Energy & Technology
Top: Siemens 2.3 MW Offshore Wind Turbines, courtesy Siemens Press.
Bottom: The ADA-ES 1 MWe pilot unit, courtesy US Department of Energy.
This fall, America’s first offshore wind farm will come online off the coast of Rhode Island, launching a new industry with the potential to create clean energy jobs in manufacturing and in the marine trades, attract private investment to New England, and reduce carbon emissions.
New energy technologies often need both state and federal support to be deployed commercially. Rhode Island has been a leader in supporting offshore wind. In 2010, its legislature authorized a state utility to enter into an offtake agreement for offshore wind power. This year, Massachusetts did the same, and New York announced a new Offshore Wind blueprint.
Rhode Island also brought stakeholders together to create an Oceanic Special Area Management Plan outlining multiple uses for the marine environment. These efforts laid the groundwork for Deepwater Wind to develop the Block Island Wind Farm, a 30 MW, five-turbine project that can provide power for most of Block Island’s 1,051 residents.
Similar state policies could help deploy more carbon capture technology as well. A handful of states have clean energy standards that include carbon capture technology, including Illinois, Massachusetts, Michigan, Ohio and Utah. This year, Montana Gov. Steve Bullock highlighted carbon capture in his state’s Energy Future Blueprint. Other states could follow this model.
Both the Western Governors’ Association and the Southern States Energy Board have issued resolutions supporting carbon capture technology as did the National Association of Regulatory Utility Commissioners.
National policies and early financing support played a role in the success of offshore wind projects in Europe. A report by the Global Carbon Capture and Storage Institute noted that European nations included offshore wind in national energy policies and established feed-in tariffs to provide incentives for deployment.
Multilateral development banks like the European Investment Bank played a leadership role by lending to early offshore wind projects, paving the way for commercial banks to follow. Once these major factors were in place, then technology development, the establishment of standardized contract structures, and maintaining a certain level of deal flow helped drive efficiencies that brought down costs.
When it comes to financing carbon capture, use and storage (CCUS) in the U.S., we have some pieces of the puzzle in place. There is already a basic federal and state regulatory framework for underground storage of CO2, for example.
Still, financing policies are needed to enable investment in carbon capture projects. We should extend and expand commercial deployment incentives like tax credits and open up the use of master limited partnerships and private activity bonds to carbon capture, among other things.
A third lesson to draw from offshore wind is that to create new domestic industries, it helps to take a regional approach. Last year, the U.S. Department of Energy (DOE) announced funding for a multi-state effort for offshore wind in the Northeast to develop a regional supply chain.
DOE is taking a similar approach with CCUS and launched seven Regional Carbon Sequestration Partnerships to characterize CO2 storage potential in the U.S. and to conduct small and large-scale CO2 storage injection tests. Millions of tons of CO2 have already been stored for decades in West Texas as part of enhanced oil recovery operations. The regional partnerships characterized the potential for more CO2 storage in deep oil-, gas-, coal-, and saline-bearing formations as illustrated in the Carbon Storage Atlas. To date, the partnerships have safely and permanently injected more than 10 million metric tons of CO2 in these types of formations.
Investing seriously in carbon capture technology has economic benefits including for electrical workers, boilermakers, the building trades, and steelworkers. A new CO2 commodity industry could be created to reuse CO2 to make other products.
Carbon capture also has environmental benefits, helping us address emissions from industrial plants, which are the source of 21 percent of U.S. greenhouse gas emissions, and from coal and natural gas power plants, which currently supply two-thirds of U.S. electricity.
This fall, as we celebrate the beginning of the new offshore wind industry in the U.S., let’s keep thinking big about what is possible with carbon capture technology. With sufficient financial and policy support, we can create skilled jobs, attract private investment, and lower CO2 emissions.
With up to 70 percent of total global emissions originating within the boundaries of cities, local governments are at the center of the fight against climate change.
One area where local governments are stepping up to meet this challenge is the building sector, which offers a variety of opportunities to reduce energy demand. Local governments have long sought to improve energy performance among new buildings, however, new buildings aren’t replacing older ones at a fast enough rate to put a noticeable dent in commercial building energy use. In response, cities are working to improve the performance of the existing commercial building stock.
The new C2ES brief, Local Climate Action: Cities Tackle Emissions of Commercial Buildings, explores four commercial building policy strategies that leading cities are adopting: energy use benchmarking and disclosure mandates, retro-commissioning, retrofitting, and requirements for building upgrades to meet current codes. The brief offers examples of how these policies are developed, structured, and implemented. We looked at several examples in an earlier blog post.
These policies are showing promise for reducing emissions in cities that adopt them. For example, New York City is pursuing a suite of building actions, including a local law that requires buildings greater than 50,000 square feet to ensure all lighting systems meet current city standards in common areas and non-residential tenant spaces greater than 10,000 square feet by 2025. Those non-residential spaces must also be sub-metered, and energy use disclosed to tenants. The city intends to extend the policy to include buildings between 25,000 and 50,000 square feet. The move is expected to reduce annual emissions by about 60,000 metric tons of carbon dioxide (MtCO2e) and cut energy costs by $35 million annually.
As we reviewed these four policy categories, two conclusions became clear:
- Although policies like New York’s retrofitting requirement are not common in U.S. cities, replicating them broadly could provide widespread co-benefits in our communities and possibly contribute measurable greenhouse gas reductions at the national level.
- A larger energy transformation is needed to achieve the aggressive community emissions targets cities have set, and that won't happen without stronger collaboration.
While a number of federal programs provide cities with technical assistance and funding, additional support could be provided by U.S. states and businesses in the form of complementary programs, private investment, and active engagement in policy development. We’ve already seen more of this kind of collaboration through initiatives like the City Energy Project. The increasing number of businesses publicly committing to climate goals indicates there are many more opportunities.
In addition, the Clean Power Plan requires states to meaningfully reduce emissions from the power sector. Properly designed, state implementation plans for the Clean Power Plan could incentivize utilities and commercial building operators to improve the performance of the building stock.
If the actions of New York City, Seattle, and others are any indication, local governments have the potential to enact policies that foster climate action. These key players must continue taking bold actions to help create a policy environment across the country that promotes high-performing buildings, no matter when they were built.
Local Climate Action:
By Todd McGarvey and Amy Morsch
|Photos by Dennis Schroeder / NREL, Iberdrola Renewables, Inc., U.S. Department of Energy|
Wind and solar power were once considered expensive and were not widely deployed. Today, skeptics say the same about technology to capture, use and store carbon dioxide emissions (CCUS or carbon capture).
So what lessons can we draw from the experience of the wind and solar industries as they’ve become more mainstream to facilitate a faster and broader deployment of carbon capture technology?
The cost of wind energy has declined by more than 60 percent since 2009 and average nameplate capacity increased 180 percent between 1998-99 to 2015. These improvements have led to an installed wind capacity of 74,821 MW in the United States, enough electricity to power nearly 20 million average U.S. homes every year.
These wind energy milestones in cost reduction, performance improvements, and scale of deployment were supported by the Production Tax Credit (PTC), a federal deployment incentive. It’s reasonable to assume that the PTC would have been even more successful if it had been maintained consistently instead of experiencing periods of uncertainty regarding its fate, leading to boom-and-bust wind power development cycles.
Ongoing federal research and development (R&D) also spurred improved wind industry technology. For example, in 2007, the National Renewable Energy Laboratory initiated the Gearbox Reliability Collaborative in response to industry-wide technology challenges. That research led to improved gearbox designs, reducing the overall cost of wind energy and showing how collaborative industry efforts and federal support for R&D can resolve performance challenges.
Solar photovoltaic (PV) technologies experienced similar dramatic cost declines due to economies of scale and improved manufacturing and performance. The cost of utility-scale solar has fallen more than 54 percent since 2011. The efficiency of all PV cells steadily improved between 1975 and 2010, supported by multi-decade R&D programs like the Department of Energy’s Thin Film PV Partnership.
These cost declines and performance improvements were facilitated by the Investment Tax Credit, another federal deployment-focused incentive, and the Section 1603 Treasury program, a federal loan guarantee mechanism to support project financing. Strong state policies like the California Renewables Portfolio Standard enabled developers to enter into above-market power purchase agreements. The experience of utility-scale solar PV demonstrates that overlapping policies are essential to achieve financing for first-of-a-kind projects.
Lessons for carbon capture
We can draw three key conclusions from wind and solar energy’s experience:
- Stable, long-term deployment incentives that build on previous public and private investments in technology research, development and demonstration (RD&D) are essential to facilitate a large volume of projects;
- As more projects are deployed, costs are reduced through economies of scale, learning from experience, and technological innovation;
- Ongoing government support for RD&D can deliver cost reductions by supporting innovation and overcoming performance challenges.
In contrast to wind and solar, the U.S. lacks an effective federal incentive for commercial deployment of CCUS—despite being a world leader in public and private RD&D for early stage technology demonstration. Fifteen commercial-scale CCUS projects are operating globally; eight of those are in the United States. But that’s not nearly enough to meet our mid-century climate goals.
Carbon capture can be used at coal- or natural gas-fired power plants, which are baseload generation resources. It’s also the only way to reduce carbon emissions from some industrial plants, such as facilities producing chemicals, steel, and cement. Also, over the long-term, we’ll need to integrate biomass energy systems with carbon capture (BECCS). Combining the capture of photosynthetic carbon from biomass with CCUS can enable negative emissions.
While first-of-a-kind, commercial-scale CCUS projects are expensive, we know that as more projects come online, they will become cheaper. SaskPower estimates it could cut costs by up to 30 percent on the next unit to be retrofitted following its current experience operating the world’s first commercial-scale, coal-fired power plant carbon capture project. Developers are exploring novel approaches, including the Exxon and Fuel Cell Energy partnership and the Exelon-supported NET Power project, that have the potential to reduce costs still further.
It’s essential to extend and expand tax incentives for carbon capture, update state laws to include CCUS technology in clean energy standards, and fund continued carbon capture RD&D, among other things, if we are going to reach our emissions-cutting goals.
This year we will witness a number of milestones in technology to capture, use and store carbon dioxide from industrial sources and power plants – technology we need to reach our goals to reduce greenhouse gas emissions. We will need continued policy and financing support, however, to accelerate deployment worldwide. Innovative research in finding uses for captured carbon will also be essential.
In 2016, the Emirates Steel Industries project in Abu Dhabi will be the world’s first steel plant with carbon capture, use and sequestration (CCUS) technology to begin operations. Globally, seven commercial-scale CCUS projects are under construction and many more are in the planning stages.
In the U.S., two notable CCUS projects are expected to come online soon, including the first-ever incorporation of CCUS technology at a bioethanol refinery at the Archer Daniels Midland project in Illinois and the incorporation of CCUS technology at the coal-fired power plant at the Southern Company Kemper project in Mississippi. Not far behind, in 2017, the NRG Energy Petra Nova project in Texas will also incorporate CCUS technology on coal-fired power generation.
These anticipated project developments reflect the fact that CCUS technology is advancing around the world. Fifteen commercial-scale CCUS projects are operating. Eight of those are in the United States, which has been a leader in this area.
Recent North American milestones include the retrofit of the SaskPower Boundary Dam coal-fired power plant project in Canada with CCUS technology in 2014. In April 2016, the company announced it had exceeded the carbon capture reliability goals established for the technology. SaskPower estimates it could cut costs up to 30 percent on future units based on the experience it has acquired. Also in Canada, in November 2015, Shell incorporated CCUS technology on hydrogen production at the Quest project in Alberta.
CCUS technology grows increasingly important as nations begin to implement their emission reduction pledges under the Paris Agreement. The Intergovernmental Panel on Climate Change Fifth Assessment Synthesis Report concluded that CCUS technology will be essential to meet mid-century climate goals of keeping global temperature rise within 2 degrees Celsius of preindustrial levels. In fact, without CCUS, mitigation costs will rise by 138 percent.
Even as nations take on climate change and diversify their energy portfolios, fossil fuels are expected to serve 78 percent of the world’s energy demand in 2040. The most recent Energy Information Administration analysis suggests that global energy consumption is expected to rise by 48 percent over the next 30 years led by significant increases in the developing world. In Asia in particular, power generation from fossil fuels is expected to continue to grow over the near term.
Earlier this spring, the International Energy Agency (IEA) published a study on retrofitting China’s coal-fired power plants with CCUS technology, which will be critical because China has roughly 900 GW of installed coal-fired power plant capacity and has committed to peaking its CO2 emissions by 2030. The IEA study concludes that one-third of the coal fleet in China is suitable for retrofitting with CCUS technology.
Aside from the power sector, CCUS is a critical technology for the industrial sector, which contributes roughly 25 percent of global emissions. Carbon dioxide (CO2) is a by-product of many manufacturing processes for chemicals, steel, and cement production as well as refining. There are no practical alternatives to CCUS for achieving deep emissions reduction in the industrial sector.
In some cases, the cost of incorporating CCUS technology into industrial processes may be lower than in the power sector because the CO2 stream in the industrial sector is often relatively pure, i.e. less mixed with other gases. A number of industrial CCUS projects are already operational including the Uthmaniyah natural gas processing project in Saudi Arabia that came online in 2015. In the U.S., the Air Products Port Arthur project in Texas incorporating CCUS technology on hydrogen production has been operational since 2013.
As new projects begin operating around the world, the Global CCS Institute concluded that policymakers can learn lessons for CCUS from the development of offshore wind in Europe. Those projects benefited from policy support from national governments through feed-in tariffs and long-term offshore wind capacity targets in national energy plans. The report also concludes that a multi-source approach to finance, including project finance, export credit agency support, multilateral institution lending, and green bank funding, will be helpful for CCUS technology.
Finding uses for the captured carbon will also be essential. At the January World Economic Forum meeting in Davos, Switzerland, the Global CO2 Initiative was launched to develop innovative approaches to transform CO2 into commercial products. Promising options include construction materials, plastics, chemicals, and agricultural products.
As researchers continue exploring new uses for captured carbon, CCUS project developments this year and next continue to highlight the significant potential for CCUS technology to contribute to global emissions reduction.
This blog post first appeared in the Summer 2016 edition of The Current, a publication of the Women's Council for Energy and the Environment.
California and New York are leaders in setting ambitious climate goals. Both have committed to producing half their electricity from renewable sources by 2030. Both have set identical goals of reducing greenhouse gas emissions 40 percent below 1990 levels by 2030.
Where they part ways, however, is on nuclear power, which supplies the majority of zero-emission electricity in the United States. California is letting its nuclear plants ride off into the sunset while New York, which just approved a Clean Energy Standard that specifically includes nuclear power, is actively trying to preserve them.
This summer, Pacific Gas & Electric Company (PG&E) announced it will close its Diablo Canyon nuclear plant – the last one in the state of California – by 2025. After striking an agreement with environmental and labor groups, PG&E said it will seek to replace Diablo Canyon’s roughly 18,000 GWh of annual electricity – almost 10 percent of California’s in-state electricity – through improved energy efficiency, which will decrease demand, and renewable energy.
Many experts think it will be a stretch to reach that goal, especially by 2025, and that natural gas will have to fill the gap, as it has where nuclear plants have closed elsewhere in California, Vermont and Wisconsin. In New England, emissions increased 5 percent in 2015 after the Vermont Yankee nuclear plant shut down and was largely replaced by natural gas-fired electricity.
Diablo Canyon might have kept going if PG&E had gotten its way in negotiations with the state last year to include nuclear power in California’s renewable portfolio standard (RPS). That standard requires utilities to produce a certain amount of electricity from renewable sources like wind, solar, geothermal and hydropower. Including nuclear would have helped it compete economically with other low-carbon energy.
New York’s path
That’s exactly the path being taken in New York, which gets a third of its in-state electricity from nuclear power. To preserve the low-carbon benefits of its economically troubled upstate reactors and ensure its electricity mix becomes increasingly clean – with no backsliding – New York’s Public Service Commission has approved a clean energy standard (CES), which is essentially an RPS that includes nuclear.
New York’s CES mandate, which will take effect in 2017, is a novel approach that incorporates best practices from other states. It’s designed to incentivize new renewables deployment while also preserving existing clean electricity generation.
New York’s CES has three tiers, each with its own supply-demand dynamics. Tier 1 will incentivize new renewable development. Tier 2 is designed to provide sufficient revenue for existing renewable electricity supply. Tier 3 is designed to properly value the emission-free power from the state’s at-risk nuclear power plants.
Nuclear plant operators have long sought to correct what they perceive as a market failure to compensate nuclear power for its low-carbon benefits. If the at-risk reactors were replaced by an equivalent amount of fossil generation, emissions would increase by 14 million metric tons – increasing the state’s carbon dioxide emissions nearly 10 percent.
New York’s plan isn’t without controversy. There’s concern that it’s too costly. However, an associated cost study by the PSC found that the state could “meet its clean energy targets with less than a 1 percent impact on electricity bills.”
Most U.S. states have a renewable portfolio standard or alternative energy standard. Only Ohio allows new nuclear to qualify. Only New York has provisions for existing nuclear power plants.
Illinois is working to expand its RPS to include nuclear into a low-carbon portfolio standard, similar to New York’s CES, but efforts have stalled in the state legislature. Exelon has announced plans to close two nuclear power plants in the state in 2017 and 2018, which could lead to an additional 13 million metric tons of carbon dioxide emissions for the state.
Across the U.S., nine reactors are scheduled to close by 2025, which could increase carbon emissions by about 32 million metric tons, or 1.7 percent of the current total U.S. carbon emissions from the power sector.
New York’s approach to reducing its emissions is a practical, well-considered model that many other states could be following (Arguably, a national price on carbon would be more efficient, though more challenging to enact.)
New York’s four upstate reactors provide significant environmental and economic benefits. From a climate perspective, it doesn’t make sense to prematurely close these facilities when, in the short- and medium-term, they cannot realistically be replaced by alternative zero-emission power sources. Keeping these reactors operational also buys us additional time to address energy storage and transmission challenges to support more renewable generation.
With reasonable policies in place to support the existing U.S. reactor fleet, it will be easier for the U.S. to reduce its emissions and achieve its climate goals.
Rooftop solar panels in central India.
Photo courtesy Coshipi via Flickr
A bold initiative to vastly expand solar energy in developing countries recently reached two major milestones toward its ultimate goal of mobilizing $1 trillion in solar investments by 2030.
In late June, the World Bank Group signed an agreement establishing it as a financial partner of the International Solar Alliance, providing more than $1 billion in support. The Bank Group will develop a roadmap and work with other multilateral development banks and financial institutions to mobilize financing for development and deployment of affordable solar energy.
The news follows the June 7 joint announcement between India and the United States to launch an initiative through the Alliance focusing on off-grid solar energy.
The International Solar Alliance was announced at the Paris climate conference in December by Indian Prime Minister Narendra Modi and French President François Hollande. It was one of many new initiatives involving business, civil society, and public-private partnerships launched in Paris.
The alliance will comprise 121 countries located between the Tropic of Capricorn and the Tropic of Cancer that typically have 300 or more days of sunshine a year. Companies involved in the project include Areva, HSBC France and Tata Steel.
According to the Renewable Energy Policy Network for the 21st Century (REN21), global solar capacity experienced record growth in 2015, with the annual market for new capacity up 25 percent over 2014. More than 50 gigawatts were added, bringing the total global capacity to about 227 gigawatts. That’s about 10 percent of the total amount of electricity the U.S. produced in 2015.
In developing and emerging economies, affordable financing is a challenge. The alliance will work to expand solar power primarily in countries that are resource-rich but energy-poor by mobilizing public finance from richer states to deliver universal energy access. Strategies include lowering financing costs, developing common standards, encouraging knowledge sharing and facilitating R&D collaborations.
President Hollande laid the foundation stone of the International Solar Alliance at the National Institute of Solar Energy in Gurgaon, Haryana in January, marking the first time India has hosted the headquarters of an international agency. The Indian government is investing an initial $30 million to set up the headquarters. The French Development Agency has earmarked over 300 million euros for the next five years to finance the alliance’s first batch of projects.
The solar alliance complements India’s own ambitious solar energy goals, which include a 2030 target of 40 percent of electric power capacity from non-fossil fuel energy sources as part of its intended nationally determined contribution to the Paris Agreement. India also plans to develop 100GW of solar power by 2022, a 30-fold increase in installed capacity.
The growing support for the solar alliance is evidence of rising political momentum around the world to act on climate change and transition to a low-carbon economy. Look for a third major milestone in September, when the Alliance meets for its inaugural Founding Conference in Delhi.
Back in 2005, the U.S. Energy Information Administration projected that, under current policies, U.S. energy-related carbon dioxide emissions would increase nearly 18 percent by 2015.
They did not.
In fact, emissions fell – by more than 12 percent. So we were off by 30 percent.
As Yogi Berra may have said: It's tough to make predictions, especially about the future. We didn’t know then the impact a variety of market and policy factors would have on our energy mix. And we don’t know now all of the factors that could help us meet, or exceed, our Paris Agreement pledge – to reduce our net emissions 26-28 percent below 2005 levels by 2025.
U.S. emissions have fallen over the last 10 years due to factors that include:
- Growth in renewable energy
- Level electricity demand
- Improved vehicle efficiency
- A shift in electricity generation from coal to natural gas.
An unanticipated abundance of cheap natural gas has transformed the U.S. electricity mix. Coal-fired generation has fallen from 50 to 33 percent of the mix, while less carbon-intensive, natural gas-fired generation has risen from 19 to 33 percent.
The last 10 years also included a major economic downturn, which in 2009 drove electricity sales below 2005 levels. Despite a return to positive economic growth in the following year that continues through today, electricity sales have remained flat. Declines in manufacturing; improvements in energy efficiency, including in buildings, lighting, and appliances; warmer winters; and increased use of on-site generation like rooftop solar panels are the likely drivers.
What will happen in the next 10 years?
Certainly, the electric power sector will continue to decarbonize. It is not unreasonable to assume that natural gas will play an even larger role, while coal will play a substantial albeit diminishing role in the electricity mix.
Here are some other factors that are hard to quantify now, but could affect how quickly we transition to a clean energy future:
More zero-emission electricity
Increased clean and renewable electricity production, spurred by the Environmental Protection Agency’s Clean Power Plan and congressional tax credit extensions for wind and solar, could reduce renewable power costs, which have already been dropping. In other words, economies of scale could lead to higher deployments and lower emissions than currently forecast.
Wind and solar generation have grown nearly twelve-fold since 2005, nearly eight times greater than what was expected back then. In the 2016 Annual Energy Outlook, wind and solar generation are projected to increase 2.5 times by 2025. Historical precedent would tend to suggest that this is a highly conservative estimate.
However, sustained low prices in wholesale power markets from low natural gas prices and a proliferation of renewable electricity sources could harm another zero-emission source: nuclear. In particular, we could see natural gas continue to replace zero-emission merchant nuclear plants, moving us in the wrong direction, unless remedies are implemented. Also, low wholesale prices would tend to discourage new renewable generation.
More zero-emission vehicles
Electric vehicles (EVs) make up less than 1 percent of new U.S. car sales. But as their prices drop and range expands, the adoption rate could accelerate over the next 10 years, spurring important reductions from what is now the largest emitting sector. In one sign of growing demand, more than 400,000 people have put down a deposit for a Tesla Model 3 EV that won’t even be on the market until 2018.
Advances in battery storage could drive the transformation of the transportation sector and would provide obvious benefits to the electric power sector as well.
Meanwhile, automakers are exploring alternative fuels: natural gas, hydrogen fuel cells, and biofuels. And more than a dozen states and nations have formed a Zero-Emission Vehicle (ZEV) Alliance to encourage ZEV infrastructure and adoption.
Action by cities, the magnitude of which is not easily captured by national macroeconomic models, could lead to greater than anticipated emission reductions. Starting with the groundbreaking Mayors Climate Protection Agreement in 2005, initiatives are evolving to connect cities with each other to exchange knowledge and achieve economies of scale for new technologies.
More cities are exploring ways to generate additional reductions by 2025. These include: more energy-efficient buildings; better tracking of electricity and water use, innovative financing for more efficient generation, appliances and equipment; and improved public transportation and promotion of electric vehicles.
Last, but not least, steps taken by companies beyond regulatory requirements could produce greater emission reductions than we can foresee. Companies are investing in clean energy projects, reducing emissions throughout the supply chain, establishing internal carbon pricing, and helping customers reduce their carbon footprint. More than 150 companies have signed the American Business Act on Climate Pledge.
C2ES and The U.S. Conference of Mayors are teaming up to encourage city and business leaders to work together to reduce greenhouse gas emissions. Imagine how effective we can be when we coordinate climate action.
A 2015 UNEP report suggests that beyond each countries’ individual commitments to the Paris Agreement, actions by sub-national actors across the globe can result in net additional contributions of 0.75 to 2 billion metric tons of carbon dioxide emissions in 2020.
The United States has significantly reduced its greenhouse gases over the past decade, and has put in place policies ensuring continued reductions in the years ahead. With so many resources and tools at our disposal, it is clear that we can meet or exceed our climate goal. The only uncertainty is how we will do it.
Event: Innovation to Power the Nation
Technology, policy, and business experts discuss how innovative technology and policy can help us reach our climate goals at Innovation to Power the Nation (and World): Reinventing Our Climate Future at 1 p.m. ET on Wednesday, June 29. Watch the livestream.
Speakers include Patent and Trademark Office Director Michelle K. Lee; C2ES President Bob Perciasepe; Dr. Kristina Johnson, CEO of Cube Hydro Partners; Nate Hurst, Chief Sustainability & Social Impact Officer at HP; and Dr. B. Jayant Baliga, inventor and director of the Power Semiconductor Research Center at North Carolina State University.
Cities often lead the way on greenhouse gas reductions, even though they rarely control the operation of the power plants that supply their energy. So how can city initiatives work together with the federal Clean Power Plan to reduce carbon emissions from power plants?
One option is the Clean Energy Incentive Program (CEIP). The U.S. Environmental Protection Agency (EPA) included this early-action program as part of the Clean Power Plan and recently released program design details.
The program is voluntary. If a state chooses to participate, then certain renewable and energy efficiency projects can receive early action credits, including a federal match from EPA. These credits can be used for complying with the Clean Power Plan, so they provide additional financial incentives for clean energy projects.
While we can’t know the full value of the CEIP without knowing how many states participate and how power plants in those states comply with the Clean Power Plan, C2ES estimates the CEIP could drive up to $7.4 billion of private spending on clean energy projects across the country.
A key aspect of the CEIP is its support of project development in low-income communities. Solar and energy efficiency projects in these communities receive double credit, and a special reserve pool is created to make sure these projects can compete with large renewables for credits. This type of project development can support four key goals of city leaders:
1. Taking action to fight climate change;
2. Reducing energy bills for low-income residents;
3. Bringing jobs and investment to the community; and
4. Delivering co-benefits of renewable energy like cleaner air and water.
City leaders have the know-how to channel CEIP credits to their communities, but they will need to partner with their states and businesses to succeed.
Once states choose to participate, city leaders can help articulate the benefits of the CEIP. Cities can also provide data and support to project developers to streamline CEIP projects, especially low-income community projects that often face more hurdles. For example, they could help businesses locate communities that would host projects, work with utilities to identify potential projects, and build public-private partnerships to finance renewable energy.
How does it work?
Step 1: EPA creates a matching pool for each state. The amount of CEIP match available is limited, and EPA will divide the total pool among the states before the program gets started. If a state does not use its full share of the match, those credits will be retired. In other words, the CEIP is use it or lose it. Half of each state’s pool is reserved for low-income community projects and the other half for renewable projects like wind, solar, geothermal, or hydroelectricity.
Step 2: Interested states include the CEIP as part of their implementation approach. States must submit a plan to EPA that details how they will implement the Clean Power Plan. States that opt-in to the CEIP would have to declare that as part of their plan, and then they could receive the EPA match. If states opt out, then clean energy projects within their borders would not be eligible.
Step 3: New clean energy projects are developed in participating states. CEIP credits go only to new projects – renewable projects that start generating electricity on or after Jan. 1, 2020 or low-income energy-efficiency projects that start delivering energy savings on or after Sept. 6, 2016.
Step 4: New clean energy projects benefit the community. CEIP credits are awarded for electricity generated (renewables) or saved (energy efficiency) in 2020 and 2021. Starting in 2022, these projects are eligible for other financing opportunities under the Clean Power Plan.
Step 5: CEIP projects receive tradeable credits. States will verify how much clean energy a project is producing, then distribute the appropriate amount of CEIP credits (half from the state’s pool and half from EPA) to eligible projects. The project developers that receive the credits can sell them to power plants that need them to comply with the Clean Power Plan. CEIP projects don’t need the credits themselves because only fossil fuel-fired power plants are covered by the regulation. The value of CEIP credits will be determined by how power plants reduce their emissions.
The dates in the CEIP design details may change, depending upon the outcome of the legal challenge against the Clean Power Plan.
The CEIP will be open for public comment this summer. Once finalized, it will help promote new clean energy development in communities across the country. Its focus on low-income communities aligns it with other city priorities in addition to fighting climate change. The short timeframe of the program will make public-private collaboration a key to success in attracting CEIP projects.
C2ES, through our Alliance for a Sustainable Future with The U.S. Conference of Mayors, can be a valuable resource on climate policies like the CEIP. By communicating technical information in a meaningful way and facilitating the conversations between cities and businesses, we can advance clean and efficient energy.
When it comes to carbon capture, innovative technology exists, but the financial and policy support needed to accelerate its deployment is lacking.
At a recent Carbon Capture, Utilization & Storage (CCUS) Conference attended by leaders of industry, federal and state agencies, and environmental organizations, one theme that emerged is the importance of policy parity with other low- and zero-carbon energy technologies like wind and solar to advance widespread deployment of CCUS technology.
We know that CCUS technology is essential to meet our mid-century climate goals. In fact, without CCUS, mitigation costs will rise by 138 percent.
Exchange Monitor, the organizer of the CCUS conference, noted that it is “an extremely important technology, enjoying a bit more spotlight on the heels of the Paris climate change agreement.” Many nations specifically referenced CCUS technology in their Nationally Determined Contributions to the agreement, including Canada, China, Norway, Saudi Arabia, the United Arab Emirates, and the United States.
Even as nations diversify their energy portfolios, fossil fuels are expected to serve 78 percent of the world’s energy demand in 2040. The most recent Energy Information Administration analysis suggests that global energy consumption is expected to rise 48 percent over the next 30 years.
Clearly, there will be a need for CCUS technology to be widely deployed, in both the power and industrial sectors. Industry, including refining and chemicals, steel, and cement production, contributes roughly 25 percent of global emissions and there are no practical alternatives to CCUS for achieving deep emissions reduction in this sector.
CCUS project development is not on track, however. The most recent International Energy Agency (IEA) Tracking Clean Energy Progress report notes: “No positive investment decisions were taken on CCUS projects, nor did any advanced planning begin in 2015, resulting in a fall in the total number of projects in the development pipeline.”
Since a project can take five to 10 years from conception to operation, financial and policy support is critical now, the EIA adds. The report concludes: “As with other low-carbon technologies, the market for CCS projects in most regions will be created by policy and regulation.”
That conclusion was echoed at the conference by Dr. Julio Friedmann, the Senior Advisor for Energy Innovation at the Lawrence Livermore National Laboratory and former Principal Deputy Assistant Secretary for Fossil Energy at the U.S. Department of Energy. He said the financing challenge for CCUS projects “is fundamentally a policy issue; this is not a technology issue.” Barry Worthington, Executive Director of the U.S. Energy Association, emphasized at the conference that “providing identical fiscal tools for all no-carbon/low-carbon technologies reduces market distortion.”
Policies that would accelerate the deployment of CCUS technology include:
- Stronger federal and state incentives for carbon dioxide enhanced oil recovery (CO2-EOR)
- The inclusion of CCUS technology in state clean energy standards
- Funding for continued CCUS research, development, and demonstration
- A price on carbon
These policies would help overcome the barriers that innovative CCUS projects face, such as higher cost and higher perception of risk by investors. The cost reductions and performance improvements experienced by the wind and solar energy industries demonstrate that these kinds of policies (tax incentives, renewable portfolio standards, etc.) can accelerate the deployment of low- and zero-carbon energy technologies.
What policy parity means is sustained public sector support through the process of achieving a declining cost curve: from deploying initial first-of-a-kind CCUS technologies in both power and industrial applications to driving deployment of next-of-a-kind projects. It also means sustaining R&D on CCUS technologies so that low- and zero-carbon energy technologies are ultimately competitive without incentives.
As more CCUS projects come online, opportunities for cost reductions become apparent. SaskPower estimates it can save up to 30 percent on future CCUS units at the Boundary Dam power plant.
Finally, there is significant support for accelerated deployment of CCUS technology. C2ES co-convenes the National Enhanced Oil Recovery Initiative, which is a broad and unusual coalition of executives from the electric power industry; state officials; and environmental and labor representatives, all of whom support improved policy for CCUS technology in the United States. Based on our experience, and as expressed at the conference, policy parity needs to be an essential component of future federal and state efforts on climate to meet our agreed-upon goals and to match the growing need for CCUS technology.