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Feb 11, 2016

Ten Things More Important than the Clean Power Plan in Limiting Carbon Emissions in the U.S.

 

 

Yesterday, the Supreme Court issued a stay to halt the Clean Power Plan regulation. They did not overturn the rule, but rather agreed to halt it while the challenge from 29 states and dozens of corporations proceeds through the federal appeals court (and eventually makes its way to the Supreme Court). This intervention, before the lower circuit court had a chance to review the plan on its merits, is unprecedented but hardly surprising.

The good news, though, is that this ruling does little to substantively impact the trajectory of CO₂ emissions in the U.S. While the Clean Power Plan serves as a valuable backstop, the timeline of implementation and limitations on what it can regulate keep it from being the dominant and irresponsible policy that opponents claim it is. Here are ten policies, trends, and market forces that are having a larger substantive impact on the trajectory of CO₂ emissions in the U.S. than the Clean Power Plan will.

1. Mercury and Air Toxic Standards 

Coal plant emissions regulated by the Clean Power Plan are already controlled under the Mercury and Air Toxic Standards (MATS). Many of the dirty coal plants that would have their carbon emissions regulated by the Clean Power Plan have already shut down, or are slated to shut down, due to the cost of cutting mercury emissions to comply with MATS. By the April MATS compliance deadline, 4,600 MW of coal generation was offline, with a total of 46,000 MW on track to close in the ten years spanning 2012–2022.

2. Investment Tax Credit Extension for Solar PV and Production Tax Credit Extension for Wind

In December of last year, Congress voted to extend the 30-percent Investment Tax Credit (ITC) for solar PV for three years, with a ramp-down through 2022. They also retroactively extended the Production Tax Credit (PTC) for wind for 2015, with a ramp down starting in 2016 and lasting through 2020. Leading up to this announcement, GTM released their forecasts projecting that under an ITC scenario the U.S. would: 

  • Install 25 GW of additional solar capacity over the next 5 years
  • Spend an additional $40 billion in incremental investments by 2020
  • Create a 20 GW annual solar market in the U.S. by 2020
  • See similar positive effects for the wind industry

3. Supreme Court Ruling on FERC 745 (Demand Response)

Late last month, the Supreme Court ruled in favor of FERC that demand response should be regulated at the federal level. This ruling was a victory for the $1.4 billion demand response industry specifically, and the clean energy community more broadly, as FERC jurisdiction over both the supply and demand sides of the wholesale energy markets now protects demand response from obstructionist state policies. This ruling was also important in highlighting the convergence of, and blurring of the lines between, the retail and wholesale sides of the electricity system, and allowing customers to participate in both parts of the electricity system.

4. Economics of Coal, Gas, and Renewables

When the Clean Power Plan was published, the EPA projected that coal would comprise only 27 percent of the U.S.’s generation mix by 2030. According to Bloomberg, in November, coal has already dipped down to only 29 percent of the U.S.’s energy share. This was not the result of the Clean Power Plan, but rather of cheap natural gas and renewable resources driving coal out of the market. Residential solar is down below 5 cents/kW and utility-scale solar contracts are predicted to reach 4 cents/kWh in the next year or so (if they are not there already). 

5. Leading Utilities

In many states, including California, utilities themselves are taking the lead in pioneering efforts to offset investment in traditional supply-side resources by using distributed energy resources (DERs). Southern California Edison has been running a preferred resources pilot (PRP) project since early 2014 that aims to bring 300 MW of clean energy assets online over the next five years. In New York City, Con Edison’s Brooklyn Queens Demand Management Program (BQDM) used a combination of customer-sited resources and nontraditional utility resources to defer the need to build a large ($1 billion) substation in downtown New York City.

6. Industry Leaders

Utilities are not the only place where we are seeing leaders emerge in the clean energy space. In 2014, corporate procurement of wind and utility scale solar reached a record of 1.2 GW, and in 2015 this number grew to over 3 GW. Additionally, many companies signed onto a number of public commitments and pledges to cutting carbon emissions.

7. Leading State Legislative Policies

While some states are challenging the Clean Power Plan, others are focusing their energy on developing strong energy efficiency programs and progressive clean energy policies. Massachusetts and California have led the American Council for an Energy-Efficient Economy (ACEEE) state energy efficiency scorecard rankings for the past four or five years with their strong utility efficiency programs, building codes, and state-led initiatives. In Oregon, the state legislature is currently considering a bill to move the state’s two investor-owned utilities (IOUs) totally off coal and onto more renewables by 2030. New York just proposed a plan to reach 50-percent renewables by 2030. 

8. Leading State Regulatory Policies 

New York’s Department of Public Service (NYDPS) is taking active steps to integrate DERs into the grid through the New York Reforming the Energy Vision (NY REV) process. By June, the state’s six utilities will be required to submit distributed system implementation plans that outline how they will encourage and coordinate DER integration. Similarly, the California Public Utility Commission (CPUC) has an alphabet soup of acronyms—the SSP (Supply–Side Pilot), the DRP (Distribution Resource Plan), the DRP (Demand Response Provider), the DERP (Distributed Energy Resource Providers), and the DRAM (Demand Response Auction Mechanism)—to name a few, helping them increase DER integration with the grid. The most recent mechanism, the DRAM, allows demand response to be aggregated into units of at least 100 kW, where it can bid into markets as an alternative to centrally controlled power plants. This auction, which resulted in 40 MW of resources contracted among the three California IOUs, opened the door for DERs to become a grid resource. 

9. Progressive Independent System Operators

The regional independent system operator (ISO) markets have developed significant demand response (and some energy efficiency) markets that give us a window into the potential that these resources could reach today if they had access to adequate markets. A quick look at the numbers shows that on average, the peak-energy reduction seen in the ISO markets was about one and one-half times that seen in investor owned utilities outside the markets. The ISOs also utilized about 70 percent more of their potential demand-response capacity than those outside the market. When demand response and energy efficiency are used to reduce peak, less electricity is needed from fossil fuel-powered peaking plants and carbon emissions are reduced.

10. Customer Choice

With the rise of companies like SolarCity, Nest, and Opower, customers now have the ability to not only generate their own carbon-free electricity, but also manage and control how their energy is used in a way that is interactive and accessible. These changes save money for customers, reduce system costs, and move the electricity system away from carbon-emitting central generation towards distributed generation and localized control.  The utilities are no longer just companies that deliver electricity to their “ratepayers,” they are now companies that deliver energy services to their “customers.”

Image courtesy of Thinkstock.

 
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