Climate Law Update: Climate Change & Sustainable Energy News : Thelen Reid Law Firm : Renewable Energy, Construction, Project Finance Lawyers & Attorneys

Maryland's Gov. Martin O'Malley has signed a package of energy bills to among other things beef up renewable portfolio standards in that state, set goals for reducing energy consumption and funnel proceeds from the sale of greenhouse gas credits to clean energy projects.

The governor (pictured) also signed a measure, SB 1013, that ratifies a settlement of a dispute with Constellation Energy Group and ends ratepayer obligations for decommissioning nuclear power plants in the future. The settlement, according to the Baltimore Sun newspaper, also gives the state some assurances a nuclear power plant will be built (see article here). 

In a statement, O'Malley, a Democrat, held out high hopes for the a package of bills on energy and other environmental issues (see text here):

"With today’s bills, we are creating a sustainable energy policy, securing relief for thousands of Maryland ratepayers through a global settlement with Constellation Energy, protecting our environment and helping to restore the Chesapeake Bay for future generations.” 

Among the bills signed by O'Malley was a measure that, according to various reports, about doubles the state's renewable power mandate. The new law, HB 375, requires 20 percent of Maryland's electricity to come from renewable sources by 2022. That's a more modest goal than some other states, including California, which is prodding utilities to meet the 20 percent goal by 2010 and is considering imposing a 33 percent goal by 2020 (see background on California mandate here). 

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On Earth Day, attention naturally turns to all things green – as in money.

Pocketbook issues are at the center of a number of new reports that assess the impact of efforts to combat climate change and promote the development of renewable sources of energy. One report shows government subsidies taking a big jump in recent years with renewables such as solar and wind getting a proportionately large share of the money.

The Environmental Defense Fund has come out with a document that studies the studies out there on the economic cost of a cap-and-trade system to cut emissions of greenhouse gases. Perhaps coming as no shock, the organization concludes that “a clear consensus” among the models demonstrates such a market system “is consistent with long-term economic growth.” The overall cost of capping the gases would amount to less than 1 percent of household budgets over the coming two decades, according to the EDF, which supports market approaches to the problem (see press statement here; text of study here).

Release of the analysis comes as the U.S. Senate is readying to take up the Lieberman-Warner Climate Security Act, which would establish a cap-and-trade system in the country. It also comes against a background of other reports issued by the government and business organizations showing potentially significant  economic impacts from such a system (see Climate Law Update story here).

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Global warming is bad, and developing renewable energy to help solve the problem is good, right? While that might be a popular view, the reality is a bit more complicated, as experts in the field have begun noting with some frequency lately.

Talk of what UCLA School of Law Professor Ann Carlson (pictured) calls “localized environmental values clashes” over renewable projects was in the air at a recent conference at the University of California-Berkeley’s law school, Boalt Hall.

Speakers at the two-day event, “California and the Future of Environmental Law and Policy,” noted that, in particular, legal and policy fights over transmission lines pose a significant challenge for renewable development. Among them was Karen Douglas, who formerly spearheaded California climate change efforts for the  group Environmental Defense (now known as Environmental Defense Fund). She is now a member of the California Energy Commission which, among other duties, licenses large new thermal power plants in the state, as well as the transmission lines connecting them to the grid. Douglas crystallized the issue this way:

“It’s kind of a different challenge to do renewables because you’ve got to generate the power where the renewable resources are and then bring it where the people are. So that means often a lot of power lines. People don’t want that through their neighborhoods. It’s hard to site and hard to build and so on, so one issue is transmission.”

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By any measure, it’s been a tough few weeks in the spotlight for biofuels such as corn-based ethanol and other alternative sources for transportation energy, including hydrogen.

A Time Magazine cover story not-so-subtly titled: “The Clean Energy Scam,” set the tone for the criticism. But it was met by a spirited rejoinder from the biofuels industry, which sees itself as helping to lead the way toward sustainability.  

The scrutiny focused on biofuels didn't stop with the magazine. 

Recently, reports have emerged that American biofuel subsidies have, in the characterization of the Wall Street Journal’s Environmental Capital, been “boomeranging” across the Atlantic (see story here). Meanwhile, the Los Angeles Times reported a California biofuels manufacturer was “short on cash and suffering from higher corn and plant construction costs” which threaten the company. The paper also noted a number of other plants that have been put on hold across the country, citing narrowing margins between the cost of production and the selling price of ethanol (see story at newspaper's Web site here).

Then, late last week, reports began emerging that corn had hit a record $6 a bushel, prompting the food industry to pin the blame rising prices squarely on government encouragement of ethanol production. The Grocery Manufacturers Association said the "ripple effects" are being "felt throughout the economy" (see statement here).  

On the hydrogen front, the San Jose Mercury News tweaked California Gov. Arnold Schwarzenegger, who four years ago proclaimed the creation of a “hydrogen highway” that would allow motorists to fill up fuel cell cars. So far, however, the newspaper reported (see story here), “not a single hydrogen fueling station has been built under the program.” The article cited a number of possible reasons, from economics to politics, for the failure. The paper also reported that Mary Nichols, the chairwoman of the California Air Resources Board, believes up to 100 stations will be built by 2015, five years later than expected.

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Legislation extending tax credits for renewable energy including wind, geothermal and solar for at least a year was introduced Thursday in the U.S. Senate by a bipartisan group of lawmakers. The move drew immediate praise from the solar industry.

Senate authors of the measure, who left out a controversial hit on the oil industry that was contained in a recent House bill, hoped to break a logjam that has blocked progress on keeping incentives for renewable energy in place. Backers stressed the need to act quickly, with billions of dollars in projects possibly on the line. The bill also includes financial encouragements for energy efficient buildings, homes and appliances.

Introduction of the Clean Energy Tax Stimulus Act of 2008 in the Senate (see bill summary and text), comes more than a month after the House passed its own multi-year extension measure. The Senate legislation is sponsored by Sen. Maria Cantwell, D-Washington (pictured), and Sen. John Ensign, R-Nevada. It has 21 other co-sponsors. Cantwell urged swift action (see full statement):

“Critical tax incentives are set to expire this year. If both houses of Congress don’t pass a bill, and the president doesn't ’t sign it into law within the next one to two months, we will start to see as much as $20 billion of anticipated investments in 2008 delayed or canceled. This could result in more than 100,000 U.S. jobs lost at a time when the country is skidding into a recession, and energy prices keep getting higher.”

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This Commentary was written by Thelen Reid Brown Raysman & Steiner attorneys Peter V. Allen and Richard M. Shapiro:

With the recent increase in concern about global warming and energy security, supporters of nuclear power are arguing that it is now time to restart the construction of nuclear power plants in the US. The national debate around nuclear power has focused on cost, safety, and waste disposal issues, but California presents additional constraints on the siting of nuclear power plants. These constraints, along with California’s significant renewable energy resources, combine to make renewable generation a better choice in California.

Even beyond California’s statutory moratorium on the construction of new nuclear power plants, other factors, including the politics and economics of water, the prevalence and location of earthquake faults, and California’s hybrid electricity market structure, render nuclear power a far less attractive option in California than in other parts of the US. At the same time, California has abundant renewable resources, including solar, wind, and geothermal. The result: in California, it is more practical to get additional electricity from new renewable plants, not new nuclear plants.

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It’s not billed as picking winners and losers but a new report issued by consultants to a multi-agency effort planning California’s transmission infrastructure gives some idea of what types of renewable energy projects have a bright future, at least when it comes to getting access to the grid.

The document in effect recommends that for some technologies, including anaerobic digestion and landfill gas, no further planning should be done on access to transmission lines. But it is much more favorable toward technologies such as biomass, solar (both thermal and photovoltaic), small hydro, wind and geothermal. Wave and marine current energy fell into a gray area, with the consultants recommending no further planning right now but instead keeping an eye on further developments.

Prepared by Black & Veatch Corporation, a large international consulting and contracting firm, the report, dated March 14, could be significant because it constitutes a first step in the state’s Renewable Energy Transmission Initiative, which is often known by its acronym, RETI. The project is designed to take a strategic and unified approach to siting transmission lines to serve renewable generation resources located in California or elsewhere in the West. The next phase of the process involves ranking the cost-effectiveness of delivering power from specific interconnection points.

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A new contract between Calpine Corp. and Pacific Gas and Electric Co. will help allow the Northern California utility to meet the state's renewable portfolio standard. The deal, according to a report in Friday's (Feb. 15) San Francisco Chronicle, makes PG&E the first utility to reach that goal.

In an announcement, PG&E said it would seek approval from the California Public Utilities Commission for a 175-megawatt geothermal purchase agreement with Calpine. The deal consolidates six existing agreements, and adds 57 megawatts of renewable power to PG&E's supply, the utility reported. PG&E noted the agreement would deliver enough new energy from Calpine's Geysers field north of Calistoga (pictured at left; courtesy of Calpine) to supply 45,000 homes. PG&E said that with the agreement, 20 percent of the utility's contracts for future energy delivery would meet California's renewable energy standard. That attains the figure set by the state under a 2006 law that expanded on earlier legislation requiring utilities to meet renewable energy goals.

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