going beyond the fence line. By dropping consumer energy efficiency as a basis for establishing the rule, the EPA has removed one part of the rule that lies beyond the fence line. But, changing the dispatch of natural gas and insisting on renewables investments really lie just as far outside the fence line. These two other building blocks remain critical to the rule, but are completely unprecedented and outside the scope of Section 111 of the Clean Air Act. As for the question of whether section 112 regulation preempts the use of section 111, that matter is still quite active. The states and some members of the regulated community even asked for the panel to reconsider its views in the Murray litigation just before EPA made clear its intention to finalize the rule. So that matter is serious, and is not changed in any way by the final rule or by the Supreme Court’s dim view of the failure to consider cost in the context of the MATS rule.
- CCS Legal Issues – EPA said yesterday that its rule for new power plants – the 111(b) rule – will still utilize carbon capture and sequestration as a basis for regulation, but at a reduced capture rate. Since there is no evidence of established commercial viability for this technology, the 111(b) provisions of the rule are still on weak legal grounds. And it is an established feature of the Clean Air Act that if the approach to 111(b) fails to pass legal muster, EPA cannot proceed to regulate existing sources under Section 111(d) of the rule. Until we review all the details of the final rule, it will be hard to tell if it raises new legal issues. But it is already clear that it doesn’t fix any of the principal legal problems present in the proposed rules.
- Legal Vulnerability – Segal also addressed whether the final version of the rule make it more vulnerable to such legal challenges, less vulnerable, or pretty much equally vulnerable to the proposed version? Answer: The final rule may well be more vulnerable, but careful analysis will need to provide those answers. For example, the final rule may have mandated new provisions or relied on new methodologies that were not really part of the record when public comments were filed. If those changes are too great, the rule could have an additional problem under administrative law. Aside from that new issue, the biggest problems with the final rule are likely missed opportunities to cure the legal problems obvious in the proposed rule.
PBEF Members Reacts – The Partnership for A Better Energy Future expressed disappointment over the EPA’s Clean Power Plan. The rule is one of the most expensive and far-reaching rules in its history, designed to regulate carbon emissions from the electric power sector. The rule represents an unprecedented intrusion into affairs of the states that will increase costs for small businesses, manufacturers, and households, threatens electric reliability and offers no significant environmental benefit remotely commensurate with the costs. PBEF is a coalition of more than 170 organizations. PBEF members offered the following Comments regarding the EPA rule:
National Association of Manufacturers President and CEO Jay Timmons: “This regulation will be exceptionally difficult for manufacturers to meet and will increase energy prices and threaten electric reliability. Manufacturers are committed to being responsible stewards of our environment, leading the way in that effort, and we will keep all options on the table, including litigation, to protect manufacturers’ ability to compete in the global marketplace.”
Mike Duncan, President and CEO of American Coalition for Clean Coal Electricity (ACCCE) : “Even in the face of damning analyses and scathing opposition from across the country, EPA’s final carbon rule reveals what we’ve said for months – this agency is pursuing an illegal plan that will drive up electricity costs and put people out of work,” said “This rule fails across the board, but most troubling is that it fails the millions of families and businesses who rely on affordable electricity to help them keep food on the table and the lights on.”
Hal Quinn, CEO of the National Mining Association: “The Nation’s governors now have a clear choice to make about their course: accept this flawed plan and put their citizens at risk, or reject it and challenge EPA’s authority and competence to manage their state’s energy economy from Washington. It’s change without a difference.”
U.S. Chamber of Commerce President and CEO Thomas J. Donohue: “As dozens of states, the Chamber, and numerous other stakeholders have discussed, the EPA’s effort to shut down existing power plants and thus drive up energy prices for businesses and consumers alike will inflict significant damage to our entire economy and reduce our nation’s global competitiveness without any significant reduction in global greenhouse gas emissions. It is a bad deal for America, and we will pursue all available options, including litigation if necessary, to block EPA’s regulatory power grab from taking effect.”
National Rural Electric Cooperative Association CEO Jo Ann Emerson: “Any increase in the cost of electricity most dramatically impacts those who can least afford it, and the fallout from the EPA’s rule will cascade across the nation for years to come.”
Holmstead Reaction – Former EPA Air office Head Jeff Holmstead also had some opinions on the rule. Holmstead said with the change in compliance deadlines, the final rule is less unreasonable than the proposal, but it doesn’t fix the big legal problems. Holmstead: “EPA just doesn’t have authority under the Clean Air Act to require states to restructure their whole electricity systems. This goes way beyond what EPA is authorized to do under the Clean Air Act. This approach that goes way beyond anything that Congress ever intended. I don’t think it will pass muster in court.” Holmstead also said it is striking that EPA gets essentially the same emission reduction even though it has abandoned one of its original building blocks. It looks like building blocks are malleable enough to get the foreordained result. Holmstead also said one of the main things motivating this rule is that the Administration wants to show leadership on the international stage. “They want to go to Paris in December and tell the international community about this historic accomplishment. So maybe it doesn’t matter so much if the courts strike down the rule in a year or two. But it will be embarrassing for the Administration if the courts decide to stay the rule before the Paris Conference.”
Gas Guys Are Mad – ANGA and other natural gas interests are upset with the White House’s change to pair back natural gas. ANGA’s Marty Durbin said “the White House is ignoring market realities and discounting the ability of natural gas to achieve the objective of emissions reductions more quickly and reliably while powering growth and helping consumers. With the reported shift in the plan, we believe the White House is perpetuating the false choice between renewables and natural gas.
CIBO Concerned about Power Plan Rule – The Council of Industrial Boiler Owners also raised concerns about the CPP. President Bob Bessette said the rule is nothing less than a power-grab over the Nation’s energy sector and—by extension—the U.S. economy. “Allowing EPA to go well beyond the fence-line of the power sector and tell states how to dispatch power to their customers threatens one of the most important foundations of economic growth—access to safe, cost-effective and reliable energy. If fully implemented, this plan would drive up the cost of power for the industrial and manufacturing sectors—the lifeblood of the U.S. economy—and impact the ability of our members to compete in a globalized economy.”
White House Hold East Room Event – This afternoon at 2:15 pm, the White House and President Obama hosted advocates and other supporters to unveil final rules for existing, new and modified power plants. Lots of action on Twitter there…
Follow up events for Reid, Alaska – President Obama later this month is slated to keynote retiring Senate Minority Leader Harry Reid’s clean energy summit. Obama will speak at the 8th annual National Clean Energy Summit in Las Vegas on August 24th at the Mandalay Bay Resort. Reid’s summit will also feature Energy Secretary Ernest Moniz and former Colorado Gov. Bill Ritter as speakers. At the end of the month, the President is expected to visit Alaska to again focus on Climate Change.
Black Chamber Study Hit CPP – The President mentioned that poor, minorities won’t be impacted. But, the National Black Chamber of Commerce President and CEO Harry Alford has released a new study that warns the Administration’s Clean Power Plan will significantly drive up energy costs and lead to dire consequences for minority communities through lost jobs, lower incomes and higher poverty rates for the 128 million blacks and Hispanics living in America. Restructuring the grid, which the rule will require, would lead to $565 billion in higher annual electricity costs by 2030 when the regulation will be fully implemented, according to the study. So with blacks and Hispanics spending a larger proportional share of their income on energy versus other demographic groups, the burden of higher costs will fall heaviest on minorities, “knocking minorities down another run on the economic ladder.” Alford asks lawmakers to resist the proposal and “fight the federal takeover of state authority,” a position that is supported by a growing number of allies from Congress, states, business associations and citizen groups who want to send the proposed power plant carbon rule back to the drawing board.
IN THE NEWS
SAFE Announces Energy Prize Winner – Securing America’s Future Energy announced the winners of its 2015 Energy Security Prize at an event at Founders Hall in Charleston, S.C. on CNBC Live. SAFE awarded a total of $175,000 to companies whose innovations are poised to advance American energy security by helping to end the United States’ dependence on oil. Momentum Dynamics, this year’s grand prize winner, received $125,000, while runners up FreeWire Technologies and Peloton Technology received $35,000 and $15,000 respectively. Grand prize winner Momentum Dynamics seeks to take DC fast charging for electric vehicles to the next level, pioneering a wireless charging system designed for the workplace and public locations like shopping centers and restaurants. Their unique 25-kilowatt wireless charging pad delivers power via magnetic induction ten times faster than home-based plug-in chargers, overcoming barriers to EV adoption by allowing EVs to charge frequently, quickly, and automatically. First runner up FreeWire Technologies’ Mobi electric vehicle (EV) charger helps eliminate the “charge rage” facing areas with high EV adoption and insufficient charging capacity. Second runner up Peloton Technology’s wireless communications system and cloud-based management links sensors and braking between pairs of trucks to provide dramatic aerodynamic fuel savings and increased safety. Videos showcasing these companies and their technologies can be viewed at www.secureenergy.org
DOE, AHRI Reach Agreement on Walk-in Coolers, Freezers Energy Efficiency Rule – AHRI said last week it has reached agreement with DOE regarding its rule for energy efficiency standards for commercial walk-in coolers and freezers (WICF). Earlier this year, AHRI argued that DOE had erred in numerous ways in adopting the WICF Rule — including by setting internally inconsistent standards that were unachievable using economically feasible technologies, by performing flawed cost-benefit work, and by failing to properly analyze small-business impacts. AHRI also noted that it had given DOE the opportunity to fix several of the Department’s errors in a petition for reconsideration. But DOE maintained that it lacked the power to fix such errors absent a court order. The settlement includes the following provisions 1) Refrigeration standards for multiplex condensing systems at medium and low temperatures, and for dedicated condensing systems at low temperatures will be vacated. DOE will support the use of a negotiated rulemaking process concerning the vacated standards, with a targeted completion date of January 2016 for this negotiated rulemaking process. DOE will also align WICF refrigeration enforcement dates by issuing an executive branch policy making clear that it will not enforce the remaining WICF refrigeration standards until January 1, 2020, provided that the anticipated negotiated rulemaking process delivers proposed standards to DOE by January 22, 2016. DOE will consider and substantively address as part of the negotiated rulemaking process any potential impacts of the standards on installers and smaller manufacturers. Finally, within six months, DOE will initiate a public process to determine how it will address error corrections in future rulemakings. DOE has also committed to employ best efforts to finalize that process within one year of the settlement.
ON THE SCHEDULE THIS WEEK
Senate Energy Look at Nuclear Issues CANCELLED – Tomorrow Senate Energy Committee hearing to discuss the back-end of the nuclear fuel cycle and related legislation has been postponed until after August Recess.
WCEE to Host Former EPA Fuels Expert – The Women’s Council on Energy and the Environment (WCEE) will hold a forum on Wednesday at Noon combating climate change with cleaner, smarter cars that will feature Margo Oge, former Director of the Office of Transportation and Air Quality at EPA. Oge served at EPA for 32 years, the last 18 of which she directed the Office of Transportation Air Quality and recently wrote a book: Driving the Future: Combating Climate Change with Cleaner, Smarter Cars, which envisions a future of clean, intelligent vehicles with lighter frames and alternative power trains, such as plug in electric and fuel cell vehicles that produce zero emissions and average 100+ mpg. Oge will also provide the ultimate insider’s account of the partnership between federal agencies, California and car manufacturers that led to President Obama’s historic 2012 deal targeting greenhouse gas emissions from passenger vehicles.
Wilson Forum to Look at Alberta Govt, Oil/Gas – On Thursday at 12:00 p.m., the Woodrow Wilson Center will hold a forum on the future of oil and gas development in the Alberta. The New Democratic Party’s stunning election victory in Alberta this spring has added another wrinkle to the already tumultuous story of Alberta’s, and Canada’s, year in energy. This seismic change in Canada’s political landscape could signal drastic changes for energy production in Alberta and the upcoming federal election. The Canada Institute holds their second Bring Your Own Lunch (BYOL) Policy Roundtable with David Docherty, PhD, President of Mount Royal College, to discuss the recent trends in Canadian and Alberta politics, their effect on energy producers, and look ahead to the election in the fall.
MD Climate Commission to Hold Public Hearing – The Maryland Climate Commission will meet on Thursday in Largo, MD to get public input on Maryland’s Climate Action Plan. This plan, required by Maryland’s 2009 Greenhouse Gas Reduction Act, contains over 150 programs and policies designed to slash statewide global warming pollution by 25% by 2020. The commission, made up of elected officials, advocates, and heads of state agencies, is charged with reporting on our state’s progress to date and making recommendations about next steps. The hearing, one of five taking place across the state, is an opportunity to shape the Climate Commission’s final recommendations — which will go to the Governor and the General Assembly before the next legislative session.
Texas EnviroSuperconference Set – The 27th Annual Texas Environmental Superconference will be held on Thursday and Friday in Austin at the Four Seasons Hotel. This year’s theme is clichés and the conference is fittingly entitled “The Greatest Thing Since Sliced Bread”; each topic has an appropriate cliché assigned to it. Speakers include, from the federal government, U.S. Department of Justice Assistant Attorney General John Cruden, EPA Deputy Administrator Stan Meiburg, EPA Principal Deputy Administrator Larry Starfield, and EPA Region 6 Regional Administrator Ron Curry, and, from the state, Bureau of Economic Geology Director Scott Tinker, Texas Commission on Environmental Quality Chairman Bryan Shaw and Commissioner Toby Baker, Texas Parks & Wildlife Executive Director Carter Smith, and the Governor’s Senior Legislative Advisor, Ashley Morgan, as well as other distinguished representatives from the public and private sectors, including Ross Ramsey from the Texas Tribune. Bracewell’s Rich Alonso and Tim Wilkins will also be speaking.
CSIS Forum Looks at Russian Gas Exports – The CSIS Energy and National Security Program will host a program to discuss the future of Russian gas exports. Speakers will include Isabel Gorst, Moscow-based Foreign Correspondent and CSIS expert Ed Chow.
August Recess – The House is out, but the Senate is likely to stay to many Wednesday or Thursday of this week.
Forum to Look at New Nuclear Technology – On Tuesday, August 11th at Noon, eGeneration will host a Luncheon Policy Briefing in B318 Rayburn on the development and commercialization of New Generation Nuclear technologies, including the Liquid Core Molten Salt Reactor,
Forum to Look at Grid-Scale Storage – The US Energy Association will hold a forum on Thursday, August 13th at 10:00 a.m. on Grid-scale energy storage. California’s energy strategy is a forcing function for more storage but what about the rest of the country? While ISOs like PJM have instituted competitive frequency regulation procurement, storage is only one of many options that can compete for this service. This presentation will summarize results from independent, competitive assessments focused on life cycle costs and commercial readiness of the various options.
GenForum Set For Columbus – ICF International Natural Gas VP Leonard Crook will kick-off the one-day GenForum/POWER-GEN event August 18th on natural gas generation in Columbus, Ohio. Crook will offer an overview of the recent rise of natural gas-fueled power generation over the years at the expense of coal-fired power plants. GenForum is organized by PennWell’s GenerationHub. The event is scheduled at the Greater Columbus Convention Center. GenForum leads into PennWell’s POWER-GEN/Natural Gas conference, scheduled for August 18-to-20 at the same convention center.
President to Address Reid Clean Energy Summit – The President will be the headliner at the annual Harry Reid Clean Energy Summit in at the Mandalay Bay in Las Vegas on August 24th. Secretary Moniz will also speak.
Moniz to Speak at CU – Energy Secretary Ernie Moniz will present a special guest lecture at the Colorado’s Getches Wilkinson Center on August 31st at 9:00 a.m. in the Wolf Law Building in Boulder.
Trauzzi to Address CHP Conference – The Combined Heat and Power Assn (CHP) will hold its 2015 Annual Meeting on September 14-15th at the National Press Club in Washington DC. The theme of this year’s conference is CHP: Providing Resilience and Security in an Uncertain Energy World. With the changing landscape of energy generation in the U.S. and the strain on an aging electric grid, energy solutions that are not only cost effective and efficient–but most importantly resilient–are needed to secure our energy future. This conference will highlight the ways in which combined heat & power is the best answer for our resilient energy needs while also providing numerous other benefits.
The conference will feature a number of new elements including CHP Association’s inaugural Solution Summit aimed at fostering meaningful discussion among attendees on ways to increase CHP deployment. In addition, there will be a trade show to highlight companies and organizations working in the industry, and a full day conference that will explore the conference theme of resilience. E&E TV’s Monica Trauzzi will be the keynote speaker.
Giuliani to Address Shale Insight – The 2015 Shale Insight Conference will be held in Philadelphia on September 16th & 17th Over the past five years, the conference has built a reputation for strong programmatic content, including an impressive speaker roster of nearly 100 industry experts, political figures and concurrent technical and public affairs session panelists who share their expertise. Attendees at the 2015 conference will hear from featured presenters, including: Hon. Rudolph W. Giuliani, Partner at Bracewell & Giuliani LLP and former mayor of New York City, as well as Robert Bryce, journalist, author and Senior Fellow at the Manhattan Institute.
DOE’s Solar Decathlon Set – The U.S. Department of Energy Solar Decathlon—America’s premier collegiate competition that challenges students from around the world to design, build and operate highly energy-efficient, solar-powered houses—will open October 8 in Irvine, California. Sixteen collegiate teams involving more than 2,000 students from 27 schools are deep into construction, assembling their innovative houses on or near their campuses. In less than three months, the students will transport and open those houses to the public in the Solar Decathlon village, where they’ll demonstrate just how affordable, attractive and comfortable these zero-energy homes—homes that are so efficient that a solar energy system can offset all or most of their energy consumption—have become.