U.S. States & Regions
States and regions across the country are adopting climate policies, including the development of regional greenhouse gas reduction markets, the creation of state and local climate action and adaptation plans, and increasing renewable energy generation. Read More
State Policy Actions to Overcome Barriers to Carbon Capture and Sequestration and Enhanced Oil Recovery
State Policy Actions to Overcome Barriers to Carbon Capture and Sequestration and Enhanced Oil Recovery
by Patrick Falwell
The development of Carbon Capture and Sequestration (CCS) and Enhanced Oil Recovery with Carbon Dioxide (CO2-EOR) projects faces a wide range of barriers, but state-level policy can help overcome many of these challenges. In addition to establishing a regulatory framework for CCS and CO2-EOR projects, states can provide incentives, financial or nonfinancial, to promote the development of CCS and CO2-EOR. So far, states have adopted a diversity of policies that meet local expectations and needs. Additional state policies have been proposed, but not yet adopted.
This paper, developed through the Sequestration Working Group of North America 2050, lists the key regulatory and economic barriers CCS and CO2-EOR projects must overcome, and lists examples of existing or proposed state-level policies to help in addressing each.
Key Considerations for Industrial Benchmarking in Theory and Practice
by Kyle Aarons
The industrial sector is responsible for 20 percent of the nation's energy consumption and greenhouse gas emissions. Benchmarking is used in a variety of applications to improve the efficiency of industrial facilities and therefore bring emissions down. In this context, benchmarking refers to developing and using metrics to compare the energy or emissions intensity of industrial facilities. Benchmarks are primarily used to compare facilities within the same sector, but can also be used to identify best practices across sectors where common process units, such as boilers, are used. Policymakers can use benchmarking for a variety of purposes, including setting emissions standards, recognizing leading facilities, promoting information sharing, or allocating emission credits in a cap-and-trade program.
This paper, developed through the Industry Working Group of North America 2050, is intended to encourage consistency in benchmarking methodology across programs within a single jurisdiction, as well as across jurisdictions. When facilities are benchmarked using a consistent methodology, it is possible to identify best practices as well as opportunities for improvement across sectors and jurisdictions. For example, two paper mills in neighboring states will only be able to compare their performance if both states use the same data collection methods and metrics. To encourage such consistency, this paper defines and explains key issues that arise when policymakers establish a benchmarking program. It also includes guiding principles recommended by the Working Group based on a review of benchmarking literature and successful programs.
On-bill programs allow building owners and occupants to pay for clean energy investments over time through an additional charge on utility bills.
On-bill programs have mostly focused on energy efficiency measures, though renewable energy and water efficiency projects may be eligible as well. Such projects often come with a high upfront cost that many people, businesses, and institutions cannot easily afford. On-bill programs can mitigate this problem because an administering utility or a third party covers the upfront cost of the clean energy installations. A customer’s history of utility bill payment can help to establish credit, and the customer may see little or no net increase in the monthly bill due to expected reductions in energy consumption. Generally, non-repayment will lead to a shutoff in utility service, which deters defaults and can make the loan provider more confident in repayment.
There are two general types of on-bill programs:
- On-bill financing (OBF) – a utility incurs the cost of clean energy upgrades and is repaid by the customer.
- On-bill repayment (OBR) – a third party (not the utility) provides the capital for a clean energy upgrade and is repaid by the customer through a utility bill.
On-bill programs vary by state and by provider, and each program has its own terms and process. Programs may be available to residential, commercial, industrial, and/or institutional customers depending on the state and utility policies. In those states with legislation that requires utilities to offer OBF, generally it is only obligatory for investor-owned utilities (IOUs). Administration of on-bill programs also varies; programs may be administered by the utility itself, a nonprofit organization, or a government entity. Some programs feature a discounted or zero interest rate. Initial investment funds for on-bill programs can come a variety of sources from utility ratepayers, government grants, or other funding sources. The American Recovery and Reinvestment Act of 2009 (ARRA) provided a significant amount of funding for OBF.
Most participants in on-bill programs begin the program with an audit of the building to determine if energy efficient upgrades would be cost-effective. Some programs require all upgrades to be “bill-neutral.” Bill-neutrality occurs when the savings accrued by the decreased energy use will be equal to or greater than the monthly repayment amount.
Certain on-bill programs may also have the characteristic of being “tied to the meter,” meaning that responsibility of repayment lies with the current resident of the building, rather than forever with the resident who instigated the financing. This allows for flexibility for residents who wish to move or sell their home.
The states are organized into the following policy categories:
1. State-Required On-Bill Financing or State-Launched On-Bill Program: These states have passed laws or public utilities commission orders that require utilities statewide (usually only large or investor-owned utilities) to provide an OBF program or directed a state agency to set up an on-bill program. Program specifications, such as loan terms, program size, and customer eligibility vary from state to state.
2. State-Supported On-Bill Programs: These states have passed laws or public utilities commission orders that authorize and/or support the implementation of OBF or OBR state-wide, but do not require any utilities to offer on-bill programs. These include policies that remove legal barriers or establish funds to offering on-bill programs.
3. Preliminary On-Bill Program Policy: These states’ public utilities commissions have ordered the establishment of pilot on-bill programs or commissioned research or working groups to analyze the feasibility of on-bill programs.
4. On-Bill Financing Offered by Individual Utilities: Utilities in some states have voluntarily created OBF programs without direction from local or state government. In some states, utilities can earn money from reducing overall demand. Energy efficiency can also be a way to reduce peak loads and thus generation costs.
To learn more about On-Bill Financing programs, please see the C2ES On-Bill Financing Brief.
On June 14, 2013, Texas Governor Rick Perry signed into law two bills that should increase the use of combined heat and power (CHP) in the state. Although natural gas production has been on the rise in Texas, the use of CHP has stagnated due to a difficult financing environment and regulatory barriers, and these laws may help remove some of those barriers.
HB 2049 clarifies language in the Texas Utility Code to allow CHP facilities to sell electricity and heat to multiple customers near the CHP facility to maximize efficiency and minimize financial risk. HB 1864 clarifies how to conduct CHP feasibility studies for government facilities that seek to use CHP for disaster preparedness.
Increased use of CHP has a number of positive effects. It is much more efficient than producing heat and power separately. It will replace coal usage in the state with natural gas and therefore decrease greenhouse gas emissions. In addition, because CHP is a decentralized method of energy generation, increased usage of CHP would decrease losses that generally occur while moving power from central power plants to customers. CHP is also less vulnerable to broader grid disruptions. Lastly, unlike typical power plants, CHP uses essentially no water, a welcome benefit in drought-ridden Texas.
In his State of the Union address, President Obama promised stronger action on climate change. Today he followed up with a credible and comprehensive plan. The real issue now is how vigorously he follows through.
From a policy perspective, the president’s plan lacks the sweep, cohesion and ambition that might be possible through new legislation. With Congress unwilling to act, the president instead is offering an amalgam of actions across the federal government, relying on executive powers alone.
Taken together, the actions represent the broadest climate strategy put forward by any U.S. president, addressing the need to both cut carbon emissions and strengthen climate resilience. While many of the specific items are relatively small-bore, and quite a few are actions already underway, the plan also includes new initiatives that can significantly advance the U.S. climate effort.
Mayor Michael Bloomberg’s $20 billion plan to safeguard New York City against a future Hurricane Sandy and other climate risks is the most ambitious effort yet by any U.S. city to prepare for the expected impacts of climate change.
The mayor last week announced “A Stronger, More Resilient New York,” a comprehensive plan to protect communities and critical infrastructure, and proposed significant changes to New York’s building codes for new construction and major renovations that will help buildings withstand severe weather and flooding. Its 250 recommendations include building new infrastructure (like installing armor stone shoreline protection in Coney Island), changing how services are provided (like encouraging redundant internet infrastructure), and establishing standardized citywide communication protocols for use during disruptions.
On June 4, 2013, Nebraska Governor Dave Heineman signed into law a bill that supports wind farm development with tax incentives. LB 104 provides a sales tax exemption for the purchase of turbines, towers, and other wind farm components. These tax incentives for wind development will allow wind projects to stay competitive with other methods of electricity generation in Nebraska and are expected to increase wind generating capacity in the state.
The American Wind Energy Association ranks Nebraska as having the fourth best wind resources in the nation, but the state lags in wind energy development. It ranks 26th out of the 39 states that generate electricity from wind energy. Nebraska currently has 459 MW of wind power capacity, while its neighbors Iowa, Kansas, and Oklahoma have 5133 MW, 2713 MW, and 3134 MW of capacity, respectively. Iowa, Kansas, and Oklahoma already have tax incentive provisions similar to those of LB 104.
At the time of the bill passage, Nebraska does not have a Renewable or Alternative Energy Portfolio Standard, but the Renewable Energy Credits (RECs) that are generated from Nebraskan wind farms have value in other states and can be traded through REC tracking systems.
For more information:
C2ES Climate TechBook: Wind Power
On May 24, 2013, Governor Mark Dayton of Minnesota signed into law an energy bill that is projected to greatly increase the state’s solar energy capacity by the end of the decade. Specifically, all utilities in the state must procure 1.5 percent of their electricity from solar generation by 2020, in addition to Minnesota’s existing Renewable Portfolio Standard (RPS) of 25 percent by 2025. Thus Minnesota’s RPS is now effectively 26.5 percent by 2025. To learn more details about Minnesota’s RPS, click on the state in the C2ES map of state Renewable and Alternative Energy Portfolio Standards.
Although 1.5 percent may seem low, compared to Minnesota’s existing solar capacity it is actually quite high. Currently, Minnesota has 13 megawatts (MW) of solar energy capacity, but in order to reach the 1.5 percent standard, the state will have to increase its solar capacity to 450 MW, more than a 30-fold increase. Thirteen other states have solar requirements, or “carve-outs,” five of which have percentage requirements higher than Minnesota. The states with the highest solar requirements are Colorado and New Mexico, each requiring four percent of electricity sold in the respective state to come from solar energy by 2020.
In addition to requiring that 1.5 percent of electricity come from solar resources, HF 956 also includes other solar energy initiatives. The law mandates that the state’s largest utility, Xcel Energy, begin a community solar garden program, in which people can own shares of a remote solar energy system and earn credit on their utility bill as if the solar panels were on their own homes. In addition, the law increases the maximum capacity for a net meter from 40 kilowatts to 1000 kilowatts, meaning owners of large solar panel arrays, such as large retail stores, can now be credited for electricity they put back on the grid, reducing their electricity bills. Lastly, the law also mentions a non-mandatory, state-wide goal of 10 percent solar by 2030.
Another energy bill was recently introduced in Minnesota that would increase the state’s RPS to 40 percent by 2030. This move would make Minnesota’s RPS one of the highest in the country.
For more information:
C2ES: Renewable Energy - Solar
C2ES: State RPS and AEPS Details
Midwest Energy News: Minnesota’s new solar law: Looking beyond percentages
PV-Tech: Minnesota bill will boost solar from 13 MW to 450MW