Climate Leadership and Community Protection Act Wind Power Economics Warning

A summary description of two reports prepared by Gordon Hughes, School of Economics, University of Edinburgh, Wind Power Economics – Rhetoric and Reality for the Renewable Energy Foundation should be required reading for anyone associated with implementation of New York’s Climate Leadership and Community Protection Act.  Professor Hughes has evaluated the wind industry performance in the United Kingdom and Denmark.  His findings are directly related to New York’s plans and should be considered in the implementation process.

My thanks to the Stop These Things blog where the article, Starry-Eyed Dreams v Economic Reality: Why The Wind Industry’s Numbers Can Never Stack Up, alerted me to these analyses.  I am following the implementation of the CLCPA closely because its implementation affects my future as a New Yorker.   The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.

Background

On July 18, 2019 New York Governor Andrew Cuomo signed the Climate Leadership and Community Protection Act (CLCPA), which establishes targets for decreasing greenhouse gas emissions, increasing renewable electricity production, and improving energy efficiency.  I have summarized the schedule, implementation components, and provide links to the legislation itself at CLCPA Summary Implementation Requirements.  In this instance the relevant targets are 70% renewable energy for electric production by 2030 and 100% carbon-free electricity by 2040.  Incredibly, at the same time the State is mandating the shutdown of 2,000 MW of existing nuclear generating capacity.  The bottom line is that wind and solar are projected to provide most of the carbon-free electricity.

Off-shore wind is a prominent part of the CLCPA.  The press conference when Governor Cuomo signed the legislation announcing the “most ambitious and comprehensive climate and clean energy legislation in the country” lead not with that news but with the news that the state had “executed the nation’s largest offshore wind agreement and the single largest renewable energy procurement by any state in U.S. history – nearly 1,700 megawatts -with the selection of two offshore wind projects”.  The legislation itself mandates 9,000 MW of offshore wind by 2035.  At this time the Climate Action Council is developing the Scoping Plan that will outline “recommendations for attaining the statewide greenhouse gas emissions limits in accordance with the schedule established” by the law.  Estimates of the wind resources necessary have not been published yet.

The New York Independent System Operator (NYISO) is doing its own evaluation of the resources needed for the CLCPA.  On September 10, 2020 the Analysis Group presented a discussion of draft recent observations as part of the NYISO Climate Change Phase II Study.  That work etimates that the state will have to develop all the technically feasible wind resource potential projected by the National Renewable Energy Laboratory: 35,200 MW of onshore wind and 21,063 MW of offshore wind.

Wind Power Economics Approach

Professor Hughes presentation describes two  new reports he prepared for the Renewable Energy Foundation:

Wind Power Costs in the United Kingdom  – and

The Performance of Wind Power in Denmark

Professor Hill’s main academic field is applied statistics and economics, but much of his work has been on the interface between economics and engineering. He has written or co-written several studies of adaptation to climate change.

His presentation explains that both European policymakers and investors have “accepted the claims

of dramatic improvements in costs and performance made by wind operators for new

projects now and in the future”.   However, he points out that “Unfortunately, the propensity of both governments and companies to understate the costs and overstate the performance of new projects has a history that is long and inglorious.”

The presentation explains that he did not rely on the claims made by wind proponents.  Instead: “My starting point is the actual data reported by companies in their accounts over the last two decades. This is possible because the standard commercial arrangement is that solar, wind and other projects are operated via legal entities known as Special Purpose Vehicles whose accounts are usually audited and are filed with Companies House. I have collected data for more than 350 SPVs responsible for wind projects that have filed accounts since 2005. The dataset is unique and provides the basis for a detailed analysis of the actual costs of wind power.”

I believe that this is the appropriate approach to evaluate the potential of wind energy.  Observations always trump projections.  It would be foolhardy for New York to dive into an electric system that depends on wind energy without checking to see if there is water in the pool be evaluating what has happened elsewhere.

Using the wind project accounting documents, Professor Hughes developed data that provides the basis for a unique and detailed analysis of the actual costs of wind power.  Contrary to the narrative, he shows that the capital expenses have increased over time rather than decreased.  He explained that this is due to installations in increasingly more difficult locations and building bigger turbines.  Unfortunately, that is not the worst news.  The operating expenses also increased over time due for both onshore and offshore projects. 

Offshore wind operating expense is a particular issue.  Using data from 6,400 turbines in Denmark he found (His Figure 6 below) that the reliability of 2+ MW turbines, like the ones proposed for New York offshore wind, deteriorates over time so that risk of failure increases sharply once they have been operating more than ten years.  In both Denmark and Great Britain, the new generation of these larger turbines were accompanied by steep learning curves for organizations that had experience with smaller turbines.  New York proposes to skip the smaller turbine step which does not portend well. 

Finally note that there was a distinct decline in load factor with age.  The high capacity factors claimed by the offshore wind developers were not maintained over ten years.  As output decreases the operating expense ratio becomes less favorable.  He notes that:

“If wind farms do not receive offtake prices that are higher than the market price – or very much higher in the case of offshore wind – their expected revenues will not cover opex costs after 12 or 15 years. Operators will either cease production or drastically cut operating costs leading to closure within a relatively short period. There is no way out of this trap because opex costs are linked to reliability; the decline in reliability with age means that high opex costs must be incurred to maintain production. The consequence is that the assumption made by BEIS and many investors that the expected operating life of new wind farms will be 25 or 30 years is completely at odds with the underlying economic reality. Few modern wind turbines operate for more than 20 years and many offshore wind turbines are likely to be decommissioned before they reach an age of 20 years.”

I am not surprised by these results.  Offshore conditions are not friendly to any machinery, particularly electronics.  The tips of wind turbine blades are going to be going pretty fast relatively close to the water so there will be direct erosion effects.  Salt water is corrosive so all the electronics have to be protected.  The massive rotors have to spin on bearings that must also be protected but still allowed to rotate.  Finally, these are all chronic problems.  What happens when a major hurricane like the 1938 “Long Island Express” brings sustained winds of 121 miles per hour to New York’s offshore wind facilities?

Wind Power Economics Conclusions

I provide italicized context and commentary on the general lessons provided by Professor Hughes in the following:

In stark terms a significant portion of wind output is expensive to produce and of no value in terms of its contribution to national wellbeing. Other than sheer ignorance there is no excuse for policymakers tolerating, let along promoting, this outcome.  I will conclude with some general lessons from the study:

  1. Stop pretending! The projections of the costs of achieving Net Zero put out by government bodies and many others rely on cost estimates that are just wishful thinking. They have no basis in actual experience and a realistic appraisal of trends in costs. As a very broad brush calculation the cost of meeting the Net Zero target by 2050 is much more likely to be 10+% of annual GDP than the claimed 1-2% of GDP.
    1. Great Britain became the first major economy to pass a  net zero emissions law by 2030 so their target is even more ambitious than the CLCPA.  New York is smaller, 54,555 square miles, than Great Britain 80,823 square miles.  New York’s GDP is $1.44 trillion USD and Great Britain is $2.87 trillion USD but the GDP per capita for New York is $72,742 compared to Great Britain’s $42,202.
  2. Accelerating arbitrary targets is very expensive. If the Government persists with the goal of building 30 GW of extra offshore wind capacity by 2030 the costs discussed here are likely to be significant under-estimates. This will be reinforced by the adoption of similar targets elsewhere in NW Europe. The offshore wind sector does not have the capacity to build new projects at a rate of 3 to 4 times the last decade. Any familiarity with the history of offshore oil & gas and other energy projects tells us that the consequence will be a gold rush. It is plausible to assume that capex and opex costs will rise by a minimum of 20% and probably closer to 50% above the already high costs that we observe in the audited accounts. 
    1. New York has to build its offshore wind support infrastructure from scratch.  Even though the goal of 9 GW by 2035 is smaller there is a similar concern about the buildout of projects.  Given that projected costs have always been lower than the actual costs only time will tell for New York implementation.
  3. Bailouts of wind farms and financial institutions are inevitable. The Government is creating a situation in which it will have no option other than to bail out failed and failing projects simply to ensure continuity of electricity supply. There will be a game of pass the parcel over how the losses will be distributed but ultimately they will fall largely on taxpayers and energy customers. Any business investor outside the renewable energy sector should plan on the basis that electricity prices in 2030 will be 3-4 times in real terms what they are today.
    1. There is no reason to expect that the New York situation will be any different.
  4. Remember that not everyone has the same priorities. The UK and the EU are very minor bit players in what happens about climate change. The outcome will depend on choices made in China, the US and India. Focusing on China and India, they are only interested in options that are consistent with both economic growth and other environmental goals. Offshore wind is expensive and of limited interest in most of Asia.
    1. New York is also a minor bit plyer in what happens about climate change. 
  5. As a rich country, the UK can afford Net Zero by 2050 at the aggregate level. However, it will mean allocating the proceeds of 10 or 15 years of economic growth to that single goal. Past experience shows that the UK’s political system cannot handle the structural and redistributive consequences of following that path. A strategy that acknowledges the real economic costs and difficulties of trying to make the transition too quickly is much more likely to be accepted and implemented.
    1. I have no reason to expect a different outcome for New York.

Conclusion

Professor Hughes has prepared an important warning for New York.  While I have little hope that the lessons will be heeded, I hope that they are at least considered during the implementation of the rule.  I will submit a comment to the Generation Advisory Panel alerting them to this work.

I conclude with his summary:

“The theme of my talk is the disparity between predictions about the future costs and performance of wind power (especially offshore wind) – the Rhetoric – and the actual evidence that is available on what it costs to build and operate wind farms and the amount of power they produce over their lifetime – the Reality. The reality of what will happen to the costs of key renewable energy and other low carbon technologies is critical. The UK Government’s strategy for meeting its Net Zero target at an affordable cost rests on the core assumption that the costs of wind power have fallen – and will continue to fall. There is, however, a major problem with all of the projections produced by official agencies, academics and other organisations. Put bluntly, they are the product of wishful thinking applied to notional projects in the future with little or no connection to commercial reality.”

My Comments on the New York Value of Carbon Guidance Document

The Climate Leadership and Community Protection Act (CLCPA) mandates that the state establish a value of carbon for use in the implementation of the law.  This post describes my comments  on the draft guidance document “Establishing a Value of Carbon, Guidelines for Use by State Agencies” document released on October 29, 2020.  I submitted comments because this law will affect the affordability and reliability of New York’s energy.

I am a retired electric generation utility meteorologist with nearly 40-years of experience analyzing the effects of environmental regulations on electric and gas operations.  I have written a series of posts on the feasibility, implications and consequences of this aspect of the law and another series of posts on carbon pricing initiatives.  The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.

Background

On July 18, 2019 New York Governor Andrew Cuomo signed CLCPA, which establishes targets for decreasing greenhouse gas emissions, increasing renewable electricity production, and improving energy efficiency.  It was described as the most ambitious and comprehensive climate and clean energy legislation in the country when Cuomo signed the legislation.  I have summarized the schedule, implementation components, and provide links to the legislation itself at CLCPA Summary Implementation Requirements.

The CLCPA requires the New York State Department of Environmental Conservation (DEC), in consultation with the New York State Energy Research and Development Authority (NYSERDA), to establish a value of carbon for use by State agencies. The Draft Value of Carbon Guidance provides values for carbon dioxide, methane, and nitrous oxide for use by State agencies along with recommended guidelines for the use of these and other values by State entities.  Three documents were made available:

In section §75-0113, Value of Carbon the CLCPA states that the “social cost of carbon shall serve as a monetary estimate of the value of not emitting a ton of greenhouse gas emissions” and that “As determined by the department, the social cost of carbon may be based on marginal greenhouse gas abatement costs or on the global economic, environmental, and social impacts of emitting a marginal ton of greenhouse gas emissions into the atmosphere, utilizing a range of appropriate discount rates, including a rate of zero.”  The law states that DEC “shall consider prior or existing estimates of the social cost of carbon issued or adopted by the federal government, appropriate international bodies, or other appropriate and reputable scientific organizations.”

My comments explain why I think the focus of the guidance is wrong.  The guidance does not recognize that when the CLCPA chose specific targets that the proper way to address social costs is through a cost efficiency approach.  The damages approach recommended in the guidance is an efficiency concept.  DEC emphasized use of their proposed values “that can be used by State entities to aid decision- making and used as a tool for the State to demonstrate the global societal value of actions to reduce greenhouse gas emissions.”  The emphasis was clearly on state agency use and not for meeting the CLCPA targets and less on providing guidelines for state agencies.

Guidance Comments

An overview of the Value of Carbon Guidance was presented Maureen Leddy at the 24 November 2020 Climate Action Council Meeting. I will annotate the Value of Carbon Guidance slides  below with excerpts from the comments I submitted.

The first slide is titled “Value of Carbon Reduction” and notes that the “CLCPA requires DEC, in coordination with NYSERDA, to establish a Value of Carbon as an evaluation tool for agency decision making”.  The lists the following requirements:

        • Describe damages and marginal abatement cost approaches
        • Consider a range of discount rates, including zero
        • Consider the social cost of carbon in other jurisdictions
        • Provide values for non-C02 greenhouse gases

I think the guidance ultimately provides cost effectiveness justification for the CLCPA.  As a result, I believe that the document should explain the concept of the social cost approach targeted for the general public.  Blastland et al. (2020) describe an approach for evidence communication that I suggested would be an appropriate template for the public primer.  The authors suggest that communications should offer “balance, not false balance”.  I argued that this is a major short-coming in the guidance and supporting memo documents because the full range of opinions on social cost methodologies was not included.

My comments addressed technical aspects of the damages and marginal abatement cost approaches.  The biggest problem with their description and the recommendation to use the damages approach is that they ignored the concept that once a cap is set, you should not use the damages approach exemplified by the social cost of carbon. The social cost of carbon is an efficiency concept. Establishing a price incentivizes society to develop the most efficient response to that price but does not guarantee specific emission levels. Once a specific target is established in a cap that violates the efficiency principle inherent in the social cost of carbon.  I pointed out that in its recent review of the federal IWG social cost of carbon, the U.S. Government Accountability Office referred to the marginal abatement cost approach as a type of “target-consistent approach” to valuing emissions, which reflects the fact that this approach establishes a value that depends in part on the relevant emission reduction target.

Also included in the first slide was the target timeline of milestones to meet CLCPA deadline

Milestone Date
Stakeholder conference July 2020
Public comment period ends November 27, 2020
Final released (CLCPA requirement) January 1,2021

I pointed out that the time between the end of the public comment period and the final release date was very short given the importance of the document.  Importantly the implication that the document was required by the CLCPA is based on a mis-reading of the law that states it was supposed to be released “No later than one year after the effective date of this article”.  The law was signed in July 2019 so this should have been released back in July 2020.  Because the date has been missed delaying release long enough for full evaluation and response is appropriate.

 

The second slide, “Draft Value of Carbon Guidance” stated that the proposed guidance:

      • Provides background on different ways to value greenhouse gas emissions reductions
        • Damages approach and marginal abatement cost
      • Recommends the U.S. Interagency Working Group’s (IWG) damages-based value of carbon, also referred to as the social cost of carbon, as appropriate for most agency decision making
      • Considers a range of discount rates, including zero
        • Recommends 1%-3% ($421-$53per ton of C02 in 2020 dollars)
        • Seeking comment on central value of 2% or 2.5% ($125 or $79 per ton of CO2 in 2020 dollars)
      • Discusses how to value non-CO2 greenhouse gases
        • Values are provided for CO2, N02 and CH4, as per IWG
        • Values for other gases will be added as the research evolves
        • CLCPA20-yr GWP does not change these values
      • Details specific considerations for State agencies on how to use a damages-based approach

I think part of the rationale is that the IWG damages-based value of carbon is a more established concept and that more information would have to be developed to use the marginal abatement approach.  The guidance touts the IWG as the best approach but then goes on to ignore the recommendations of the IWG when it comes to the choice of the discount value.  I argued that they did not provide sufficient justification to recommend the changes proposed.

The guidance document recommends that the non-CO2 greenhouse gases be valued individually.  I agree with that approach but I pointed out that there are ramifications to that relative to methane.  Carbon dioxide is long-lived and accumulates over time because it stays in the atmosphere.  Methane is a short-lived (10 to 12 years) pollutant that lasts in the atmosphere less.  Because the CLCPA targets set a hard cap on methane emissions twelve years after the cap limit is reached the impact of methane on warming is done.  It stands to reason that the economic impact on aspects of the economy, such as energy use, health, and agriculture, projected from these climatic changes is also done.  I suggested that the social cost impacts needed to be revised to reflect that reality.

There is a basic problem with the way the guidance document is framed.  While it is valuable that State agencies have guidance on how to use a damages approach, it is even more important to provide support for the CLCPA implementation process.  The use of the damages approach over the marginal abatement cost approach handicaps CLCPA implementation of the most cost-effective strategies.

The second slide also stated that “This guidance is not a regulation and does not set a carbon price nor impose any fees.”  This caveat has been included in every DEC document on the value of carbon but the reality is that the guidance will be used to set a carbon price for the imposition of fees if the New York Independent System Operator Carbon Price proposal is implemented.  I would expect that it would be also used if New York joins the Transportation Climate Initiative.

The third slide, DEC Draft Value of Carbon Guidance, basically repeated all the points made in previous slides.  Two points do need to be addressed:

      • State agencies may utilize the Value of Carbon to aid many forms of decision-making related to permitting, environmental review, rulemakings, funding, procurement, etc.
      • Guidance does not create a price, fee, or compliance obligation.

It is not clear that if the value of carbon is used in decision-making related to permitting how that cannot be considered a compliance obligation.  Maybe it is just intended to “prove” that the actions can be justified because the costs may be less than the social costs calculated using the recommended values.  That may also explain why the IWG recommended values which yield lower social costs are not recommended.

I specifically suggested that the guidance document incorporate the Blastland et al., (2020) simple tip to display information in a table rather than stating them in the text to address the implications of the assumptions used to develop the recommended values of carbon.  I suggested that a table be included that lists the effects of assumptions on the social cost values.  My comments addressed the effects of location of benefits (guidance benefits are primarily global and not New York specific), time horizon (the benefits extend out to 2300), the sensitivity of the climate to greenhouse gases (IWG estimates do not use the most recent modeled estimates of the sensitivity), and the discount rate.  Of those parameters only the differences in discount rates were discussed.  However, the underlying ramifications of the discount rate choice were not explained.

Finally, I recommended that the evaluation of carbon pricing policies in Canada by McKitrick (2016) be considered.  He explains that “there may be many reasons to recommend carbon pricing as climate policy, but if it is implemented without diligently abiding by the principles that make it work, it will not work as planned, and the harm to the Canadian economy could well outweigh the benefits created by reducing our country’s already negligible level of global CO2 emissions”.  Clearly this is entirely relevant to New York.  Importantly he notes:

“However, a beneficial outcome is not guaranteed: certain rules must be observed in order for carbon pricing to have its intended effect of achieving the optimal balance between emission reduction and economic growth. First and foremost, carbon pricing only works in the absence of any other emission regulations. If pricing is layered on top of an emission-regulating regime already in place (such as emission caps or feed-in-tariff programs), it will not only fail to produce the desired effects in terms of emission rationing, it will have distortionary effects that cause disproportionate damage in the economy. Carbon taxes are meant to replace all other climate-related regulation, while the revenue from the taxes should not be funnelled into substitute goods, like renewable power (pricing lets the market decide which of those substitutes are worth funding) but returned directly to taxpayers.”

Conclusion

Because it appears that a primary goal of this process is to memorialize a value of carbon to justify agency actions, the public deserves to know how the real costs are balanced against the theorized cost benefits.  When CLCPA strategies are announced and cost savings are claimed the public deserves to know that the savings are based on global not New York benefits, savings out to 2300, and do not represent the latest climate sensitivity science.  If the total costs are close to the purported benefits this may be acceptable but I have no doubt that the total costs per ton will far exceed even these conjured values.

Furthermore, there are fundamental technical considerations overlooked or ignored by the guidance. New York State CLCPA implementation is trying to choose between many expensive policy options while at the same time attempting to understand which one (or what mix) will be the least expensive and have the fewest negative impacts on the existing system. If good picks are made then state ratepayers will spend the least amount of a lot of money, but if they are wrong, we will be left with lots of negative outcomes and even higher costs for a long time.  Picking the correct value of carbon metric and values is critical to doing this right.  A comprehensive response to comments justifying the choices made is an integral part of doing this right.

My comments on the FERC Carbon Pricing Policy

Earlier I described the Federal Energy Regulatory Commission (FERC) technical conference regarding Carbon Pricing in Organized Wholesale Electricity Markets held on September 30, 2020.  On October 15, 2020 FERC proposed a policy statement to “clarify that it has jurisdiction over organized wholesale electric market rules that incorporate a state-determined carbon price in those markets. I also described the proposed policy statement that seeks to encourage regional electric market operators to explore and consider the benefits of establishing such rules.”

The post on the policy statement mentioned that I intended to personally comment on the concerns I raised in my personal blog post on the FERC technical conference.   I submitted comments as a private citizen.  The technical conference convinced FERC commissioners that carbon-pricing was an “efficient” market-based tool but nobody asked and no one proved that they work.  In my opinion the first rule of efficient policy is that it works.  I believe that those who support carbon pricing on theoretical economic grounds are overlooking or are unaware of practical issues I have raised.  Cynic that I am, I think the primary value to FERC and the RTO/ISO operators is that the carbon price makes their lives easier.  That it will have significant impacts on consumers and not do anything for the climate is somebody else’s problem.

In order to determine whether any carbon pricing proposal will affect the justness and reasonableness of rates I argued that the Commission must consider whether the proposal will reduce carbon dioxide emissions at a cost below some standard of reasonableness.  There is a cost where the abatement costs exceed any estimates of the cost impacts of CO2 on the climate.  Despite its flaws the Social Cost of Carbon (SCC), the present-day value of projected future net damages from emitting a ton of CO2 today, is a widely used metric to establish a reasonable value.  Because my primary concern is New York’s Climate Leadership and Community Protection Act (CLCPA) I proposed using New York’s proposal to use the Interagency Working Group 2016 estimates that translate into a 2020 value of carbon dioxide of $53-421 per ton, with a central value of $79-125 per ton”.

The FERC notice of the proposed policy statement on Carbon Pricing in Organized Wholesale Electric Markets states that “We agree that proposals to incorporate a state-determined carbon price in RTO/ISO markets could, if properly designed and implemented, significantly improve the efficiency of those markets”.  I argued that there are practical reasons why it is impossible to properly design and implement a carbon pricing scheme that will affect efficiency of those markets in the best interests of the public.

Carbon pricing is a climate policy approach that charges sources for the tons of carbon dioxide that they emit.  A Resources for the Future (RFF) summary lists several attributes that they claim makes carbon pricing more attractive than other potential policies to reduce carbon dioxide emissions:

      • Carbon pricing allows emitters to choose the most efficient method to reduce emissions.
      • An economy-wide carbon price applies a uniform price on CO₂ emissions regardless of the source.
      • A carbon price encourages individuals and businesses to reduce their carbon emissions more than conventional regulations.
      • A carbon price creates a new revenue stream that can be used in a number of ways.

I compared those attributes to the real-world of carbon pricing.

RFF states that “carbon pricing allows emitters to choose the most efficient method to reduce emissions”.  In the context of power plants under FERC jurisdiction this is mostly irrelevant.  In the first place, there are no cost-effective add-on controls for CO2 reductions, so fossil-fired electrical generators only have limited options.  For an individual power plant operator, the only effective approach is to switch to a lower emitting fuel.  Power plants can also be replaced in whole or part by alternative generation, but the business model of most de-regulated generating companies precludes the option to develop replacement generation. I have shown that in RGGI the market participants don’t behave as expected by economic market theory so the markets don’t necessarily behave as the economists think they should.  As a result, all the modeling and laboratory testing economic results “proving” market efficiency should be viewed cynically.  I believe that even though carbon pricing advocates have convinced themselves that somehow carbon pricing is different than a tax, the reality is that because of the limited options for compliance any carbon price is treated just like a tax by electric generating operators.  Because energy taxes are inherently regressive, the carbon price result is not in the best interest of low-income ratepayers.

There is another aspect to carbon emissions reductions that is relevant to FERC.  In order to replace firm, dispatchable fossil-fired capacity the total costs to make in-kind replacement with renewable wind and solar have to be included.  No one at the technical conference addressed how a carbon price signal for generators would lead to the development of the transmission and ancillary grid support services necessary to support intermittent and diffuse wind and solar generation.  An electric system carbon price requires any generator that emits CO2 to include a carbon price in their bid which serves to provide the non-emitting generators with more revenue.  However, solar and wind generators are not paying the full cost to get the power from the generator to consumers when and where it is needed.  Because solar and wind are intermittent, as renewables become a larger share of electric production energy storage or energy now provided by traditional generating sources will be needed but there is no carbon price revenue stream for energy storage.  Because solar and wind are diffuse, transmission resources are needed but solar and wind do not directly provide grid services like traditional electric generating stations.  Energy storage systems could provide that support but they are not subsidized by the increased cost to emitting generators.  When the carbon pricing proposal simply increases the cost of the energy generated, I think that approach will lead to cost shifting where the total costs of fossil fuel alternatives have to be directly or indirectly subsidized by the public.

RFF and the economists at the FERC Technical Conference all agree that an economy-wide carbon price that applies a uniform price on CO₂ emissions, regardless of the source, is the ideal solution.  On the other hand, speakers at the conference admitted that this ideal implementation was unlikely.  Pollution leakage refers to the situation where a pollution reduction policy simply moves the pollution around the globe rather than actually reducing it. Economic leakage is a problem where the increased costs inside the control area leads to business leaving for non-affected areas.  There also is an economic leakage effect in electric systems where a carbon policy in one jurisdiction may affect the dispatch order and increase costs to consumers in another jurisdiction.  As a result, work arounds are necessary to address leakage which complicates the implementation and may lead to unintended consequences.

RFF’s third attribute stated that ‘A carbon price encourages individuals and businesses to reduce their carbon emissions more than conventional regulations”.   There are several problems with this ideal.  In a situation where there is a specific target like New York’s CLCPA 2040 target for zero emissions from the electric sector, it is necessary to consider the total costs and then the necessary carbon price. In order for a carbon price to effectuate this change the carbon price has to equal the cost of the conversion divided by the total tons emitted over the implementation period.  I conservatively estimated the cost for New York to meet the state’s goal of a zero-emissions electric sector by 2040 as $620 per ton.  The cost for converting the country by 2035 as has been proposed would be much higher because the number of years in the implementation period is shorter and the reduction costs themselves would be higher because New York’s starting point for emissions is relatively lower.  Recall that the highest social cost of carbon value that New York is considering is no more than $421 per ton.

The second problem is that individuals and businesses also have limited opportunities to reduce carbon emissions.  One commentator points out that “The only logical reason for a carbon tax is to reduce emissions. Such a tax might help to reduce energy consumption, but only at punitive levels, because energy demand is so inelastic. Therefore, the real intention is to make fossil fuels so expensive that renewables can eventually become competitive, along with carbon capture and sequestration, hydrogen heating etc.”

In order for a carbon price to be more effective than conventional regulation the funds received will have to be spent effectively.   I have evaluated the results of the investments made by regulatory agencies to date in RGGI measured as the cost per ton reduced.  The RGGI states have been investing investments of RGGI proceeds since 2008 but their investments to date are only directly responsible for less than 5% of the total observed reductions.  Furthermore, from the start of the program in 2009 through 2017, RGGI has invested $2,527,635,414 and reduced annual CO2 emissions 2,818,775 tons.  The resulting cost efficiency, $897 per ton reduced, far exceeds the range of SCC values representing the value of reducing CO2 today to prevent damages in the future.

Theory says that the carbon price alone can incentivize lower emitting energy production and that the market choices will be more efficient than government-mandated choices. Ultimately the market signal question is whether the SCC value is sufficient to incentivize the market to invest in zero GHG emitting generation resources.  There is no sign that RGGI motivated the market to act and it is not clear that the carbon pricing schemes proposed under the purview of FERC will provide enough incentive either.

The final RFF attribute stated that “A carbon price creates a new revenue stream that can be used in a number of ways.”  This attribute is more of a concern on the value of the approach than a direct impact on the electric generation sector.  The revenue stream from a carbon pricing stream could be very large.  In the classical theory of carbon pricing those revenues are re-distributed to offset other taxes so that the consumers come out whole.  In practice all or part of the revenues have usually been diverted away from direct consumer rebates to fund carbon reduction programs. If carbon reduction programs are dependent upon a continuing revenue stream there is a fundamental problem.  As CO2 is reduced revenues decrease and eventually either the carbon price has to increase to a very high level or the revenues used to fund mitigation programs will be insufficient to make further reductions.

Conclusion

In order to convince me that carbon pricing has a hope of working in the US electricity market I would need to see an estimate of the cost to convert the nation’s electric system to zero emissions and combine that with recent emissions to develop a cost per ton for the transition.   I believe that the cost for converting the country by 2035 would be much higher than any estimate of the social cost of carbon.

If the estimated emissions reduction cost per ton is higher than the social cost of carbon, then the costs to mitigate climate change effects are greater than the alleged impacts.  A rational alternative response would be to invest in research and development to produce cheaper zero emissions electric generating resources and finance adaptation measures until such time that cost-effective zero-emission resources are available.  I asked if FERC does not hold the States to this just and reasonable standard then who will?

I concluded that RTO/ISO market rules that incorporate a state-determined carbon price in RTO/ISO markets cannot be just and reasonable for the rate payers whatever the value to the RTO/ISO market operators.  I note that among the advocates for carbon pricing at the Technical Conference were RTO/ISO operators who apparently believe that carbon pricing will make their regulatory responsibilities easier.  However, a carbon price will have significant impacts on consumers and not cost effectively reduce CO2 emissions.

Accelerated Renewable Energy Growth and Community Benefit Act Draft Standards and Conditions Comments

This post summarizes the comments I submitted on the draft regulations proposed by the New York Office of Renewable Energy Siting to implement the Accelerated Renewable Energy Growth and Community Benefit Act.  This is part of the Climate Leadership and Community Protection Act which mandates that New York electric system generation be zero-emissions by 2040.  In order to meet that requirement, the state envisions a vast build out of wind and solar generation.

I am following the implementation of New York’s climate mitigation efforts closely because its implementation affects my future as a New Yorker.  One environmental success story in the past 20 years is the resurgence of the bald eagle population.  It was not that long ago that a highlight of a trip to Alaska was seeing bald eagles and the thought of seeing one locally unimaginable.  Now, while it still remains a thrill, I routinely see them from my backyard or driving along the I-90.  As show below I fear that this proposed rule threatens New York’s bald eagle population.  The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.

Background

On July 18, 2019 New York Governor Andrew Cuomo signed the Climate Leadership and Community Protection Act (CLCPA), which establishes targets for decreasing greenhouse gas emissions, increasing renewable electricity production, and improving energy efficiency.  It was described as the most ambitious and comprehensive climate and clean energy legislation in the country when Cuomo signed the legislation.  I have summarized the schedule, implementation components, and provide links to the legislation itself at CLCPA Summary Implementation Requirements.  In early April 2020, NYS passed the Accelerated Renewable Energy Growth and Community Benefit Act (AREGCBA) as part of the 2020-21 state budget.  This legislation is intended to ensure that renewable generation is sited in a timely and cost-effective manner.   I previously discussed my concerns that these laws do not include feasibility studies to determine whether this can work.

AREGCBA established the Office of Renewable Energy Siting which according to their website has the following objectives:

      • Establish a first-of-its-kind Office of Renewable Energy Siting to implement the timely consolidated review and permitting of major renewable energy facilities in a single forum that takes into consideration local laws, public health and safety, environmental, social and economic factors pertinent to the decision to permit such facilities.
      • Streamline and expedite the siting of major renewable energy projects and associated transmission facilities to help achieve the State’s clean energy and climate goals, while maintaining the State’s strong environmental and public participation standards.
      • Ensure that renewable energy projects deliver economic benefits to the local communities where they are built.

The Office of Renewable Energy Siting (ORES), housed within the Department of State, will “consolidate the environmental review of major renewable energy facilities and provide a single forum to ensure that siting decisions are predictable, responsible, and delivered in a timely manner along with opportunities for input from local communities”.  All large-scale, renewable energy projects 25 megawatts or larger will be required to obtain a siting permit from the Office of Renewable Energy Siting for new construction or expansion. ORES has the authority to issue a single permit for the construction of major renewable energy facilities from both a state and local law perspective, but applicants will still be required to obtain any approvals necessary under federal law, including federally-delegated permits.

New York’s Article Ten process defines the permitting requirements for all large-scale electric generating new construction or expansion and was previously used for renewable projects.  It includes extensive and time-consuming public notification and participation requirements.  The 2011 revisions to the Article Ten law were intended to speed things up but were largely ineffective in that regard.  The AREGCBA application requirements are intended to primarily speed the process up.  ORES has 60 days from the date of its receipt of a permit application to make a completeness determination. An application will not be complete without proof of consultation with the host municipalities and communities but the public notification requirements are much reduced relative to Article Ten. After a completeness determination, draft permit conditions will be issued by the Office of Renewable Energy Siting for public comment. The Office of Renewable Energy Siting must issue a final decision on the siting permit within one year of the date on which the application is deemed complete and within 6 months if the facility is proposed to be located on brownfield, former commercial or industrial, landfill, former power plant, and abandoned or underutilized sites.

Shortcoming Comments

My comments addressed three shortcomings in the proposed regulation.  The greatest deficiency of the CLCPA and AREGCBA is the failure to consider the cumulative environmental impact of the wind and solar resources necessary to replace the fossil-fired electric generating capacity of New York.  Recent studies indicate that the National Renewable Energy Lab projected total technical potential land-based wind capacity of 35,000 MW will be needed.  Assuming three MW wind turbines that means 10,000 turbines!  Unless a cumulative impact analysis is done by the Office of Renewable Energy Siting the public welfare and environment could be threatened.

I am particularly concerned about bald eagles.  There are actions necessary within a quarter of a mile from a bald eagle nest but to assume that will eliminate interactions with the birds who must fly further than that on a routine basis is a stretch.  While some argue that on an individual or even facility basis that most environmental impacts are generally acceptable, the impact of 10,000 turbines is different.  As it stands there is nothing to say that wind farms could surround the Montezuma National Wildlife Refuge as long as there are more than a quarter mile away.

It may be a misunderstanding on my part but I did not see any provision to require applicants to provide capability information in the applications.  It is not enough to just say that there will be 10 three MW turbines for a total of 30 MW, applicants also need to provide the expected energy (MWh) output.  That information is absolutely necessary so I argued it should be specified.  I don’t think it is appropriate to short-change local participation and environmental issues for renewable facilities that will not provide renewable energy credit to New York so I recommended that if a facility cannot prove that the renewable energy credits generated by the facility will be used to meet New York’s goals that they be required to go through the existing Article Ten process.

Inadequacy Comments

I raised issues with this accelerated approval schedule.  I don’t think that there are enough safeguards in place to ensure that locally affected residents will be notified of the project early on in the process.  It is particularly troubling that the law includes deadlines for the agency staff reviewing the applications.  If they don’t respond on time the submittals are deemed complete.  ORES is a new organization and has no staff, procedures, or operating history.  Moreover, it is entirely likely that there will be many applications to process.  I recommended that a safety valve be included if the reviewing staff is over-whelmed.

I raised a couple of concerns about communications and references.  There is a discussion of the impact of wind turbines on weather radars.  My primary concern with 10,000 wind turbines is that false echoes from turbines across the landscape will make accurate tracking of the relatively small, low-level, and possibly intense lake-effect snow bands in downwind areas more difficult and affect the safety of local residents.  This issue should be addressed and not simply ignored.  I pointed out that the most recent  World Health Organization Guideline on community noise was not used  The fact that more recent guidance is not being used is disappointing.  That the more recent guidance inconveniently indicates that more restrictive limits on wind turbines are necessary to protect public health and welfare suggests that this may have been more than a simple oversight.

Conclusion

I cannot over-emphasize my belief that the lack of a cumulative environmental impact analysis is a danger to the environment of New York.  The number of wind turbines and solar panels needed to meet the CLCPA goals is staggering.  The idea that 10,000 wind turbines might not have an environmental impact that deserves analysis is absurd.

Overall, I do not think this regulation as proposed is in the best interests of anyone near a proposed renewable energy facility.  Without the thorough public participation requirements of Article Ten and with the threat of over-ruling any home rule limits on renewable energy development, the AREGCBA result may be New York’s first climate refugees.  The first Dutch climate refugees are a fact because local residents cannot cope with the noise of wind farms.

Climate Leadership and Community Protection Act Energy Efficiency Citizen Science

One of the reasons we have a dog is that I cannot avoid the need to take him out for a walk every day.  I don’t take along an audio system so the walk is a time for reflection and observation.  This morning’s observation is that when the frost is on the roofs you can tell who has good insulation and who doesn’t.  That lead to the thought that maybe I could do a “study” to determine how many houses in our neighborhood appear to be energy efficient and how many are not.  One of the primary presumptions of the Climate Leadership and Community Protection Act Energy Efficiency and Housing Advisory Panel is that the deep de-carbonization goals can be met by reductions in energy service demand by more efficient building shell and weatherization measures.  Those measures have been targeted for years so I have always wondered how many homes still could be updated to get the biggest demand reductions for the investments.

Background

On July 18, 2019 New York Governor Andrew Cuomo signed the Climate Leadership and Community Protection Act (CLCPA), which establishes targets for decreasing greenhouse gas emissions, increasing renewable electricity production, and improving energy efficiency.  It was described as the most ambitious and comprehensive climate and clean energy legislation in the country when Cuomo signed the legislation.  I have summarized the schedule, implementation components, and provide links to the legislation itself at CLCPA Summary Implementation Requirements

I am following the implementation of the CLCPA closely because its implementation affects my future as a New Yorker.  Given the cost impacts for other jurisdictions that have implemented renewable energy resources to meet targets at much less stringent levels, I am convinced that the costs in New York will be enormous and my analyses have supported that concern.  The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.

Energy Efficiency and Housing Advisory Panel

The Climate Action Council (CAC) is charged with preparing a scoping plan to achieve the goals of the CLCPA.  The CLCPA mandates that in order to “provide recommendations to the council on specific topics, in its preparation of the scoping plan, and interim updates to the scoping plan, and in fulfilling the council’s ongoing duties”, the CAC (§ 75-0103, 7) “shall convene advisory panels requiring special expertise and, at a minimum, shall establish advisory panels on transportation, energy intensive and trade-exposed industries, land-use and local government, energy efficiency and housing, power generation, and agriculture and forestry”.  Since the start of the implementation process the CAC realized that another advisory panel specifically addressing waste was appropriate.  You can follow the progress of this work at the State’s Climate Act webpage.

The Energy Efficiency and Housing Advisory Panel is, in my opinion, doing the best job addressing issues associated with their objective to “develop recommendations specific to the buildings sector for emissions reducing policies, programs, or actions that contribute to achieving the statewide emissions reductions established in the CLCPA, for consideration by the Climate Action Council for inclusion in the Scoping Plan”.  The Panel’s target is to “develop buildings sector-focused recommendations for emission-reducing policies and actions to achieve approximately 31-39% emission reduction in buildings by 2030 (and 85-93% emission reduction by 2050), from 2016 levels”.  (As an aside, these emission rate targets are subject to refinement because the CLCPA has its own unique emissions accounting approach and they have not made up the numbers yet.)

The following slide is an overview of the residential housing sector profile of New York prepared by the New York State Energy Research and Development Authority (NYSERDA).  It was included in the Energy Efficiency and Housing panel presentation on October 16, 2020.

Citizen Science Survey

The hypothesis of this citizen science experiment is that it is possible to categorize building shell and weatherization effectiveness by comparing the appearance of frost on the roofs of similar homes to give a first order estimate of the potential for additional energy savings in this sector.

The following picture illustrates the difference between one home that appears to have better weatherization and insulation than another home.  This photo was taken at 8:09 AM on November 13, 2020.  A New York State Mesonet meteorological monitoring site several miles south showed that the temperature went below freezing about 9:00 PM the previous evening and that the temperature went above freezing around 7:00 AM.  By the time I got home around 8:15 AM there was a noticeable difference in the frost on my own home due to melting.  I categorize the house on the left as one that has inadequate insulation and weatherization.  Note that the entire roof is mostly frost free.  You can see under the roof over the garage and the area along the eaves has frost.  The house on the right appears to have adequate insulation and weatherization.  The entire roof has an even layer of frost.

One of the notable things about this survey was there was a third category as shown in the following picture.  My assistant Gus points to the one-story section of the house that has much less frost than the two-story section.  My own home showed  two different frost patterns too.  Unfortunately, I did not take a picture of my house because the frost had melted too much but the frost-free zone is located over my front porch.  I did not put insulation there because it was not enclosed but the roof pattern shows that something should be done there to improve the house energy efficiency.

The homes in this neighborhood were all built in the 1960’s which puts them right in the middle of the central age sector of the NYSERDA residential building survey shown above.  We surveyed 70 home roofs this morning.  Seven homes were in the inadequate insulation and weatherization category with roofs that were generally frost-free, 35 additional homes had uneven patterns of frost that indicate that improvements could be made to the insulation and weatherization, and the remaining homes had an even pattern of frost that indicates adequate insulation and weatherization.

Conclusion

I have the impression that advocates for insulation and weatherization to reduce home energy use base their estimates of future improvements from a baseline of uninsulated homes.  Ever since we purchased our first home in 1977 there have been many state and federal programs subsidizing insulation and weatherization.  For my home we meet the insulation standards for the attic, the exterior walls have been insulated, all the windows and doors have been upgraded, and we had a company come and do a leak check.  They noted the problem with porch, put in a barrier and resolved a couple of other issues.  Nonetheless, there still is an issue that needs to be addressed but the relative benefit for the cost will mean a small incremental reduction in energy usage.

These survey results suggest that there are limits on the potential energy savings reductions because many home owners have already implemented insulation and weatherization measures.  Only 10% of the homes in this neighborhood appear to have large potential reduction where the investments will produce the greatest reductions.  Half of the homes apparently could use more measures to improve energy efficiency but those investments will not have as large a cost benefit ratio.  It may be that there is a reason that there isn’t as much insulation in the roof.  For example, the house in the last picture may have cathedral ceilings which are much costly to insulate.  This problem occurred over the garages of most of the homes in this neighborhood with this problem showed up and that is another more complicated and costly problem to resolve.  For the remaining 40% of the homes, any further energy efficiency improvements will likely show much less potential for reductions at much higher costs.

Finally, I want to suggest that this is a methodology that shows promise for quick, broad survey results of actual energy efficiency potential.  The visual appearance of residential homes clearly indicates the insulation and weatherization standards.  Importantly, it is not just frost that could be used as the visual marker..  Light snow probably is a better indicator because frost patterns can be influenced by over-hanging trees.  Another indicator is icicles.  Moreover, this is simple enough that anyone can collect the data.  All you need is a camera, a car and the right conditions to target homes that could provide the greatest energy efficiency improvements.

My Climate Leadership and Community Protection Act Part 496 Comments

On July 18, 2019 New York Governor Andrew Cuomo signed the Climate Leadership and Community Protection Act (CLCPA), which establishes targets for decreasing greenhouse gas emissions, increasing renewable electricity production, and improving energy efficiency.  I have summarized the schedule, implementation components, and provide links to the legislation itself at CLCPA Summary Implementation Requirements.  On August 14, 2020 New York State Department of Environmental Conservation (DEC) Commissioner Basil Seggos released proposed part 496 regulations that defined the 1990 baseline emissions inventory for the CLCPA.   This post summarizes the comments I submitted on October 26, 2020.

I am following the implementation of the CLCPA closely because it affects my future as a New Yorker.  If they get it wrong it will be all the more difficult to get to the aggressive CLCPA targets.  The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.

Background

This 1990 emissions inventory is important because many of the targets of the CLCPA are based on reductions from this baseline.  For example, there is a target to reduce GHG emissions to 60 percent of 1990 emissions levels by 2030.  The CLCPA includes specific requirements for the 1990 emission inventory that I am positive no legislator who voted for the law understood.

The law mandates an aggressive schedule for developing this inventory.  The CLCPA 1990 baseline is supposed to be set in 2020 but the first statewide greenhouse gas emissions report isn’t due until 2021.  The statewide emissions report is defined as a “comprehensive evaluation of the inventory best available science and methods of analysis, including the comparison and reconciliation of emission estimates from all sources, fuel consumption, field data, and peer-reviewed research”.  It “shall clearly explain the methodology and analysis used in the department’s determination of greenhouse gas emissions and shall include a detailed explanation of any changes in methodology or analysis, adjustments made to prior estimates, as needed, and any other information necessary to establish a scientifically credible account of change”.  The 1990 baseline for the statewide GHG emission limits has similar quality requirements: “In order to ensure the most accurate determination feasible, the department shall utilize the best available scientific, technological, and economic information on greenhouse gas emissions and consult with the council, stakeholders, and the public in order to ensure that all emissions are accurately reflected in its determination of 1990 emissions levels”.

I compared the proposed Part 496 1990 emission inventory with the previous “official” New York greenhouse gas emission inventory that was prepared by the New York State Energy Research and Development Authority (NYSERDA) in two earlier posts.  The Part 496 Regulatory Impact Statement (RIS) includes a section titled Key Requirements of the 1990 Emission Baseline section that explains the CLCPA mandates that required DEC to develop a new official inventory.   These requirements significantly affect the greenhouse gas (GHG) emission total for the State.  According to the latest edition of the NYSERDA GHG emission inventory (July 2019) Table S-2 New York State GHG Emissions 1990–2016 the New York State 1990 GHG emissions were 236.18 MMtCO2e The proposed Part 496 regulation 1990 emissions inventory total is 401.38 MMtCO2e for an increase of 165.2 MMtCO2e.

Summary of 1990 Emission Inventories
Regulatory Impact Statement Table 1 Inventory in GWP20.
Sector CO2 CH4 N2O PFCs HFCs SF6 Total
Energy 254.43 70.12 1.31 4.00 329.87
IPPU 1.67 0.00 0.00 0.90 0.02 0.01 2.60
AFOLU 0.05 13.07 4.01 17.13
Waste 3.03 48.25 0.50 51.78
Total 259.18 131.45 5.83 0.90 0.02 4.01 401.38
NYSERDA July 2019 Table S-2 Emission Inventory in GWP100
Sector CO2 CH4 N2O PFCs HFCs SF6 Total
Energy 208.96
IPPU 3.99
AFOLU 8.37
Waste 14.86
Total 236.18

Comments

In my first comment I addressed the contradiction in the emission inventory requirements in two sections of the CLCPA.  How can § 75-0107, Statewide greenhouse gas emissions limits, establish a limit estimated pursuant to § 75-0105 which is due later than this requirement?  Both sections mandate the use of the “best available” information and consultation with the public, but the timing requirements preclude that from happening.

As shown above there are significant differences in the Part 496 proposed inventory and the July 2019 NYSERDA inventory.  The July 2019 emission inventory relied primarily on Intergovernmental Panel on Climate Change (IPCC) methods but because of CLCPA mandates, GHG emissions that occur outside of the boundaries of New York State have to be included if they are associated with the use of energy within the State and the carbon equivalent emissions have to use a global warming potential time horizon of 20 years instead of 100 years.  One basic flaw in the Part 496 regulation’s supporting documentation is that in order to be complete the emission factor, activity factors or throughput and the reference for those choices made for each value listed in the inventory has to be provided.  That information is not available.

The RIS is the only documentation provided for the proposed Part 496 inventory and it only provides less than ten applicable references justifying the values chosen.  Given the significant departure from IPCC protocols, the documentation is inadequate.  Reading the RIS gives the impression that methane inventorying is without controversy.  However, as shown in the references I provided, Methane Reference Summary, this clearly is not the case. The overview paper  M. Saunois et al.2020: The Global Methane Budget 2000–2017 notes in the abstract: “The relative importance of CH4 compared to CO2 depends on its shorter atmospheric lifetime, stronger warming potential, and variations in atmospheric growth rate over the past decade, the causes of which are still debated. Two major challenges in reducing uncertainties in the atmospheric growth rate arise from the variety of geographically overlapping CH4 sources and from the destruction of CH4 by short-lived hydroxyl radicals (OH)”.  In order to justify the values used in the inventory these issues should be addressed in the documentation.

The major difference in this inventory compared to previous NYS inventories is due to changes in the methane inventory.  I believe that the changes in the inventory due to methane can be traced to Dr. Robert Howarth.  He not only helped draft the Climate Act but also now is a vocal member of the Climate Action Council.  While this accounts for his outsized impact on the inventory that does not necessarily mean that his views justify the changes.  In the Howarth 2020 paper he claims “Some evidence indicates that shale-gas development in North America may have contributed one-third of the total global increase in methane emissions from all sources over the past decade (Howarth 2019).”  This paper and other similar papers claim that “methane emissions can contribute significantly to the GHG footprint of natural gas, including shale gas”.  There is a problem however, because much other evidence contradicts those claims.

In my comments I provided references with other evidence that I think should be included in the documentation.  While it may be that the State will choose to ignore those results, there is a CLCPA mandate to provide a “detailed explanation of any changes in methodology or analysis, adjustments made to prior estimates, as needed, and any other information necessary to establish a scientifically credible account of change”.  Clearly the existing documentation fails to meet that standard.

Based on my experience I believe there is a huge hurdle for Howarth’s methane inventory.  Although I have been involved with emissions inventories for over 45 years, I do not have specific experience with natural gas production emissions.  However, over that time I learned early on that the gold standard check on any emissions inventory is comparison of the inventory estimate with observed ambient monitoring.  If there is a high quality, long-term monitoring network that measures the pollutant in the inventory and those measurements do not reflect the trend in the inventory then the inventory is wrong.  Lan et al., 2019 evaluated data from the National Oceanic and Atmospheric Administration Global Greenhouse Gas Reference Network and determined trends for 2006–2015.  This covers the period when Pennsylvania shale-gas production increased tremendously.  According to the plain language summary for the report:

“In the past decade, natural gas production in the United States has increased by ~46%. Methane emissions associated with oil and natural gas productions have raised concerns since methane is a potent greenhouse gas with the second largest influence on global warming. Recent studies show conflicting results regarding whether methane emissions from oil and gas operations have been increased in the United States. Based on long‐term and well‐calibrated measurements, we find that (i) there is no large increase of total methane emissions in the United States in the past decade; (ii) there is a modest increase in oil and gas methane emissions, but this increase is much lower than some previous studies suggest; and (iii) the assumption of a time‐constant relationship between methane and ethane emissions has resulted in major overestimation of an oil and gas emissions trend in some previous studies.”

As a result of the fact that the relevant high quality, long-term monitoring network does not show a trend consistent with the work of Howarth I believe that unequivocally supports Dr Lewan’s conclusion that his ideas, perspectives, and calculations on methane emissions from shale gas are invalid.  If the State cannot explain this inconsistency then their inventory is wrong.

Conclusion

In order to meet the “best available science and methods of analysis” criteria of the CLCPA, the DEC documentation should address the current methane debate by summarizing articles on both sides of methodology differences, explain how those differences affect the Part 496 1990 emission inventory relative to previous inventories, and then provide the rationale for picking one approach over the other.  Because this level of detail is not provided, I recommended that the Part 496 inventory should be re-proposed with that information.

There is a big issue lurking in these numbers.  Part 496 lists the baseline GHG emissions inventory for 1990 but the State has not provided their estimated inventory for a recent year.  The GHG inventory with the most recent data covers the period 1990 to 2016 and was published in July 2019.  That inventory is not consistent with the requirements of the CLCPA, but in that inventory New York’s CO2 emissions went from 236.2 MMtCO2e to 205.6 MMtCO2e a 13% decrease.  I would not be surprised that the revised inventory’s emphasis on methane will show that there is a much smaller decrease over that time frame.  That will make attaining the 2030 CLCPA 40% reduction from 1990 emissions level harder to meet.

2020 76West Clean Energy Competition Winners

Governor Cuomo announced this year’s winners of the 2020 76West Clean Energy Competition on October 19, 2020.  This post discusses the competition, its record, and this year’s awards.

I follow New York energy policy closely because its implementation affects my future as a New Yorker.  I am not sure that the reliability and affordability of the electric system can be maintained under the Cuomo administration.  The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.

76West Clean Energy Competition

Before I explain what this program is really about here is the 76West website description:

“76West is an unparalleled competition focused on growing entrepreneurs and attracting resources from the U.S. and around the world to build clean energy businesses and jobs in New York State’s Southern Tier region. Administered by NYSERDA, the 76West Competition  was launched in 2016 as a $20 million four-year initiative to grow the clean energy ecosystem in the Southern Tier with funds from the Regional Greenhouse Gas Initiative and the Clean Energy Fund. Due to its significant positive impact for the region, the competition is being funded this year by Empire State Development through the Southern Tier Soaring Upstate Revitalization Initiative. The Competition supports technological and other innovation initiatives to meet New York State’s climate and decarbonization goals. “

The first question is why is there a focus on New York State’s Southern Tier region.  The Southern Tier spans eight counties along central New York’s southern border with Pennsylvania.  In 2015 the New York Department of Environmental Conservation (DEC) finalized an environmental impact statement that effectively banned hydro-fracking in New York State based on the Department of Health’s public health recommendation that the activity should not proceed in the state.  In January 2020, Cuomo announced legislation in the fiscal year 2021 executive budget to make the ban permanent and that legislation was passed later in the year.  Cuomo’s announcement notes that:

“In the wake of the ban, the clean energy ecosystem in the Southern Tier has grown rapidly over the last five years, fueled by a variety of programs and resources. New companies have sprouted in the Southern Tier with innovations in a wide variety of clean energy sectors, supporting over 4,100 jobs as of 2017. Examples of this industry density include the success of 76West Clean Energy Competition, new business like Imperium3, Sungeel, and Micatu locating in the ST, and the most recent spotlight on the region’s clean energy expertise with the 2019 Nobel Prize in Chemistry awarded to Binghamton University’s Stan Whittingham. These efforts have been bolstered by Southern Tier Soaring, the URI-winning strategic plan developed by the Southern Tier Regional Economic Development Council.”

There you have it.  The eight counties in the Southern Tier were the counties adjacent to Pennsylvania where hydrofracking was proposed before the ban.  The progressive meme is that we don’t need fossil fuels for jobs because the clean energy economy will provide jobs.  So, this program is a bone thrown out to the Southern Tier to make up for the economic benefits lost by the fracking ban.

76West Awards

Not surprisingly the awards are described in multiple places.  You can “Sign in to review information on competitors, judges and mentors, view videos and more on the 76West Competition Platform”.  There is a competition results page for each year’s winners.  I have also summarized the winners in the 76West Competition Winner Summary   According to the website description: “76West is designed to help clean energy technology startups develop in the region, get early users for their technologies, as well as further develop the community of clean tech innovators, industry experts, educators, and investors.”

Since 2016 the state has awarded five $1,000,000 prizes, seven $500,000 prizes, and sixteen $250,000 76West competition prizes for a total of $12,5000,000.  If I had the time to research this more, I would address all the winning entries but in this post I will just describe the winners in the latest year and the first year of the competition.

In 2020, Montreal based TermoAI won the $1,000,000 prize for “Optimizing and automating industrial combustion with patent-pending artificial intelligence to reduce greenhouse gas emissions and increase energy efficiency.”  While this is needed for the future system it is nothing new.  I recall companies offering similar services to Niagara Mohawk when I worked there 20 odd years ago albeit the sales pitch then was that it would reduce nitrogen oxides emissions and decrease fuel costs by improving efficiencies.  AGreatE, Inc. won a $500,000 prize for “Making renewable energy affordable and accessible by producing artificial intelligence-enabled battery-based energy storage systems.”  Energy storage is a critical need for the future energy system.  COI Energy Services, Inc. won a $500,000 prize for “Improving building energy performance and grid optimization with software-as-a-service solutions.”    Optimizing energy efficiency is another aspect of the future energy system that is needed.  Combplex won a $500,000 prize for “Creating a farming ecosystem that sequesters more greenhouse gases by eliminating pests that threaten the health of honeybee hives.”  Their web page states: “Our mission is simple. Help beekeepers, help farmers, and help pollinators to create a more resilient farming ecosystem. Not clear how this relates to clean energy.

In 2016 Micatu won a $1,00,000 prize for “optical sensor for highly accurate real-time grid monitoring.  Their web site includes a picture of their new work headquarters in Horseheads, NY so I imagine that their award facilitated that move.   Charge CCCV won a $500,000 prize for energy storage batteries with longer lifetimes to reduce costs.   They are an “intellectual property company” and “By state mandate, the company is located in designated space at Binghamton University.”  West76 awarded $250,000 prizes to Besstech for “Silicon-based electrodes to make energy storage batteries cheaper, fast-charging and more environmentally friendly”; ChromaNanoTech for “Dye which blocks invisible radiation in windows to reduce air conditioning loads”; Concertio for “Software that reduces the energy consumption of data centers”; and Global Thermostat “Captured carbon dioxide and purifies it for industrial manufacturers”  but appears to be more oriented to carbon capture technologies.  Besstech is an electrode design and engineering venture based in Albany, New York. ChromaNanoTech was founded in 2014 at the Binghamton University incubator so this prize does help the Southern Tier.  Concertio headquarters are in Manhattan but on their about page there are two references to Cornell which is located in Ithaca within the Southern Tier.  Global thermostat is also headquartered in Manhattan.

In this sampling of the 2016 and 2020 awards for the 76West competition “focused on growing entrepreneurs and attracting resources from the U.S. and around the world to build clean energy businesses and jobs in New York State’s Southern Tier region” I am not necessarily seeing that focus.  The four awards in 2020 went to three companies outside the Southern Tier in Montreal, Canada, Carlsbad, CA, and Tampa, FL.  Perhaps their proposals promised that offices would be established in the Southern Tier.  Combplex is based in the Southern Tier but trying to make a connection to the admirable goal of helping honey bees as a clean energy effort is more than a little stretch.  In 2016 Micatu won the biggest prize and has established its headquarters in the Southern Tier and their technology is needed for the grid of the future.  ChromaNanoTech is also based in the Southern Tier.  The other three 2016 winners have no obvious direct connection with the Southern Tier.

Funding

NYSERDA is responsible for the initiatives to be supported by Regional Greenhouse Gas Initiative (RGGI) auction proceeds. The RGGI Operating Plan is “designed to strategically invest across disciplines, economy wide, in a way that supports comprehensive strategies that best advance the CO2 emission reductions goals of the State”.  RGGI is ostensibly a GHG emission reduction program but emission reductions since the inception of the program are primarily due to the hydrofracking technology that New York banned than the program itself.  I have shown that the cheaper price of natural gas due to hydrofracking made natural gas a cheaper alternative than coal and oil, the only reductions due to RGGI are those from the investment of its proceeds.  At some point, however, further reductions in CO2 emissions will need to come from these kinds of investments.

The last time I reviewed the NYSERDA RGGI investments I found that none of the NYSERDA investments of RGGI auction proceeds meet the social cost of carbon criterion of a cost-effective control strategy.   I believe that New York will propose to use the Obama era social cost of carbon value which is $50 in 2019.  The Consolidated Summary of Expected Cumulative Annualized Program Benefits through 31 December 2018 table summarizes the benefits and costs. It shows that for a total of $558 million invested that the total claimed GHG savings are 1,203,781 tons for a cost benefit of $463.54 per ton reduced, almost ten times higher than the social cost of carbon.

According to the 2020 RGGI Operating Plan Amendment numbers shown in the 76West Financial Awards and NYSERDA RGGI Funding Summary, RGGI is the primary source of funding for the 76West program.  Clearly, the 76West competition does not emphasize strategies that best advance CO2 emissions reductions goals of the State.  That suggests that this competition is one of the reasons why the RGGI investments are not producing socially cost of carbon effective reductions.

Conclusion

Governor Cuomo has said:

“New York has made unprecedented progress in reducing its carbon footprint, while making great strides in transforming the economy into one that is cleaner, greener, stronger and more sustainable than ever before,” Governor Cuomo said “The Regional Greenhouse Gas Initiative has been an incredible success in reducing emissions throughout New York and the Northeast, while supporting thousands of jobs and billions of dollars of investments in green development projects.”

As noted above.  I have shown that the cheaper price of natural gas due to hydrofracking was the primary cause of the “unprecedented progress” in reducing New York’s carbon footprint.  Furthermore, RGGI investments have not been effective tools to reduce emissions.  These facts directly contradict Cuomo’s claims.

According to the NYSERDA October 19, 2020 press notice announcing the winners of the 76West clean energy business competition “Winning companies will spur clean energy innovation in support of Governor Cuomo’s nation-leading climate and clean energy agenda”.  Even this cursory check of the winners of the competition illustrates that the winning projects will do little to achieve the climate emission reduction goals which are the primary drive of the clean energy agenda.  If one were to try to estimate the actual CO2 reductions that might result from these winning programs relative to the awards, I am sure the cost per ton reduced would be much higher than the general numbers that I extracted previously.

The poster child for well-intentioned work but without any obvious connection to clean energy is the Combplex award for technology to track honey bee disease.  According to the Wall Street Journal, New York faces a $59 billion revenue shortfall.  In this time of clear financial crisis and the purported existential climate crisis, if funding intended to make the transition to clean energy is diverted to anything other than clear clean energy projects, then it would seem that decision makers are short changing their clean energy posturing for political gain.

 

Climate Leadership & Community Protection Act Dispatchable Emission Free Resources Feasibility

Updated October 23 2020: Added a reference to a new Carbon Capture and Storage report.

On July 18, 2019 New York Governor Andrew Cuomo signed the Climate Leadership and Community Protection Act (CLCPA), which establishes targets for decreasing greenhouse gas emissions, increasing renewable electricity production, and improving energy efficiency.  I have summarized the schedule, implementation components, and provide links to the legislation itself at CLCPA Summary Implementation Requirements.  This post summarizes the status of possible technologies that could be used to meet the need for firm dispatch capacity or dispatchable emissions-free capacity.

I am following the implementation of the Climate Act closely because its implementation affects my future as a New Yorker.  New York State is trying to choose between many expensive policy options to meet the CLCPA targets while at the same time attempting to understand which one (or what mix) will be the least expensive and have the fewest negative impacts on the existing system. If they make a good pick then state ratepayers spend the least amount of a lot of money, but if they get it wrong then we will be left with lots of negative outcomes and even higher costs for a long time.  The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.

Background

This post addresses the resources necessary to meet the CLCPA target of an emissions-free electric generating sector by 2040.  In order to assess the potential impacts on power system reliability in 2040 when meeting that target, NYISO contracted with ITRON and the Analysis Group to develop estimates of the necessary resources.  On October 8, 2020 Kevin DePugh, Senior Manager for NYISO Reliability Planning, made a presentation to the Executive Committee of the New York State Reliability Council that summarized their work and provides an estimate of the  Generation Capacity resource mix.  I think that the resources projected are mind-boggling:  35,200 MW of onshore wind, 21,063 MW of offshore wind, 10,878 MW of behind-the-meter solar, 29,262 MW of grid connected solar will be needed, energy storage of 15,600 MW, and winter price responsive demand of 3,412 MW.  Even with those projected capacities there is a category called Dispatchable Emissions-Free (DE) resources with a projected capacity need of 32,136.6 MW.

Ultimately, the problem is that no amount of additional renewable energy will provide electricity when the sun isn’t shining and the wind isn’t blowing.  In order to provide electrical energy during those periods the DE resources category was included.  DePugh described the following characteristics of this resource:

      • Large quantities of DE Resource generation are needed in a small number of hours
      • Substantial quantity of DE Resource capacity is needed, but the energy need is minimal
      • DE Resource must be able to come on line quickly, and be flexible enough to meet rapid, steep ramping need
      • On an average day, storage can meet evening peaks, but the DE Resource must generate if storage is depleted and renewable generation is low
      • In the Winter CLCPA scenario, the DE Resource output across the state must increase from 362 MW (1.1% of DE Resource nameplate capacity) to27,434 MW (85.4% of name plate capacity) in six hours of the most stressed day

The Analysis Group (AG) and NYISO have not offered any examples of a resource that meets these characteristics.  In fact, AG goes out of its way to not offer examples: “AG does not presume to know what resource or what fuel will fill this gap twenty years hence” and “The purpose of modeling it is to understand the attributes of the resource need”.  In their presentation to the Power Generation Advisory Panel on September 16, 2020 Energy and Environmental Economics (E3) included a slide titled Electricity Supply – Firm Capacity that said: “As the share of intermittent resources like wind and solar grows substantially, some studies suggest that complementing with firm, zero emission resources, such as bioenergy, synthesized fuels such as hydrogen, hydropower, carbon capture and sequestration, and nuclear generation could provide a number of benefits”.    I believe the E3 firm, zero emission resource is the same as the NYISO DE resource so these are potential sources of dispatchable, emissions free energy.

This post will address the complementing firm, zero emission resources examples mentioned by E3.

CLCPA Definition of Renewables

There are two relevant specifications in the language of the CLCPA.  The first defines “renewable energy systems” as “systems that generate electricity or thermal energy through use of the following technologies: solar thermal, photovoltaics, on land and offshore wind, hydroelectric, geothermal electric, geothermal ground source heat, tidal energy, wave energy, ocean thermal, and fuel cells which do not utilize a fossil fuel resource in the process of generating electricity.”  The language specifying the 2030 target states that a minimum of seventy percent of the state wide electric generation “shall be generated by renewable energy systems”.

The renewable energy systems definition is a continuing topic at the Climate Action Council meetings.  There are vocal members who insist on a strict interpretation of allowable electric energy resources.  However, the CLCPA also notes that “the commission shall consider and where applicable formulate the program to address impacts of the program on safe and adequate electric service in the state under reasonably foreseeable conditions. The commission may, in designing the program, modify the obligations of jurisdictional load serving entities and/or the targets upon consideration of the factors described in this subdivision.”  It will be interesting to see what happens if the strict interpretation of appropriate technology prevents safe and adequate electric service.

Hydropower and Nuclear Generation

Both hydropower and nuclear generation would be very useful as dispatchable emissions-free firm capacity.  However potential development of either resource in New York is limited.  New York already has extensive hydropower resources and that means there are only limited opportunities for any additional development.  I believe that it I unlikely that New York would consider building new nuclear generation while at the same time the state is shutting down viable existing nuclear generation.

Carbon Capture & Sequestration

There are several general issues with carbon capture & sequestration (CCS) technology for DE resources.  Firstly, the final clause in the renewable energy definition “which do not utilize a fossil fuel resource in the process of generating electricity” could apply to all the technologies rather than just the immediately adjacent technology “fuel cells”.  If that is the correct interpretation then CCS is off the table.

The second general issue is the engineering challenges of the technology itself.  While there already is technology to capture CO2 from gases it is another matter to capture CO2 in the hot and corrosive flue gas of a power plant.  Assuming that you can get over those hurdles then you need to store the collected CO2.  If the facility is near old oil and gas fields the CO2 can be used to enhance the recovery of the oil and gas.  To my knowledge this option is not available for New York so an alternative underground rock storage structure will have to be developed.

The final general issue is implementation in New York.  I will provide some anecdotal evidence for this issue.  In a vivid example of how far things have changed in New York, consider that Governor George Pataki’s Office of Regulatory Reform launched the Advanced Clean Coal Initiative in 2006, which sought to encourage the development of one or more clean coal facilities in New York to reduce New York’s dependence on petroleum.  As part of the initiative, the New York Power Authority (NYPA) issued a request for proposal for up to 600 MW electric generating capacity from a coal plant that would significantly reduce emissions and be built with the ability to capture and sequester carbon dioxide emissions.  Four companies submitted bids and my former employer NRG Energy was given a conditional award.  One of the incentives of the initiative was a purchase power agreement with NYPA and when the state figured out the costs necessary to support the project the whole thing was cancelled as too expensive.  In 2020 with the benefit of hindsight we see that was the right decision. As a result of the technology that New York banned (high volume fracking), the low price of natural gas made all of New York’s coal-fired power plants uneconomic.  The additional cost of the CCS would have made this project even more uneconomic.

Although I was not directly involved in my NRG’s carbon capture & sequestration (CCS) proposal, I learned that there were implementation problems with any carbon capture and sequestration project from colleagues who were involved.  New York regulators have a recent history opposing pipelines because of the potential for leaks and contamination.  I believe that the pipeline transport and pumping process would spark the same irrational reaction as fracking produced.  The NRG project had difficulty finding locations where it could be sequestrated in western New York.  Another problem the project faced was that there was no precedence for liability protection if the sequestered CO2 leaked.  Who would get sued, the state, operator, or land-owner?

In conclusion, the fact that despite a lot of effort there are only a few CCS projects suggests that the technology is still an issue.  Coupled with New York limitations this may not be a viable DE resources alternative.

Update (10/23/2020): On October 22, 2020 the Energy Futures Initiative (EFI) and Stanford University released “An Action Plan for Carbon Capture and Storage in California: Opportunities, Challenges, and Solutions,” a report providing policymakers with options for near-term actions to deploy carbon capture and storage (CCS) to meet the state’s climate goals.  According to the press release there are some key takeaways from the report:

      • California’s economy would see rapid near-term emissions reduction benefits from CCS;
      • The state has a strong foundation for supporting CCS projects, and the study has identified 76 facilities suitable for carbon capture;
      • California’s geology makes it well suited for safe, permanent CO2 storage; and
      • California could prioritize CCS projects that have demonstrable local air quality benefits and local job opportunities in line with the state’s climate and equity goals

A few comments. I have not studied this report but it may disprove my assertion that the technology is still an issue.  However, in order to use this technology for the CLCPA, New York would have to do a similar study to identify suitable sites for carbon capture and areas with suitable geology for storage.  However, the CLCPA electric power target in 2040 mandates zero emissions and this technology does not eliminate GHG emissions only reduces them significantly.  Unfortunately, this is still not a viable technology.

Bioenergy

In my summary description of the October 8, 2020 Climate Action Council meeting I noted that there is a controversy related to the use of bioenergy and renewable natural gas (RNG).  In this instance I assume that bioenergy refers both to the use of bio-mass as a fuel and methane from biological processes the so called RNG. Similar to the CCS option the interpretation of the CLCPA language could exclude these resources as an option because they are not explicitly included.  For example, opponents of RNG claim that because it is not listed then it is not a renewable energy source.   If that is the correct interpretation then RNG and other forms of bioenergy are off the table.

Renewable natural gas is pipeline quality natural gas derived from renewable energy resources. According to a July 2019 report by the consulting firm MJ Bradley and Associates entitled “Renewable Natural Gas: Potential Supply and Benefits” the most common sources of RNG today include landfills, animal manure, and wastewater treatment plants and additional sources include food waste, agricultural waste, and woody biomass.

In the DE resources context, the advantage of RNG and other forms of bioenergy is that they can be used with existing infrastructure to generate electricity as a dispatchable resource.  Because the sources are renewable, the presumption is that this resource is carbon-neutral.  If the RNG is stored then it will be available during the periods of low wind and solar energy output.  Another advantage is that using the methane generated from the sources listed helps reduce the waste streams.

On the other hand, there are vocal members of the Climate Action Council that are adamantly opposed to its use.  The basis for this opposition is the methane obsession of Dr. Robert Howarth in which he claims that due to the higher global warming potential of methane and his estimates of fugitive emissions, no additional sources of methane should be encouraged.

As I said this is controversial.  A major issue is that if the programs that use RNG are no longer considered good state policy there are many on-going projects and programs that are no longer viable.  For the companies that have invested in the technology to use RNG expecting to profit from its value as a renewable energy source those investments will be lost.  Unless, of course, their reductions are considered “renewable” by other jurisdictions.  Perhaps the project will end up selling the credits they earned elsewhere so New York gets no benefits.

Hydrogen

One superficially attractive approach to the need for storable energy is to use electrolysis to produce hydrogen when there is surplus wind and solar electric production.  It also appears attractive because when the hydrogen is burned it generates no pollutants, only water. On the other hand, hydrogen is an element that does not exist in nature and that is the first of many complicating issues.   While the theory is fine in practice there are many problems with using hydrogen.

One study by Bossel, Eliasson, and Taylor gives a good overview of those problems.  The study notes that, “like any other product, hydrogen must be packaged, transported, stored, and transferred to bring it from production to final use”.  They found that heating value per volume is less than a third of methane.  That means that more energy is needed to package it in more complicated tanks than what is used for oil and gas.  In order to transport hydrogen by pipeline a new system would be needed because of “diffusion losses, brittleness of materials and seals, incompatibility of pump lubrication with hydrogen and other technical issues”.  Storage is an issue which is the consequence of the low energy density of hydrogen and the weight of the pressure vessels.  Before it can be used it has to be transferred from storage and that requires energy to empty the pressurized hydrogen container for use.  Bossel, Eliasson, and Taylor conclude that:

We have to accept that hydrogen is the lightest element and its physical properties do not suit the requirements of the energy market.  The production, packaging, storage, transfer and delivery of the gas are so energy consuming that other solutions must be considered.  Mankind cannot afford to waste energy for uncertain benefits; the market economy will always seek practical solutions and, as energy becomes more expensive, select the most energy-efficient.  Judged by this criterion, the elemental “Hydrogen Economy” can never become a reality.

One other aspect of hydrogen needs to be considered.  When hydrogen is mentioned as a fuel source the first impression of many people is the picture of the Hindenburg dirigible’s hydrogen exploding.   It is an odorless, colorless gas.  Because hydrogen is an element it is difficult to store and prone to leak.  I am not confident that the public will accept widespread use of an undetectable explosive gas that is leak prone.

Conclusion

One of the case studies for the NYISO analysis of the resources needed to meet the 2040 emissions-free electric power generation target includes a category called Dispatchable Emissions-Free (DE) resources with a projected capacity need of 32,136.6 MW.  The E3 pathways analysis for the CLCPA Climate Action Council notes that “As the share of intermittent resources like wind and solar grows substantially, some studies suggest that complementing with firm, zero emission resources, such as bioenergy, synthesized fuels such as hydrogen, hydropower, carbon capture and sequestration, and nuclear generation could provide a number of benefits”.  This analysis looked at the potential of those firm, zero emission resources to meet the 32,136.6 MW capacity projected need.

The prospects are not good to meet the 2040 target.  Despite the critical need for these resources to maintain reliability, the technological readiness issues of the options, New York siting constraints for the alternatives, and practical capability of the resources suggest that this may be an insurmountable hurdle.  Moreover, some of the more vocal Climate Action Council members have an ideological interpretation of the CLCPA law that places further constraints on potential resources.  From what I have heard at the CLCPA implementation meetings so far, I don’t think the enormity of this problem, much less the need for pragmatic interpretation of the law, is recognized.

FERC Carbon Pricing Policy Statement

On October 5 Anthony posted my article on the Federal Energy Regulatory Commission (FERC) technical conference regarding Carbon Pricing in Organized Wholesale Electricity Markets held on September 30, 2020.  On October 15, 2020 FERC proposed a policy statement to “clarify that it has jurisdiction over organized wholesale electric market rules that incorporate a state-determined carbon price in those markets. The proposed policy statement also seeks to encourage regional electric market operators to explore and consider the benefits of establishing such rules.” This post alerts WUWT readers to the opportunity to provide comments on that policy statement.

Policy Statement Comments

According to the FERC press release:

The proposed policy statement follows the September 30, 2020, technical conference at which participants identified a diverse range of potential benefits from proposals to integrate state-determined carbon pricing into the regional markets. Those benefits include the development of technology-neutral, transparent price signals within the markets and providing market certainty to support investment.

States are taking the lead in efforts to address climate change by adopting policies to reduce their GHG emissions. Currently, 11 states impose some version of carbon pricing, and other entities, including the regional markets, are examining this approach. Participants at the technical conference said carbon pricing is an example of an efficient market-based tool to incorporate state public policies into regional markets without diminishing state authority.

Today’s proposal finds that regional market rules incorporating a state-determined carbon price can fall within the Commission’s jurisdiction over wholesale rates. However, determining whether the rules proposed in any particular Federal Power Act (FPA) section 205 filing do fall under FERC jurisdiction will be based on the specific facts and circumstances. The Commission is seeking comment on the appropriate information to consider when reviewing such a filing, including:

        • How do the relevant market design considerations change depending on the manner in which the state or states determine the carbon price? How will that price be updated?
        • How does the FPA section 205 proposal ensure price transparency and enhance price formation?
        • How will the carbon price or prices be reflected in locational marginal pricing?
        • How will the incorporation of the state-determined carbon price into the regional market affect dispatch? Will the state-determined carbon price affect how the regional market co-optimizes energy and ancillary services?
        • Does the proposal result in economic or environmental “leakage,” in which production may shift to more costly generators in other states, without regard to their carbon emissions? How does the proposal address any such leakage?

The Commission invites comments on this Proposed Policy Statement by November 16, 2020 and reply comments by December 1, 2020. Comments must refer to Docket No. AD20-14-000, and must include the commenter’s name, the organization they represent, if applicable, and their address in their comments.

 

Comments, identified by docket number [AD20-14-000], may be filed electronically at http://www.ferc.gov in acceptable native applications and print-to-PDF, but not in scanned or picture format. For those unable to file electronically, comments may be filed by mail or hand-delivery to: Federal Energy Regulatory Commission, Secretary of the Commission, 888 First Street, NE, Washington, DC 20426.

 

Policy Statement

If you want to participate in a process where your comments could affect policy I encourage you to read the policy statement itself.  I will summarize its contents below.

The policy statement starts with a background section.  It notes that states are currently leading the charge to address climate change by adopting policies to reduce their greenhouse gas emissions (GHG) and frequently focus on the electric sector.  It notes that:

Carbon pricing has emerged as an important, market-based tool in state efforts to reduce GHG emissions, including efforts to reduce GHG emissions from the electricity sector. In this proposed policy statement, we use the term “carbon pricing” to include both “price-based” methods adopted by states that directly establish a price on GHG emissions as well as “quantity-based” approaches adopted by states that do so indirectly through, for example, a cap-and-trade system.

The policy statement notes that even though the “Commission is not an environmental regulator” they still have to address proposals that incorporate a state-determined carbon price into Regional Transmission Operators (RTO) or Independent System Operators (ISO) markets.  They conclude that carbon pricing is not unlike other filings that they address so this should be no different.

In the discussion section they “clarify that the Commission has the jurisdiction over RTO/ISO market rules that incorporate a state-determined carbon price in those markets.”  Then they go on to argue that “it is the policy of this Commission to encourage efforts to incorporate a state-determined carbon price in RTO/ISO markets”.  I am not going to try to interpret their legal arguments justifying this policy.

In the sub-section titled “Commission Encouragement of Efforts to Incorporate a State-Determined Carbon Price into RTO/ISO Markets” the policy statement says:

As noted, on September 30, 2020, the Commission held a technical conference on the integration of state-determined carbon pricing in RTO/ISO markets. Participants at the conference identified a diverse range of potential benefits that could arise from such a proposal. Those benefits include the development of technology-neutral, transparent price signals within RTO/ISO markets and providing market certainty to support investment. In addition, participants explained that carbon pricing is an example of an efficient market-based tool that incorporates state public policies into RTO/ISO markets, without in any way diminishing state authority.

We agree that proposals to incorporate a state-determined carbon price in RTO/ISO markets could, if properly designed and implemented, significantly improve the efficiency of those markets. Accordingly, we propose to make it the policy of this Commission to encourage efforts by RTOs/ISOs and their stakeholders—including States, market participants, and consumers—to explore establishing wholesale market rules that incorporate state-determined carbon prices in RTO/ISO markets.

The discussion concludes that:

The Commission will review any FPA section 205 filing that proposes to establish wholesale market rules that incorporate a state-determined carbon price in RTO/ISO markets based on the particular facts and circumstances presented in that proceeding.  Nevertheless, certain questions and issues are likely to arise in any such filing.

They specifically ask for comment on the questions listed in the press release quotation above that are the “appropriate information and considerations the Commission should take into account or whether different or additional considerations may be or must be taken into account” to “determine whether an RTO/ISO’s market rules that incorporate a state-determined carbon price in RTO/ISO markets are just, reasonable and not unduly discriminatory or preferential.”

Conclusion

For the denizens of this blog this is your opportunity to comment on something that could affect policy.  I suggest that those who are skeptical of the value of GHG emission reduction policies concentrate on whether a state-determined carbon price in RTO/ISO markets can be just, reasonable and not unduly discriminatory or preferential.

I intend to personally comment on the concerns I raised in my personal blog post on the FERC technical conference.   The technical conference convinced FERC commissioners that carbon-pricing was an “efficient” market-based tool but nobody asked and no one proved that they work.  In my opinion the first rule of efficient policy is that it works.  I believe that those who support carbon pricing on theoretical economic grounds are overlooking or are unaware of practical issues I have raised.  Cynic that I am, I think the primary value to FERC and the RTO/ISO operators is that the carbon price makes their lives easier.  That it will have significant impacts on consumers and not do anything for the climate is somebody else’s problem.

Roger Caiazza blogs on New York energy and environmental issues at Pragmatic Environmentalist of New York.  This represents his opinion and not the opinion of any of his previous employers or any other company with which he has been associated.

 

8 October 2020 New York Climate Action Council Meeting

On July 18, 2019 New York Governor Andrew Cuomo signed the Climate Leadership and Community Protection Act (CLCPA), which establishes targets for decreasing greenhouse gas emissions, increasing renewable electricity production, and improving energy efficiency.  It was described as the most ambitious and comprehensive climate and clean energy legislation in the country when Cuomo signed the legislation.  I have summarized the schedule, implementation components, and provide links to the legislation itself at CLCPA Summary Implementation Requirements.  This post summarizes my impression of the fourth meeting of the Council.  Summaries of other meetings are available here.

I am following the implementation of the Climate Act closely because its implementation affects my future as a New Yorker.  The Climate Action Council is trying to choose between many expensive policy options to meet the CLCPA targets while at the same time attempting to understand which one (or what mix) will be the least expensive and have the fewest negative impacts on the existing system. If they make a good pick then state ratepayers spend the least amount of a lot of money, but if they get it wrong then we will be left with lots of negative outcomes and even higher costs for a long time.  Given the cost impacts for other jurisdictions that have implemented renewable energy resources to meet targets at much less stringent levels, I am convinced that the costs in New York will be enormous and my analyses have supported that concern.  The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.

According to the Climate Action Council website: “The New York State Climate Action Council is a 22-member committee that will prepare a Scoping Plan to achieve the State’s bold clean energy and climate agenda”.  The co-chairs and ten of the members are representatives of state agencies and authorities.  The remaining ten members were chosen by politicians. Advisory panels and the Just Transition Working Group will help develop the scoping plan.

The meetings provide insight to the direction of the massive energy transition required by the Climate Act.  The meetings are run formally with a role call at the beginning, approval of minutes, and votes on any decisions.  The following is a description of the meeting and my impressions.  Meeting materials are provided here:

Co-Chair Remarks and Reflections

With only a couple of exceptions all the members of the Climate Action Council are either political appointees or were vetted and approved by the Cuomo Administration.  As a result, I should not be surprised that the remarks and reflections at all the meetings to date have included a brag list of all the latest initiatives and project announcements of the Cuomo Administration.  All the meetings have also worked in at least one example of a recent event that the co-chairs link to climate change.  Department of Environmental Conservation Commissioner Seggos had the honors at this meeting when he talked about western wildfires.  The bigger story line was the Climate Week summit and all the actions by New York’s agencies, authorities, and partners that were released as part of the publicity associated with that event.

Status Reports

This agenda item was titled “Advisory Panel and Working Group Chairs Report-out on Work Plans” and consisted of a status update by each of the chairmen of the panels and groups charged with supporting the Climate Action Council.  Each presentation listed the scope of their work plans.  Because some of the issues included are relevant to more than one panel each chair described those interactions.    Each presentation also included a timeline and plans for external engagement.  Council members were given the opportunity to ask questions and make comments.

There was a wide range of detail provided.  In some cases, it could simply be a function of the charge of the advisory panel.  For example, there were four slides with scope items for the Agriculture and Forestry Advisory Panel and Land Use but only one slide for the Local Government Advisory Panel.  On the other hand, the Local Government Advisory Panel had the most detailed meeting timeline reflecting the direction of that panel’s approach. In other cases, the lack of detail could portend problems.  I consider the Power Generation Advisory Panel to be the most important because the prime de-carbonization strategy is to electrify everything.  Unfortunately, this presentation was the weakest.  Everyone else had a meeting timeline.  Six out of the eight presentations announced that their public outreach includes a designated email address for comments and questions.  Power Generation was one of the panels that did not include that option.  Furthermore, the external engagement slide for this panel had the least detail.

Waste Emissions

At the previous Council meeting there was a discussion about waste management issues.  The Cuomo Administration proposed that it be handled by DEC but the concern was raised that there would not be enough interaction with the public.  At this meeting DEC Commissioner Seggos proposed that another advisory panel for this issue be set up that would follow the same rules as the existing panels.  After a discussion the Council voted to add this panel.  It will have a lot of catching up to do because they won’t be able to decide on the membership until the next meeting on November 24.  It will be interesting to see if the scope for this panel will include disposal of solar panels and wind turbine blades.

I have been worried, and this meeting did not allay my concerns, that some members of Council have an agenda that seems to be more important to them than keeping the lights on and costs affordable.  As shown below there is a clear need for an energy resource that can be stored and then used when needed.  In order to help meet that need there are advocates for so-called renewable natural gas (RNG).  RNG is just the methane produced from anerobic digestion from different sources such as enteric fermentation from animal feeding, manure management, food waste, landfills, and sewage treatment plants.

This appears to be a major controversy for the Council.  Dr. Robert Howarth is the most vocal critic of methane in any form and helped draft the CLCPA language.  One interpretation of the law is that if the resource is not explicitly listed then they do not qualify as a renewable source.  That means some sources of methane are explicitly banned for use as a renewable fuel.  Howarth and others who agree with him are arguing against RNG.  For example, at 40:00 of the meeting recording, Raya Salter commented “Natural gas is, you know, a fossil fuel and would not qualify as a renewable fuel in the earth pursuant to the CLCPA renewable or not”.  A more rational view is that we have a waste management problem as well as a need for dispatchable energy and both could be addressed if RNG is classified as a renewable fuel.

Presentations

There were two presentations ostensibly to bring the Council members up to speed on a couple of relevant topics.  Rich Dewey from the New York Independent System Operator (NYISO) described their electric system planning process and Tammy Mitchell from the Department of Public Service (DPS) gave an overview of the transmission and distribution system.  While both presentations were valuable, they were overviews and did not provide much detail.

Rich Dewey, President of the NYISO gave an overview of the planning process used to maintain system reliability.  If you want a good overview of where New York stands I recommend the presentation. Dewey’s slides included the following statements:

      • We believe State policy goals can be achieved while maintaining grid reliability.
      • The NYISO’s wholesale markets can serve as an effective platform for achieving New York State environmental objectives.
      • The plan includes a set of market design enhancements that work together coherently and efficiently to satisfy New York’s changing grid reliability needs.

In general, I think those statements ignore some very real problems.  As described below there is a particular resource adequacy problem that I think determines feasibility of the plan to completely replace fossil-fired generation.  Not surprisingly the NYISO argues that the wholesale markets can solve environmental issues and drive the changes needed to the electrical system necessary to implement the changes needed for the CLCPA.  I am not as sure but will leave my arguments about that for another post.

I have previously described what I think is ultimate problem with the CLCPA, namely what non-emitting power sources will be able replace the loss of intermittent wind and solar energy when electricity is needed the most during the winter.  The NYIOSO describes those power sources as Dispatchable Emission-free Resources and describes them as “Large quantity of installed dispatchable emission free resources needed in small number of hours”, and “Dispatchable resources must be able to come on line quickly, and be flexible enough to meet rapid, steep ramping needs.”  Except for the emissions, those qualities perfectly describe fossil-fired peaking units.  While Dewey introduced the problem, I don’t think he adequately described the challenges of this problem that could endanger compliance with the CLCPA targets.

Tammy Mitchell (DPS) described Planning for a Grid in Transition. She provided overview information describing the transmission and distribution systems, rate cases, the status of costs and reliability today, and then listed all the necessary new resources that have been identified to date.  The DPS will develop transmission and distribution plans to meet the CLCPA goals early next year.  Presumably then the State’s electric utility companies will be required to implement those plans.  In my opinion, that is a license for the Cuomo Administration to bury CLCPA costs to make it harder for them to be held accountable and pass the buck on cost increases to the utility companies who will take the blame in the minds of the ratepayers.

DEC also provided an agency status update.  DPS & NYSERDA held a Technical Conference on Transmission Planning pursuant to the Accelerated Renewable Energy Growth and Community Benefit Act.  There will be public comment hearings on Part 496 and the public comment period will end later in October.  They expect the guidance document from DEC on the Value of Carbon by the end of October and there will be seven public comment hearings on Office of Renewable Energy Siting proposed rulemakings in November.

One last note.  At the last Council meeting there were suggestions for adding members to the advisory panels.  Nothing was said about that at this meeting.

Conclusion

The RNG waste energy controversy concerns me.  The obsession of some members of the Council appears to over-ride common sense.  I suspect that every possible source of non-fossil fuel energy is going to be needed to keep the lights on.  While I may be wrong, it seems obvious that rather than limiting any of those resources now it might be more appropriate to wait to see what is needed.  If I am wrong then banning RNG might not be such a big deal.  If I am right, then banning it now not only makes it more difficult to keep the lights on but also does nothing to help deal with waste management of the sources of methane.