Climate Compass Blog

How the first US offshore wind project holds lessons for carbon capture

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.

In Europe, the number of offshore wind farms grew from zero to 84 in just a few decades. What lessons can we draw from the growth of offshore wind that could help advance carbon capture technology?

State Leadership

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

Financing Support

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.     

Regional Approach

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.  

Building sustainability from the ground up

L to R: Tom Cochran, CEO and Executive Director, The U.S. Conference of Mayors; Daniel A Zarrilli, Senior Director, Climate Policy and Programs, Chief Resilience Officer, New York City Office of the Mayor; Josh Sawislak, Global Director of Resilience, AECOM; Mayor Chris Bollwage, Elizabeth, NJ, Mayor Javier Gonzales, Santa Fe, NM; Mayor Stephanie Rawlings-Blake, Baltimore, MD; Bob Perciasepe, President, C2ES.

 

Mayors know what’s going on in their communities. Businesses know how to get a good return on investment. So it seems like a natural fit to have them work together on innovative ways to finance clean energy, strengthen resilience to climate impacts, and reduce greenhouse gas emissions.

To promote that collaboration, C2ES and The U.S. Conference of Mayors formed the Alliance for a Sustainable Future, which held its first public forum during Climate Week NYC.

Baltimore Mayor Stephanie Rawlings-Blake, past president of the conference, told the gathering that cities are where the work is getting done when it comes to addressing climate change. “Nations talk about energy efficiency and climate action, but mayors are doing it every day,” she said.

At the same time, she noted, mayors need tools to get the job done. “We have to do more with less resources. We’re all in this together.”

That’s where business comes into the picture.

Josh Sawislak, global director of resilience for AECOM, a global engineering, consulting and project management company, said businesses want to get involved in building resilience, and they can do more on the local level.

He noted, however, that there needs to be a sound business case for clean energy investments, and for small businesses, the return on investment needs to be immediate.

“Climate change is costing us money. Not investing in these things is costing us money. We’re not doing the math right,” he said.

Some cities are already taking an innovative approach to bridging the gap between the two interests.

Santa Fe, NM, Mayor Javier Gonzales, the alliance’s chairman, explained how his city’s new Verde Fund taps into community needs and business expertise to help low-income residents access clean energy. “More well-to-do people can navigate complicated systems to get rooftop solar on your house,” he said. “The Verde Fund helps disadvantaged residents do the same.”

When low-income residents can save money on their electricity bills by going solar, he said, they have more money to spend on food, clothing and other essentials. The jobs created by these projects benefit the community as well.

Elizabeth, NJ, Mayor Chris Bollwage, whose city’s vulnerability to climate impacts was exposed during Hurricane Sandy in 2012, said some visionary leadership is also needed to imagine today what will be needed tomorrow.

“When we built Elizabeth’s midtown parking garage, we put in five spaces for electric vehicle charging,” he said. “No one used them the first two years, but now three cars are charging there every day.”

In New York City, officials are being proactive in other ways, like working through the city’s OneNYC plan to reduce energy use in buildings, the source of 70 percent of the city’s emissions. Daniel Zarelli, Mayor Bill de Blasio's senior director of climate and sustainability policies and chief resilience officer, said the city’s goal is to reduce greenhouse gas emissions from buildings by 30 percent by 2025 and to retrofit one million buildings so they’re energy efficient.

All the panelists agreed that federal, state, and local policy must become aligned to move in the right direction. One way to do that is by citizens letting both their government and business leaders know that they value sustainability.

Cities and businesses join to build resilience

How does a city become resilient? With more communities facing climate impacts, including more severe storms, heat waves, and sea level rise, it’s a question many city planners are struggling with. And it’s a question best answered through collaborative efforts.

To move its resilience planning forward, the City of Providence brought together state officials, city departments, local businesses, universities, hospitals, utilities, and others for a two-day workshop facilitated by C2ES. At the workshop, AECOM and IBM led city and community officials through the Disaster Response Scorecard where participants discussed the risks they face, strategies in place or needed to lessen those risks, and how they can respond now and in the future to minimize loss of life and damage to critical infrastructure.

Providence has already seen rising sea levels and increased flooding. In Rhode Island, sea level could rise as much as 2 feet by 2050 and 7 feet by 2100. The Third National Climate Assessment says the region will experience heat waves, more heavy downpours, and more coastal flooding.

With its extensive waterfront, Providence is on the frontlines of climate change. As Mayor Jorge Elorza told the Providence Journal, “We simply can’t afford to kick the can down the road. By planning ahead we can make wiser investments … to minimize our risk and enhance resilience.”

Cities like Providence are one of many working to strengthen their resilience to climate change now, rather than waiting for a disaster to occur. C2ES held a similar exercise with the City of Anchorage, and will soon hold resilience workshops with Kansas City, MO, Miami Beach, FL, and Phoenix, AZ.

Cities across the U.S. are looking to change how they prepare for and respond to extreme weather and climate change impacts. Strategies to improve resilience include:

  • Working with community leaders. Cities are working together with diverse community groups to raise citizens’ awareness of climate change and extreme weather. For example, Providence recently held a workshop with faith-based organizations on hurricane preparedness.  
  • Partnering to pool resources. The adage “There’s strength in numbers” holds true. Through memorandums of understanding, cities are partnering with their local businesses and non-profits to prepare for and respond to extreme weather. Some businesses are funding collaborative resilience efforts. PG&E will award $1 million  to local governments in their utility territory that propose resilient solutions, focused on disadvantaged communities, that others can replicate.
  • Visualizing and combining information and data. Mapping of climate change risks can help people understand vulnerabilities. The Rhode Island Coastal Resources Management Council has mapped sea level rise, storm surge, and other risks to coastal communities in the state.
  • Developing innovative solutions. The City of Hoboken, N.J., which experienced devastating flooding during Hurricane Sandy, is partnering with BASF to build a park and parking garage that can double as floodwater storage. Once finished, it could hold at least 1 million gallons of excess water.

Innovative solutions like these could help communities improve their resilience to climate change and extreme weather events, and C2ES will continue to share new approaches and best practices

Cities flex their muscles to improve existing commercial buildings

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:

  1. 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.
  2. 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. 

Models tell us Clean Power Plan will cut emissions at low cost

In the year since the Clean Power Plan was finalized, natural gas prices have dropped and federal tax incentives for renewables have been extended. Both developments make it cheaper to generate lower- emitting electricity.

C2ES compared five economic modeling studies released this spring and summer to get an updated look at the Clean Power Plan’s expected impact on carbon emissions, the U.S. power mix, and electricity prices. Each study included several scenarios and made slightly different assumptions, so we focused on observations found in multiple studies. Three key findings were:

1. The Clean Power Plan reduces total power sector emissions compared to business-as-usual scenarios in every study.

Market forces alone, such as lower costs for renewables and natural gas-fired generation, do not achieve the same reductions, even with federal tax credit extensions for wind and solar. On average, the scenarios project total emissions in 2030 will be 18 percent lower with the Clean Power Plan than what they’d be in a business-as-usual scenario.

2. Renewable energy increases and coal decreases compared to business-as-usual generation levels across all five studies.

In each study, power sector emissions decline under the Clean Power Plan because of changes in the electricity generation mix. The models are clear that the Clean Power Plan will cause an increase in renewables and a decrease in coal. The models are less clear on the impact the rule will have on natural gas and nuclear generation, though they suggest that these technologies will benefit from Clean Power Plan implementation. In all studies, the diversity of power generation is maintained.

3. The Clean Power Plan will have minimal impact on U.S. national average retail electricity rates.

Two of the five studies examined the plan’s likely impact on rates. In most scenarios, rate changes range from a 2 percent decrease to a 5 percent increase, depending on how the Clean Power Plan is implemented in each state. A 5 percent increase translates to $4.65 per month, or about 15 cents a day, for the average household.

The chart shows the projected CO2 emissions in 2030 from the studies we examined for three scenarios: business as usual (BAU), mass-based Clean Power Plan implementation, and rate-based Clean Power Plan implementation. One studied modeled a mixed, or “patchwork” implementation scenario. The five studies are:  MJ Bradley & Associates (MJB)U.S. Energy Information Administration (EIA)Bipartisan Policy Center (BPC)Center for Strategic and International Studies partnering with Rhodium Group (CSIS/Rhg), and the Nicholas Institute for Environmental Policy Solutions, Duke University.

Another key finding is that cumulative carbon dioxide emissions are very similar under rate-based and mass-based compliance plans (See Figure 1). In other words, the choice of implementation approach doesn’t seem to affect the overall reductions — at least, not when every state makes the same choice.

The Clean Power Plan gives each state an emissions target and leaves it up to the state to determine the best path forward. This gives states maximum choice, even though it could lead to fewer reductions than a comprehensive national approach.

Many states are weighing whether to use a mass-based approach, similar to what California and the nine Northeast states in the Regional Greenhouse Gas Initiative use that limits the total amount of carbon emissions, or a rate-based approach that limits emissions per unit of electricity produced.

What’s clear from the models is that if states choose to go different directions, a patchwork of mass- and rate-based implementation, emissions are likely higher than if they all choose a similar path.

From these studies, we can be confident the Clean Power Plan will reduce power sector emissions compared with business as usual. Now it’s up to states to choose how they will implement the plan to best serve the needs of consumers and reduce the emissions that are causing damaging and costly climate impacts to our communities.