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

Gov. Ted Strickland of coal-heavy Ohio has signed a bill pushing his state's electric distribution utilities to make sure that 25 percent of the power they sell comes from "alternative" resources by 2025.

Under Senate Bill 221, that would include juice coming from such renewable sources as wind and solar, to other forms of generation, including "clean" coal, fuel cells and advanced nuclear, according to a statement by Strickland (see statement here; bill text here) and a report in the Toledo Blade (see story here).

To meet the mandate that at least 25 percent of the power come from "alternative energy resources," Ohio's legislation requires that "at least half shall be generated from renewable energy resources, including one-half per cent from solar energy resources," in accordance with a number of annual benchmarks. 

The Blade reported that the measure allows utilities to avoid full compliance with the standards if they can demonstrate that their attempts to comply would raise consumers' bills by 3 percent or more, a provision that disappointed some environmental groups.

In his statement, Strickland (pictured) lauded the measure:

"This bill, Senate Bill 221, will ensure predictability of affordable energy prices and maintain state controls necessary to protect Ohio jobs and businesses.

We will safeguard Ohio families by empowering consumers and modernizing Ohio’s energy infrastructure.

And we will attract the jobs of the future through an advanced energy portfolio standard—and today’s action by Ohio means that a majority of states now agree that these technologies represent the future of energy in the United States." 
 

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This saving the planet stuff just isn't complicated enough, it seems.

Underscoring the importance of the finer points involved in establishing a market-based approach to controlling greenhouse gas emissions, a new report (accessible here) sponsored by a fascinating collection of interests shows how huge sums are at stake depending on how such a program is structured.

The most intriguing part of the document examines one of the most controversial parts of a cap-and-trade scenario: the distribution of emissions credits or "allowances" that will determine how many tons of heat-trapping gases that, say, a power plant can emit over a year. It looks at the differences in formulas contemplated by two bills now before Congress, the Lieberman-Warner Climate Security Act and the Bingaman-Specter Low Carbon Economy Act. The document also adds another twist, such as examining what would happen if credits were allocated based on each company's electricity output, versus its share of emissions.

The report generally seems to side with Lieberman-Warner. That bill would require selling more of the credits initially and it would also allocate some credits for sale to benefit the public.

The document also finds that some utilities, such as those with relatively cleaner technologies, would fare vastly better under a system in which credits were distributed on the basis of power output. However, both bills so far propose to allocate the allowances to electric providers based on their historic carbon dioxide emissions. 

The bills are named for their sponsors, Sens. Joe Lieberman, I-Conn., John Warner, R-Va., Jeff Bingaman, D-New Mexico, and Arlen Specter, R-Pa.

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Chinese government officials may have produced a startling new goal for wind power in the giant country -- 100,000 megawatts by 2020. That represents a big step beyond more near-term figures the country floated just earlier this year (see Climate Law Update story here).

According to a story in the Shanghai Daily (see article here), an official with the Chinese Wind Energy Association (Chinese language site) said that the country's top economic planning agency, the National Development and Reform Commission recently discussed increasing wind power capacity to the 100,000-megawatt level. Previously, the country's leaders had announced a goal of installing 10,000 megawatts by 2010, so the new objective represents a 10-fold increase over the succeeding decade.

The country had set an objective of supplying 10 percent of its electricity from renewable sources by 2010, which would include wind, hydropower, bio-energy and solar.  According to the Shanghai Daily story it now wants to achieve 15 percent of its power consumption from renewable sources by 2020.  

Environmental Capital, the Wall Street Journal's online site that monitors such developments, sees new business opportunities in the Chinese move (see full posting here):

"Despite the recent tax reform meant to limit wind-turbine imports, China’s more ambitious goals could also open the doors for more joint ventures and local business for wind turbine makers like Vestas of Denmark, Suzlon of India, and Gamesa of Spain—all of whom have made China a key part of their global growth plans. And of course, General Electric hopes to make its energy business one of the group’s driving forces."

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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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The U.S. Senate Thursday moved forward with its version of an extension of tax credits for renewable energy. But it did so without identifying how to pay for the estimated $6 billion in incentives for wind, solar and other projects.

Introduced by Sens. Maria Cantwell, D-Washington, and John Ensign, R-Nevada (pictured), only a week ago (see Climate Law Update story), the Clean Energy Tax Stimulus Act (see text here) was grafted as an amendment onto a housing bill before the Senate. Lawmakers adopted the energy amendment on an 88-8 voted and passed the entire bill 84-12.

In many ways, the Senate bill is roughly similar to a measure the House passed earlier in the year extending incentives known as the investment tax credit and the production tax credit. The renewable industry has been pushing hard for Congress to adopt some kind of legislation extending credits which expire at the end of the year.

Both bills provide short-term extensions of credits for producing electricity from renewable sources and for a longer period, until 2016, for business investment tax credits for solar and fuel cell projects. Residential solar and energy efficiency projects would also benefit under the Senate bill.

But the major difference in the Senate legislation lies in the fact that bill avoided the House approach of funding the incentives through reducing tax breaks for the oil industry. Instead, the Senate bill contains no identified funding mechanism. That could give the bill a difficult road in the House.

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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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Recent reports originating in Europe and Asia suggest the worldwide extent of the booming interest in renewable energy. One consequence, according to experts and observers, could be new pressure on critical supplies needed by the industry.

China, according to that country’s state news service, Xinhua, has decided to boost its consumption of renewable energy, including wind, hydropower, bio-energy and solar, to about 10 percent of the country’s total by 2010. That, according to Xhinua, would would nearly double the country's renewable energy consumption compared to 2005. China's National Development and Reform Commission, the nation's top economic planning agency, had several reasons for boosting renewables, including environmental concerns, according to Xinhua:

“Given the dearth of petroleum and natural gas resources and the large share of coal in China’s energy production, it is difficult for the nation to sustain its development and protect the environment by relying simply on fossil fuels, the NDRC said.”

One of China’s goals is to have about 10,000 megawatts of wind power projects installed by 2010, the report said. The country at the end of 2007 had about 6,000 MW, according to a recent estimate from the Global Wind Energy Council, an international industry trade association. According to Global Wind, the Chinese 2007 capacity represented a better than 150 percent increase over just the previous year and it put China in the fifth spot in the world, behind Germany, the United States, Spain and India.

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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 flurry of new reports from consultants, industry officials and scientists paint a decidedly upbeat picture for renewable energy -- with the startling possible exception of electricity from Hoover Dam. The overall conclusion: Government policies and larger market trends are boosting the fortunes of non-traditional energy, even in the face of a stressed economy.

Experts, in analyses released over recent days, see mushrooming growth in both revenues and investments in alternative energy, including wind, solar, biofuels and fuel cells. One report produced by Clean Edge Inc., a West Coast research company, showed sales for those sectors worldwide had grown by 40 percent from last year, to $77.3 billion. The four sectors are likely to be valued at $254.5 billion by 2017, Clean Edge predicted (see press release here).

At the same time, Renewable Energy Policy Network for the 21st Century (REN21), an international research organization based in Paris, reported a nearly 30 percent increase in investments in renewable capacity, to $71 billion, over 2006. Almost half of that money was going toward wind power, according to the institution's press release and report.

But still another estimate went even further. Analysts at New Energy Finance, headquartered in London, calculated that total new investment in clean energy – which the firm defines as biofuels, biomass, geothermal, small hydro, wind, marine and solar – actually hit $148.4 billion in 2007. That figure is up 60 percent compared to the year before and is even higher than an estimate produced by New Energy in January that did not include some transactions reported until later. Venture capitalists, private equity investors and public market investors all played major roles, New Energy reported.

The influx of capital is “the big story here,” Ron Pernick, co-founder of Clean Edge, told Climate Law Update Tuesday. Clean Edge’s report, which also incorporated the New Energy findings, estimated venture capitalists poured $2.7 billion into clean-energy investments, nearly 10 percent of the total VC activity for the year.

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Emissions of greenhouse gases in the United States dropped a small but eye-catching 1.5 percent between 2005 and 2006, according to a new inventory (which can be accessed here) put forward by the Environmental Protection Agency. The EPA cited a number of reasons for the decrease -- which saw the first drop in carbon dioxide emissions since 2001 -- including greater reliance on renewable power generation.

Overall, according to the annual Inventory of Greenhouse Gas Emission and Sinks, the amount of pollutants believed to contribute to global climate change decreased by about 1.5 percent. Carbon dioxide from fossil fuel combustion was down by 1.9 percent.

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Daniel Yergin, a widely known energy expert who closely advises  the oil and gas industry, is predicting a rosy future for renewable energy, and other "clean" technologies such as nuclear and hydropower, partly as a result of public concern over global warming and driven by subsidies and government mandates. 

"High energy prices, climate change and energy security are converging as the new engine driving the development of clean energy," Yergin (pictured at left), chairman of Cambrige Energy Associates, told a gathering at the National Governors Association in Washington, D.C. (Feb. 23). "There is a major shift in public opinion towards clean energy, which is being bolstered by the growing conviction that new carbon policies will reshape the competitive landscape of the global energy business."

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