can u.s. renewable law & policy catch up? · pdf filecan u.s. renewable law & policy...

World Renewable Energy Forum Session 0530

May 14, 2012

1:15-2:30 p.m.

Can U.S. Renewable Law &

Policy Catch Up?

K.K. DuVivier

Professor of Law

University of Denver,

Sturm College of Law

[email protected]

mailto:[email protected]

I. CONTEXT:

United States & World

Energy Statistics

II. IMPEDIMENTS:

A Bit of History

III. HELP?

1.2 The Renewable Energy Reader Figure 1.2—World primary energy consumption

The Renewable Energy Reader Figure 1.3 –Growth in world energy demand & consumption

Source: U.S. Energy Info. Admin., Int’l Energy Outlook 2010 1 (2010)

The Renewable Energy Reader Figure 1.8

The Renewable Energy Reader Figure 1.5— U.S. Energy Production and Consumption

Source: National Renewable Energy Lab., 2009 Renewable Energy Databook 7 (2010)

Source: National Renewable Energy Lab., 2010 Renewable Energy Databook 107 (2011) http://www.nrel.gov/analysis/pdfs/51680.pdf

The Renewable Energy Reader Figure 1.6 U.S. electricity capacity and generation


The playing field will not be level, even if all financial advantages (tax breaks, subsidies, etc.) are removed, because:

1) The price of conventional fuels does not account for externalities (air & water pollution , health costs, GHGs,);

2) -Infrastructure perpetuates & supports conventional fuels (petroleum fueling stations, highway system, RR for coal);

3) Conventional fuels had years to mature & were established before extensive public input & environmental review, which would have prevented their development today (mining, dam building, fracing).

The Renewable Energy Reader Figure 1.4—Levelized Cost of Energy (LCOE) of Renewable Electricity by Technology

Note: The price of solar PV panels was almost cut in half in 2010-2011 because of imports of cheap panels from China. A tariff was added in 4/12. Installation costs of PV are much higher in U.S.—DOE Solar Sunshot Initiative is working to change this.


True monetized cost of generating electricity from coal= 9 ¢ to 27 ¢/kWh Epstein, Full Cost Accounting for the Life Cycle of Coal, 1219 Annals N.Y. Acad. Sci, 73 (2011) cited in RER pp. 7-8

A Brief Chronology of the Incandescent Lightbulb

1802: Humphrey Davy of

Great Britain created the first incandescent

light with a strip of platinum.

1879: Thomas Edison filed

patent for the carbon filament incandescent

light bulb.

1882: World's first

hydroelectric power plant began operation

on the Fox River in Appleton, Wisconsin.

1885: 300,000 carbon

filament bulbs in use.

1904: Hungarian patent granted to

Sandor Just & Franjo Hananan for tungsten filament

incandescent light bulb. Tungsten filament bulbs lasted

longer and gave whiter light than carbon filaments.

1945: 795 million bulbs in U.S.

1914: 88.5 million bulbs in

U.S.

77 years

210 years

102 years

A Brief Chronology of the Automobile

1769: Steam engine

automobiles for human transport

1806: Internal combustion

engine running on fuel gas

1859: Drake’s well—oil

discovered in Pennsylvania Titusville, PA

1878: Spurred by a $10,000

reward from the State of Wisconsin, 1 vehicle

finished a 201 mile contest course

Late 1890s: Dominance of

petrol-gal internal combustion engine by 1910 (helped to

propel the petroleum industry)

1908-27: Model T—widely

available & affordable assembly line car

1921: Bureau of public roads asked

the army to list roads necessary for national defense

1938: FDR gave Thomas

MacDonald, chief of Bureau of Public Roads, a

hand drawn map of 8 superhighway corridors

1956: National Interstate and Defense Highways Act

setting up federal support & funding

mechanism

37 years

102 years 48 years

243 years

History of Solar PV

1921: Einstein wins Nobel Prize for theories on photovoltaic effect

1977: Solar Energy

Research Institute (now NREL) established

2007: 14.2MW solar PV array

at Nellis AFB, NV.

1954: Bell Labs creates

“power photocell” Costs $250-$300 / watt

2010: 58 MW Copper Mtn

Solar Facility, NV

58 years

1979: Costs: $10-20/watt

25 Kw at Mead, NE for remote hydro pumping

(still in operation)

33 years

1880 1900 1920 1940 1960 1980 2000 2020

1969 NEPA

HYDRO 1882

WIND 1979

SOLAR (CSP) 2010

PETROLEUM 1890

NUCLEAR 1955 / 1957

GEOTHERMAL 1960

COAL 1882

First Private Utility-Scale Electricity Generation By

Source

SOLAR (PV) 2010

0

10

20

30

40

50

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

Growth of U.S. Environmental Statutes

OSHA CAA

NEPA WSRA NHPA WRPA SWDA

WA

CERCLA EEA

ESAA SWRCA SMCRA

CWA CAAA RCRA

FLPMA TSCA

ESECA SDWA

DPA ESA

MMPA PWSA FIFRA

HCA CZMA

MPRSA WPCA

SARA SDWAA

EPAA RCRAA NWPA

RHA

IA RA

WL

WRA FCA TGA

FWCA

CSISSFRRA FIFRA

NTTAA

EISA FFDCA

http://www.epa.gov/lawsregs/laws/

1969 NEPA

http://www.epa.gov/lawsregs/laws/

I. CONTEXT:

United States & World

Energy Statistics

II. IMPEDIMENTS:

A Bit of History

III. HELP?

U.S. Renewable Law and Policy: Catch Up or The Clock Strikes Midnight!

Jeff Thaler Visiting Professor of Energy Policy, Law & Ethics

University of Maine

[email protected]

(207) 228-8539

May 14, 2012


1) Why Should We Care if U.S. Renewable Energy “Catches Up”?

2) How Can We Level the Cost Playing Field For Renewables vs. Fossil Fuels?

3) What Are Some of Renewable Energy’s Permitting Hurdles To Fix?

4) When? Actions to Take to Tilt the Regulatory Playing Field for Renewables to Catch Up– Now!

1) Why Should We Care if U.S. Renewable Energy

“Catches Up”? Many Critical Reasons…..

UN Secty. General Ban Ki-Moon, 12/11/09

Climate change is by far the most important and fundamental issue affecting all of our lives. It affects core development issues: poverty, water scarcity, disease, regional and political instability, global health. All of these issues are interconnected. [If we take on climate change], we can be in a much better position to address and resolve all of these issues. Climate change affects the future of humanity, and it affects the future of the planet Earth.

IEA Tracking Clean Energy Progress 4/12

We have a responsibility and a golden opportunity to act,” said IEA Deputy Executive Director Ambassador Richard H Jones. “Energy-related CO2 emissions are at historic highs; under current policies, we estimate that energy use and CO2 emissions would increase by a third by 2020, and almost double by 2050. This would likely send global temperatures at least 6°C higher. Such an outcome would confront future generations with significant economic, environmental and energy security hardships – a legacy that I know none of us wishes to leave behind.” http://www.iea.org/papers/2012/Tracking_Clean_Energy_Progress.pdf

http://www.iea.org/papers/2012/Tracking_Clean_Energy_Progress.pdf

What Would Six Degrees Look Like?

1⁰C Lose many tropical coral reefs and mountain glaciers

2⁰C Greenland ice sheet reaches point of unstoppable melt; Europe heat waves; 75% Reduced Sierra Nevada snow pack

3⁰C Tipping Point? Parts of Amazon rainforest collapse due to cycles of drought and fires

4⁰C Arctic ice cap melts; Permafrost esp. Siberian releases GHGs; Glacier fed rivers largely dry up

5⁰C Coastal cities severely flood during seasonal storms from sea level rise; more desertification

6⁰C Many species face extinction

Lynas Links and Thaler Moral:

• http://www.guardian.co.uk/books/2007/apr/23/scienceandnature.climatechange

• http://channel.nationalgeographic.com/channel/sixdegrees/interactive.html

We are fiddling while the world slowly, but increasingly, burns.

http://www.guardian.co.uk/books/2007/apr/23/scienceandnature.climatechange


http://channel.nationalgeographic.com/channel/sixdegrees/interactive.html


Doomsday Clock graph. The lower the graph becomes, the higher the probability of catastrophe is deemed to be: Now at 5 minutes to Midnight. (http://en.wikipedia.org/wiki/Doomsday_Clock)

http://en.wikipedia.org/wiki/Doomsday_Clock



Climate Change Also Is a Health Threat

--Humans depend on a safe climate for clean and plentiful water to drink and air to breathe, good soil for food, strong health, jobs, and a sustainable society for our children and theirs.

--Ocean resources depend on a safe climate to reduce exposure to increasing acidification and temperatures, and Forest resources to avoid spreading insect pest ranges, significant habitat losses, and resultant economic losses.

2) How Can Law and Policy Level the Cost Playing Field for Renewables Versus Fossil-Based Sources?

Let Us Count The Ways…..

From the International Energy Administration’s Tracking Clean Energy Progress Report,

April 2012

To move clean-energy technologies to the mainstream market: You must Level the playing field for clean energy technologies. This means ensuring that energy prices reflect the “true cost” of energy – accounting for the positive and negative impacts of energy production and consumption. [BUT HOW?]




One Cost: Relative Carbon

Dioxide Emisssions

0

10

20

30

40

50

60

Coa

lOil

Diese

l Fuel

Gas

olin

e

Pro

pane

Nat

ura

l Gas

Sol

ar

Win

d

Hyd

ropower

lbs

CO

2/m

illi

on

BT

U

Carbon Dioxide Emitted Per Quantity of Energy by Fuel Source (derived from the Energy Information Administration, “Voluntary Reporting of

Greenhouse Gases Program”

Renewables and Carbon Emissions

We know wind, hydro, tidal, geothermal, and solar power generally do not directly emit carbon emissions– but what about biofuels?

GHGs from direct & indirect land-use change/energy crop http://www.nature.com/nclimate/journal/v1/n8/fig_tab/nclimate12

65_F1.html

http://www.nature.com/nclimate/journal/v1/n8/fig_tab/nclimate1265_F1.html



2009 National Research Council “Hidden Costs of Energy”

--Non-climate damages estimated to be $120 Billion in 2005 (human health, grain crop, timber yields, building materials, recreation, visibility of outdoor vistas) --$62 Billion Coal electricity generation & $740 MM Natural Gas --$56 Billion from ground transportation (oil-petroleum) --$1.4 Billion from Heating with Natural Gas

--There are also many important policy issues which are not priced externalities:

- Indirect food price effects of biofuels - Oil supply and price shocks

National Research Council Conclusions --Non-climate damages from electricity generation and transportation exceed $120 billion (2005)-- principally related to emissions of NOx, SO2, PM.

--That is a substantial underestimate because it does not include damages related to climate change, health effects of hazardous pollutants, ecosystem effects, or infrastructure and national security.

--Climate damages vary greatly depending on the discount rate and the relationship between warming and GDP impacts. If the unit damage is more than $30/ton of CO2-eq, climate damages would likely be at least as large as non-climate damages.

http://www8.nationalacademies.org/onpinews/newsitem.aspx?RecordID=12794




Life Cycle Greenhouse Gas Emissions

(g CO2eq/kWh) 20

0

100

200

300

400

500

600

Adapted from: Jacobson, M. Review of solutions to global warming, air pollution, and energy security, Energy &

Environmental Science, 2008

Social Costs ($/kWh)

Sources: Energy Information Administration (2010); Epstein, P.R. et al (2011); Howarth, R.W., et al. (2011); Muller, N. Z., et al. (2011); National Research Council, U.S. National Academy of Sciences (2009); Stern, N (2006); Weitzman, M.L (2007).

0.00

0.05

0.10

0.15

0.20

0.25

0.30

Wind NGCC NGCC highCO2

Oil/gasTurbine

Coal

Justice &Insurance

Health &EnvironmentalCosts

Private Costs

Intergenerational justice

Insurance against catastrophe (Stern)

Fracking Health

?

One Tool: State Renewable & Alternative Energy Portfolio Standards (Not Federal)

http://www.c2es.org/what_s_being_done/in_the_states/rps.cfm



23

* Renewable CHP systems are eligible; fossil-fueled CHP systems are not eligible.

‡Includes only those states that allow fuel cells using nonrenewable energy sources of hydrogen. Some states allow only renewable fuel cells (Arizona,

California, Colorado, Delaware, Massachusetts, Maryland, New Mexico, New York, Rhode Island, Wisconsin) as eligible technologies.

Source: U.S. EPA Clean Energy-Environment Guide to Action (2006), Database of State Incentives for Renewable Energy (DSIRE) last accessed July

2007,

Resource Eligibility Eligibility of technologies varies by state and depends on whether an energy resource or technology supports state goals.

Another Tool: U.S. Production Tax Credits by Source

Resource Type In-Service Deadline Credit Amount

Wind December 31, 2012 2.2¢/kWh

Closed-Loop Biomass December 31, 2013 2.2¢/kWh

Open-Loop Biomass December 31, 2013 1.1¢/kWh

Geothermal Energy December 31, 2013 2.2¢/kWh

Landfill Gas December 31, 2013 1.1¢/kWh

Municipal Solid Waste December 31, 2013 1.1¢/kWh

Qualified Hydroelectric December 31, 2013 1.1¢/kWh

Marine and Hydrokinetic (150 kW or larger)**

December 31, 2013 1.1¢/kWh

Third Tool to Adjust: Fossil v Renewable Subsidies http://www.eli.org/pdf/Energy_Subsidies_Black_Not_Green.pdf

http://www.eli.org/pdf/Energy_Subsidies_Black_Not_Green.pdf


3) What Are Some of Renewable Energy’s Permitting Hurdles That Need To Be Fixed?

Let’s Look at Ocean Energy….

FERC Tidal Pilot (<5MW, <5yrs) Licensing Flow Chart http://www.ferc.gov/industries/hydropower/gen-

info/licensing/hydrokinetics/energy-pilot.asp

http://www.ferc.gov/industries/hydropower/gen-info/licensing/hydrokinetics/energy-pilot.asp






(Some) U. S. Federal Law and Policy Hurdles for Offshore Wind

• National Environmental Policy Act (NEPA) • Bureau of Ocean Energy Management Lease (BOEM) • Endangered Species Act (ESA) • Magnuson Stevens Fishery Convention & Management Act • Bald and Golden Eagle Protection Act • National Marine Sanctuaries Act • Rivers and Harbors Act of 1899 • Marine Mammal Protection Act (MMPA) • Coastal Zone Management Act (CZMA) • Clean Air Act (CAA) • Clean Water Act (CWA) • National Historic Preservation Act (NHPA) • Government Performance and Results Act (GPRA) • Fishery Conservation and Management Act (FCMA) • Executive Order 12114: Environmental Effects Abroad • Executive Order 12898: Environmental Justice • Executive Order 13007: Indian Sacred Sites • Executive Order 13089: Coral Reef Protection

http://www.boemre.gov/eppd/compliance/nepa/index.htm


http://www.boemre.gov/eppd/compliance/esa/index.htm


http://www.boemre.gov/eppd/compliance/mmpa/index.htm

http://www.boemre.gov/eppd/compliance/czma/index.htm

http://www.boemre.gov/eppd/compliance/caa/index.htm

http://www.boemre.gov/eppd/compliance/cwa/index.htm

http://www.boemre.gov/eppd/compliance/nhpa/index.htm

http://www.boemre.gov/eppd/compliance/gpra/index.htm

http://www.boemre.gov/eppd/compliance/fcma/index.htm

http://www.boemre.gov/eppd/compliance/12114/index.htm




Federal Endangered Species Act Hurdles

-- Prohibits the “take” of a species federally listed as threatened or endangered.

-- “Take” means to harass, harm, pursue, wound, kill, capture or collect– or to disrupt normal behavioral patterns or significantly impair essential behavioral patterns

-- “Take” through “harm” can also include by impactful habitat modification

-- Incidental Take Permit then required—Can Require Years of Studies and Processing

Federal Marine Mammal Protection Act --Prohibits “taking” of marine mammals unless specifically permitted by law;

--Incidental take protection can be sought—again, multiple requirements and months or longer.

Federal Migratory Bird Treaty Act --Prohibits the “taking” of migratory birds;

--No incidental take permit available; need to explore possible special purpose permit options.

-- Risk of prosecution if a bird is “taken” is a hotly debated topic today

Additional State (ie Maine) Requirements, Even for Projects in Federal Waters, Include:

-- Multiple statutory approvals for cabling running within 3 miles of State lands….

-- Also for Any Onshore or Near-shore Assembly and Staging Areas That May Impact State Waters or Land (Including Islands)

FOR EXAMPLE:

Site Location of Development Act

--Need Dept. of Envtl. Protection Site Location of Development Permit, but no expedited permitting process;

--Must show, in part, no adverse effect on natural environment, scenic character, natural resources in the area;

--Also adequate provision to fit development harmoniously into existing natural environment.

Permitting Result?

Multiple years, Multiple Types and Levels of Approvals Required, Multiple Degrees of Developer and Financier Uncertainty, Risks, and Higher Costs, and Multiple Ways for Renewable Projects to Never Get Steel into the Ground or Water

4) Actions to Take to Tilt the Playing

Field for Renewables to Catch Up–

Now!

More than a Level Field with Fossils Needed– 5 Minutes to Midnight

Must Tilt the Field to Faster, Expedited and One-Stop Reviews for Permit and Lease Approvals…Some Experts’ Ideas…..

UMaine Students’ Ideas --Streamline permitting and regulatory review ie one stop permitting, expedited timelines and zoning(ie Maine wind); time limits for issuance of permit decisions or else approved for renewable projects. Use rebuttable presumptions. --Enact National Renewable Portfolio Standard --Rebuttable Presumption that interference with a neighbor’s solar access is a legal nuisance --More $$ for generation and distribution efficiency initiatives --End fossil subsidies; impose carbon tax based on true social costs of energy source; Long term subsidy policy for all renewable energy, staggered- higher in beginning, lower overtime

More Students’ Ideas --Kyoto Protocol—US sign it! --Carbon offsets: Mandatory, not optional, ie for air flights, car travel, etc. --Education efforts using social media to emphasize local impacts of climate change; Be more visible, concrete, ie calculate # tons of carbon emissions you or a business do a year, then create something of that weight/appearance and install in front yard, lobby, etc -- Choice visuals: oil refinery nearby vs favorite mtn top leveled for coal vs on or offshore wind farm --Start earlier than college on climate change, sustainability educating ie elementary schools

Or We Could Learn from The Mouse That Roared….

Denmark --Danish Energy Authority is A Single Agency Overseeing Permitting, Transmission, Incentives

-- 30% Investment Tax Credit (‘79-’89); Feed-In Tariff (‘81-onward), Carbon Tax (‘92)

--Long-Term Wind Financing if Use Danish Turbines

--Each municipality must plan 75MW wind capacity

--Turbine-owner & Utility share Grid connection costs

--Mandatory Efficiency regs, more Cogeneration

--Long-term, consistent energy financing policies encourage investment and R&D

http://www.thedailyshow.com/watch/wed-june-16-2010/an-energy-independent-future

The End?

By Contrast: U.S. “Clean” Energy Policy: After 8 Presidents’ Speeches, Time’s A Wasting to Turn Back the

Doomsday Clock


















bhfs.com Brownstein Hyatt Farber Schreck, LLP

Solyndra Fallout

A Fukushima for U.S. Renewable Energy,

or just a bump in the road?

Presented by

John A. Herrick Brownstein Hyatt Farber

Schreck, LLP

Denver, CO

May 14, 2012

World Renewable

Energy Conference

Denver, CO

bhfs.com John A. Herrick, May 14, 2012 - WREC Brownstein Hyatt Farber Schreck, LLP

2

U. S. Renewable Energy Sector is in a Hiatus

Great Recession of 2009 is still lingering in renewable financing

Private Capital is on the sideline and hasn’t come back

Project financing is in the doldrums

The 2010 U.S. Stimulus funding is over

Was great while it lasted

It is now over and a new round of funding may not come back

Private Sector has not picked up the slack

Congress is in a foul mood with tax incentives for renewables

U.S. Energy Policy – Cheap Energy

New era for natural gas and alternative fossil fuel development


3

U.S. Energy Policy is in an Election Year Mode

Congress will not address climate change issues this

year or likely next year

The energy issues in the Presidential election will

revolve around cheap energy – not long term

considerations

The task facing the renewable sector in federal policy

is to hunker down and fight to retain what has been

won in the past

Get tax extender legislation passed in the lame duck

session


4

Despite What You Hear, the Federal

Stimulus Was a Success

Energy Efficiency & Renewable Energy R & D

Stimulus Package - $18.5 Billion for various federal and state EE & RE grant programs

$11 Billion to states

ARPA – E $400 million

Smart grid - $4.5 Billion

DOE’s Loan Guarantees for Renewable Projects

DOE has made $15.1 Billion in loan guarantees for 30 major renewable energy project financings

Median project size - $141 million

“Shovel Readiness” and Job Creation

Has another $15 Billion in projects in the pipeline under conditional commitments


5

The Stimulus Extended and Expanded Federal Tax

Incentives for Renewable Energy Projects

Investment Tax Credit

Production Tax Credit

Manufacturing Tax Credit

Cash Grant in Lieu of Credit Program


6

Investment Tax Credit (ITC)

ITC Credit is 30% of investment cost in the capital facility

Claimed year facility placed into service

Primarily solar, but also small wind projects, pre-

transmission geothermal 10%: post-transmission

geothermal, microturbines, combined heat & power

Placed in service on or before December 31, 2016


7

Production Tax Credit (PTC)

Tax credit based upon amount based on sale of

“electricity” produced from “qualified energy resources”:

wind

closed-loop and open-loop biomass

geothermal

Realized over 10 years commencing with year placed in

service -

generally 2.1 cents per kilowatt hour

phased-out proportionally over the 10 years

Placed in service

on or before December 31, 2012 for wind projects

on or before December 31, 2013 for all other projects


8

Cash Grant in in lieu of PTC or ITC (§ 1603

Program) Was the major success story of the Stimulus

Opened renewable financing to entities without tax liabilities

Immediate cash, relatively simple process

Supported 23,000 PV and large wind projects from 2009-2011

supported $30 billion in investments

Solar market grew 176% during this period

Added 13,000 MW of wind and solar to the grid

Construction & installation jobs - @60,000 jobs

Indirect jobs - @ 55,000 jobs

O&M permanent jobs - @ 5,250 jobs

Source:

Preliminary Analysis of the Jobs and Economic Impacts of Renewable Energy Projects Supported by the §1603

Treasury Grant Program, NRELNREL/TP-6A20-52739, April 2012, Daniel Steinberg, Gian Porro, Marshall

Goldberg


9

§ 1603 Cash Grant

Source:

Preliminary Analysis of the Jobs and Economic Impacts of Renewable Energy Projects Supported by the §1603 Treasury Grant

Program, NRELNREL/TP-6A20-52739, April 2012, Daniel Steinberg, Gian Porro, Marshall Goldberg

Gash Grant Affect


10

§ 1603 Cash Grant Deadlines – Its about over

Property must be placed in service in 2011, or before the credit

termination date for such property, provided construction began

during 2011

The credit termination date for large wind projects is January 1,

2013 and is January 1, 2017 for solar projects

An application must be submitted before October 1, 2012 for

property that will not be placed in service before December 31,

2011


11

Some Good Funding News, Some Bad For FY 2013

Senate Appropriations Subcommittee has just passed a measure

that would provide $2 billion for DOE renewable energy and

energy efficiency office

A $160 million increase from FY 2012 levels

$500 million more than the House funding mark for FY 2013

ARPA-E was marked $37 million over its current 2012 budget

Neither House or Senate provided additional funds for Loan

Guarantees in FY 2013


12

Could this be the high water mark?

Crash Grant Program has not been extended by Congress, nor

does it seem likely that it will be extended

In 2010, Congress made a last-minute decision to extend the

1603 program for 2011

On November 30, 2011, more than 750 renewable energy trade

groups and companies sent a letter to Congress urging an

extension of the 1603 program to no avail

Manufacturing Tax Credit has not been extended, nor is it likely

that it will be extended by Congress

Best chance with Congress is extending the PTC


13

Along Came Solyndra!


14

Solyndra A $535 million loan guarantee for PV manufacturing facility in

Fremont, California 2009 issued by DOE in 2009

Chapter 11 Bankruptcy in August 2011, defaulted on guaranteed

loan

Reason: Unfair competition from Chinese panel manufactures?

Puts a dark cloud over DOE’s Loan Guarantee Program and all

federal programs for clean energy

U.S. Treasury – Out $525 million


15

Clean energy has now become a political football

Political knives are out for shaky

clean energy projects funded with

public dollars


16

Failure to Extend the Production Tax Credit

PTC expires at end of this year

Is now the main federal incentive for large wind projects

Congress has so far refused to extend credit

Will the Lame Duck Congress save the day?

Long wait until November, December?


17 Source: AWEA/EIA – “Federal Production Tax Credit for Wind Energy”

Historic Impact of PTC expiration on annual wind installation

?

2013


18

Affect of Not Extending PTC

With no PTC extension this year, the U.S. wind market will shrink

significantly in 2013

Annual installations will be 2 GW in 2013, down from >8 GW in 2012.

Total wind supported jobs will drop by nearly half, from 78,000 in 2012 to 41,000 in 2013

Total wind investment will drop by nearly two-thirds, from $15.6 billion in 2012 to $5.5 billion in 2013

With a 4 year PTC extension, the U.S. wind market will grow through

2016

Annual installations will be 8-10 GW through 2016

Total wind supported jobs will grow to 95,000 by 2016

Total wind investment will grow to $16.3 billion in 2016

Source: Impact of the Production Tax Credit on the U.S. Wind Market, Naigant Inc, (December 2011), Prepared for the

American Wind Energy Association


19

Future Electric Capacity Needs Through 2035 -

Can Renewables Compete?

EIA predicts 60% of new

additions will be natural gas;

25% renewable; 11% coal; 3%

nuclear; and 1% “other”

223 gigawatts of need filled

primarily with gas and

renewable capacity

But?

Source: EIA, Annual Energy Outlook 2011


20

Competition from Natural Gas

Shale gas production increasing

17% per year growth 2000 - 2006;

accelerating to 48% per year,

2006 to 2010

Largely attributed to advances in

technologies, primarily horizontal

drilling and

Hydraulic fracturing, which have

opened up plays in a number of

different basins that were not

previously considered due to

economics

Gas prices leveling off:

Source: EIA, Annual Energy Outlook 2011


21

Renewable generation industry will be faced with a

choice in the upcoming years:

or

Compete with natural gas

based upon cost.

Form partnerships with natural gas for a

new generation of baseload facilities.

Gas v.

Renewable

Gas and

Renewable


22

Contact:

John Herrick, Esq.

Brownstein Hyatt Farber Schreck, LLP

Denver, Colorado - Washington, DC

(303) 223-1122

[email protected]

U.S. Renewable Law and Policy: Catch Up or The Clock Strikes Midnight!

Jeff Thaler Visiting Professor of Energy Policy, Law & Ethics

University of Maine

[email protected]

(207) 228-8539

May 14, 2012


1) Why Should We Care if U.S. Renewable Energy “Catches Up”?

2) How Can We Level the Cost Playing Field For Renewables vs. Fossil Fuels?

3) What Are Some of Renewable Energy’s Permitting Hurdles To Fix?

4) When? Actions to Take to Tilt the Regulatory Playing Field for Renewables to Catch Up– Now!

1) Why Should We Care if U.S. Renewable Energy

“Catches Up”? Many Critical Reasons…..

UN Secty. General Ban Ki-Moon, 12/11/09

Climate change is by far the most important and fundamental issue affecting all of our lives. It affects core development issues: poverty, water scarcity, disease, regional and political instability, global health. All of these issues are interconnected. [If we take on climate change], we can be in a much better position to address and resolve all of these issues. Climate change affects the future of humanity, and it affects the future of the planet Earth.

IEA Tracking Clean Energy Progress 4/12

We have a responsibility and a golden opportunity to act,” said IEA Deputy Executive Director Ambassador Richard H Jones. “Energy-related CO2 emissions are at historic highs; under current policies, we estimate that energy use and CO2 emissions would increase by a third by 2020, and almost double by 2050. This would likely send global temperatures at least 6°C higher. Such an outcome would confront future generations with significant economic, environmental and energy security hardships – a legacy that I know none of us wishes to leave behind.” http://www.iea.org/papers/2012/Tracking_Clean_Energy_Progress.pdf


What Would Six Degrees Look Like?

1⁰C Lose many tropical coral reefs and mountain glaciers

2⁰C Greenland ice sheet reaches point of unstoppable melt; Europe heat waves; 75% Reduced Sierra Nevada snow pack

3⁰C Tipping Point? Parts of Amazon rainforest collapse due to cycles of drought and fires

4⁰C Arctic ice cap melts; Permafrost esp. Siberian releases GHGs; Glacier fed rivers largely dry up

5⁰C Coastal cities severely flood during seasonal storms from sea level rise; more desertification

6⁰C Many species face extinction

Lynas Links and Thaler Moral:

• http://www.guardian.co.uk/books/2007/apr/23/scienceandnature.climatechange

• http://channel.nationalgeographic.com/channel/sixdegrees/interactive.html

We are fiddling while the world slowly, but increasingly, burns.





Doomsday Clock graph. The lower the graph becomes, the higher the probability of catastrophe is deemed to be: Now at 5 minutes to Midnight. (http://en.wikipedia.org/wiki/Doomsday_Clock)




Climate Change Also Is a Health Threat

--Humans depend on a safe climate for clean and plentiful water to drink and air to breathe, good soil for food, strong health, jobs, and a sustainable society for our children and theirs.

--Ocean resources depend on a safe climate to reduce exposure to increasing acidification and temperatures, and Forest resources to avoid spreading insect pest ranges, significant habitat losses, and resultant economic losses.

2) How Can Law and Policy Level the Cost Playing Field for Renewables Versus Fossil-Based Sources?

Let Us Count The Ways…..

From the International Energy Administration’s Tracking Clean Energy Progress Report,

April 2012

To move clean-energy technologies to the mainstream market: You must Level the playing field for clean energy technologies. This means ensuring that energy prices reflect the “true cost” of energy – accounting for the positive and negative impacts of energy production and consumption. [BUT HOW?]




One Cost: Relative Carbon

Dioxide Emisssions

0

10

20

30

40

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60

Coa

lOil

Diese

l Fuel

Gas

olin

e

Pro

pane

Nat

ura

l Gas

Sol

ar

Win

d

Hyd

ropower

lbs

CO

2/m

illi

on

BT

U

Carbon Dioxide Emitted Per Quantity of Energy by Fuel Source (derived from the Energy Information Administration, “Voluntary Reporting of

Greenhouse Gases Program”

Renewables and Carbon Emissions

We know wind, hydro, tidal, geothermal, and solar power generally do not directly emit carbon emissions– but what about biofuels?

GHGs from direct & indirect land-use change/energy crop http://www.nature.com/nclimate/journal/v1/n8/fig_tab/nclimate12

65_F1.html




2009 National Research Council “Hidden Costs of Energy”

--Non-climate damages estimated to be $120 Billion in 2005 (human health, grain crop, timber yields, building materials, recreation, visibility of outdoor vistas) --$62 Billion Coal electricity generation & $740 MM Natural Gas --$56 Billion from ground transportation (oil-petroleum) --$1.4 Billion from Heating with Natural Gas

--There are also many important policy issues which are not priced externalities:

- Indirect food price effects of biofuels - Oil supply and price shocks

National Research Council Conclusions --Non-climate damages from electricity generation and transportation exceed $120 billion (2005)-- principally related to emissions of NOx, SO2, PM.

--That is a substantial underestimate because it does not include damages related to climate change, health effects of hazardous pollutants, ecosystem effects, or infrastructure and national security.

--Climate damages vary greatly depending on the discount rate and the relationship between warming and GDP impacts. If the unit damage is more than $30/ton of CO2-eq, climate damages would likely be at least as large as non-climate damages.





Life Cycle Greenhouse Gas Emissions

(g CO2eq/kWh) 20

0

100

200

300

400

500

600

Adapted from: Jacobson, M. Review of solutions to global warming, air pollution, and energy security, Energy &

Environmental Science, 2008

Social Costs ($/kWh)

Sources: Energy Information Administration (2010); Epstein, P.R. et al (2011); Howarth, R.W., et al. (2011); Muller, N. Z., et al. (2011); National Research Council, U.S. National Academy of Sciences (2009); Stern, N (2006); Weitzman, M.L (2007).

0.00

0.05

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0.30

Wind NGCC NGCC highCO2

Oil/gasTurbine

Coal

Justice &Insurance

Health &EnvironmentalCosts

Private Costs

Intergenerational justice

Insurance against catastrophe (Stern)

Fracking Health

?

One Tool: State Renewable & Alternative Energy Portfolio Standards (Not Federal)




23

* Renewable CHP systems are eligible; fossil-fueled CHP systems are not eligible.

‡Includes only those states that allow fuel cells using nonrenewable energy sources of hydrogen. Some states allow only renewable fuel cells (Arizona,

California, Colorado, Delaware, Massachusetts, Maryland, New Mexico, New York, Rhode Island, Wisconsin) as eligible technologies.

Source: U.S. EPA Clean Energy-Environment Guide to Action (2006), Database of State Incentives for Renewable Energy (DSIRE) last accessed July

2007,

Resource Eligibility Eligibility of technologies varies by state and depends on whether an energy resource or technology supports state goals.

Another Tool: U.S. Production Tax Credits by Source

Resource Type In-Service Deadline Credit Amount

Wind December 31, 2012 2.2¢/kWh

Closed-Loop Biomass December 31, 2013 2.2¢/kWh

Open-Loop Biomass December 31, 2013 1.1¢/kWh

Geothermal Energy December 31, 2013 2.2¢/kWh

Landfill Gas December 31, 2013 1.1¢/kWh

Municipal Solid Waste December 31, 2013 1.1¢/kWh

Qualified Hydroelectric December 31, 2013 1.1¢/kWh

Marine and Hydrokinetic (150 kW or larger)**

December 31, 2013 1.1¢/kWh

Third Tool to Adjust: Fossil v Renewable Subsidies http://www.eli.org/pdf/Energy_Subsidies_Black_Not_Green.pdf



3) What Are Some of Renewable Energy’s Permitting Hurdles That Need To Be Fixed?

Let’s Look at Ocean Energy….

FERC Tidal Pilot (<5MW, <5yrs) Licensing Flow Chart http://www.ferc.gov/industries/hydropower/gen-

info/licensing/hydrokinetics/energy-pilot.asp







(Some) U. S. Federal Law and Policy Hurdles for Offshore Wind

• National Environmental Policy Act (NEPA) • Bureau of Ocean Energy Management Lease (BOEM) • Endangered Species Act (ESA) • Magnuson Stevens Fishery Convention & Management Act • Bald and Golden Eagle Protection Act • National Marine Sanctuaries Act • Rivers and Harbors Act of 1899 • Marine Mammal Protection Act (MMPA) • Coastal Zone Management Act (CZMA) • Clean Air Act (CAA) • Clean Water Act (CWA) • National Historic Preservation Act (NHPA) • Government Performance and Results Act (GPRA) • Fishery Conservation and Management Act (FCMA) • Executive Order 12114: Environmental Effects Abroad • Executive Order 12898: Environmental Justice • Executive Order 13007: Indian Sacred Sites • Executive Order 13089: Coral Reef Protection





http://www.boemre.gov/eppd/compliance/mmpa/index.htm

http://www.boemre.gov/eppd/compliance/czma/index.htm

http://www.boemre.gov/eppd/compliance/caa/index.htm

http://www.boemre.gov/eppd/compliance/cwa/index.htm

http://www.boemre.gov/eppd/compliance/nhpa/index.htm

http://www.boemre.gov/eppd/compliance/gpra/index.htm

http://www.boemre.gov/eppd/compliance/fcma/index.htm



