Recently in climate change Category

More Clouds for Coal: Oregon PUC Questions PacifiCorp Expenditures on Coal Fleet

March 24, 2014

March 17 was not a happy St. Patrick's Day for PacifiCorp's coal fleet. Echoing recent actions by the Washington Utilities & Transportation Commission ("WUTC"), the Oregon Public Utility Commission ("OPUC") expressed serious reservations about the assumptions embedded in PacifiCorp's Integrated Resource Plan ("IRP") concerning anticipated expenditures for pollution control equipment at its fleet of coal-fired generators. While the OPUC did not take any specific action, it made clear that PacifiCorp will be required to engage in a substantially more robust modeling of the costs of pollution control and other upgrades for its coal generators.

The stakes for PacifiCorp's coal fleet, which consists of 26 units scattered across five Western states, are substantial. According to current estimates, PacifiCorp will be required to invest more than $4.2 billion for pollution control retrofits before 2023, not including any upgrades that may be required to comply with limits on greenhouse gas emissions. Based on a report from the Commission's staff, as well as comments from interest groups ranging from the Oregon Department of Energy to the Sierra Club, the OPUC raised a number of serious questions about the IRP's economic modeling, baseline assumptions, and timing of proposals for coal-related upgrades embedded in PacifiCorp's 2013 IRP update.

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Bully for Biomass: Washington Supreme Court Rejects Greenhouse Gas Claims, Upholds Finding of No Significant Environmental Impact for Biomass Facility

February 27, 2014

The Washington Supreme Court today rejected claims that the potential for greenhouse gas ("GHG") from a biomass facility triggers the requirement to prepare a full Environmental Impact Statement under Washington's State Environmental Protection Act ("SEPA"). Today's decision promises to greatly simplify the permitting process for projects planning to use woody biomass and should help clarify how GHG emissions are treated for biomass-fired facilities, a question that has bedeviled courts and regulators in other contexts. PT Air Watchers et al. v. State of Washington et al., No. 88208-8 (issued Feb. 27, 2014).

The controversy arose from Port Townsend Paper Company's plans to modernize the boiler at its paper mill by increasing the use of woody biomass to fuel the boiler, increase the boiler's firing efficiency, and adding a 25 megawatt generator to produce electricity. The paper company prepared a SEPA "checklist" in accordance with WAC 197-11-960. The checklist concluded that, because the project would reduce burning of fossil fuels by burning woody biomass instead, it would produce a net reduction in GHG emissions. The Department of Ecology agreed, concluding that no EIS was required because the project would not produce significant environmental impacts. A coalition of local environmental groups challenged this finding, but the challenges were rejected both in an administrative appeal and by the reviewing courts. The Washington Supreme Court accepted review and today affirmed Department of Ecology's finding that no significant environmental impacts requiring preparation of an EIS would result from the project.

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Ninth Circuit Denies Rehearing in Greenhouse Gas Case, Continues to Struggle With Standing in Climate Litigation

February 13, 2014

A recent order of the U.S. Court of Appeals for the Ninth Circuit illustrates the extent to which courts continue to struggle with otherwise routine legal issues when confronting claims related to climate change and greenhouse gas emissions. The order denies rehearing of last year's Ninth Circuit panel decision in Washington Environmental Council v. Bellon, which concluded that a group of environmental plaintiffs seeking to force the Washington Department of Ecology to issue greenhouse gas regulations lacked standing to bring the claim.

The rehearing order was unusual in several respects. Ordinarily, a dissatisfied party to the case seeks rehearing and, in nearly all cases, rehearing is denied in a short order simply noting that an insufficient number of judges supported the request for rehearing. Perhaps the most unusual aspect of the Ninth Circuit's order is that it arose from a Ninth Circuit judge seeking rehearing, rather than from one of the parties. This suggests that at least some of the Ninth Circuit's judges view the October panel opinion as not just incorrect, but so seriously wrong that the Court should re-examine the decision even in the absence of any request to do so by the losing parties. The order is also unusual in that it included two impassioned opinions alternatively defending and attacking the October panel opinion.

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Pacific Coast Action Plan Sets Framework for Regional Climate and Energy Action

November 7, 2013

Last week, the governors of the three West Coast states and the Premier of British Columbia signed the Pacific Coast Action Plan on Climate and Energy. While not legally binding, the Action Plan is important because it lays out a regional framework on climate and energy policy that is likely to be reflected in specific legislation and other measures adopted in each of the four jurisdictions, as well as in coordinated actions among the jurisdictions. Notably, the Pacific Coast regional economy produces a combined U.S.$2.8 trillion in GDP, making it the world's fifth largest economy when considered as a unit. Because the Action Plan charts a course for the future of this huge economy, the Plan is worthy of careful attention.

Issued under the auspices of the Pacific Coast Collaborative, the Action Plan lays out a series of policy goals in three areas, including climate policy, clean transportation, and clean energy infrastructure. Among these policy goals, several are particularly noteworthy:

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Ninth Circuit Rejects Petition Seeking Regulation of Greenhouse Gases in Washington

October 25, 2013

Two October decisions of the federal courts are likely to have significant implications for regulation of greenhouse gases ("GHG") under the Clean Air Act. Of greatest note for the State of Washington, the Ninth Circuit last week overturned a lower court's order that would have required the Washington Department of Ecology ("Ecology") to set standards limiting GHG emissions from Washington's five oil refineries. The Court of Appeals concluded that the environmental plaintiffs lacked standing to bring their complaint. (Washington Environmental Council v. Bellon, No. 12-35323 (issued Oct. 17, 2013)).

In that case, two environmental groups filed a lawsuit in U.S. District Court under the Clean Air Act's citizen suit provisions arguing that Ecology, which administers the Clean Air Act in Washington under an EPA-approved State Implementation Plan, is obligated to set GHG emissions limits on the five refineries under the Act's "Reasonably Available Control Technology" requirements. The District Court agreed, ordering Ecology to develop GHG emissions limits for the five oil refineries by 2014.

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Getting a CLEW About Climate Legislation: Report to Governor's Climate Workgroup Suggests Future Course of Greenhouse Gas Regulation in Washington

October 18, 2013

Earlier this week, Leidos (formerly SAIC International) delivered its final report evaluating greenhouse gas ("GHG") reduction policies from other jurisdictions to the Climate Legislative and Executive Workgroup ("CLEW"). The CLEW was created by ESSB 5802, the first piece of legislation sponsored by Gov. Jay Inslee, which is intended to establish the future legislative agenda for climate issues in our state. Leidos was retained as the CLEW's technical consultant. This week's Leidos report aims to help the CLEW quantify both the need for new climate legislation and the effectiveness of several approaches taken in other jurisdictions. The CLEW is scheduled to release its final report and recommendations at the end of 2013.

The Leidos report incorporates the GHG emissions reduction targets adopted by the legislature in 2008. Those targets are: (a) to reduce Washington's GHG emissions to 1990 levels by 2020; (b) to reduce GHG emissions to 25% below 1990 levels by 2035; and, (c) to reduce overall emissions to 50% below 1990 levels by 2050, or 70% below the state's expected emissions in that year. Evaluating current policies at both the state and federal level, the report concludes that existing policies (for example, Initiative 937 and policies encouraging energy efficiency) will achieve substantial reductions in Washington's GHG emissions, but will fall well short of the 2008 targets.

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Will Protectionism Foil California's Increased RPS Mandate?

September 23, 2013

Under AB 327, passed this month by the California legislature, California has cleared the way to ratchet up its aggressive Renewable Portfolio Standard ("RPS") mandate beyond the 33% it already requires. But the legislature did nothing to address the most troubling aspect of California's RPS program, the "Portfolio Content Categories" -- commonly referred to as "buckets" -- which systematically favor in-state renewable resources over out-of-state resources. A recent report from the National Renewable Energy Laboratory ("NREL") shows, however, that California is rapidly running out of easily-developed in-state resources. It is therefore becoming increasingly clear that, unless California lowers the wall it has erected around its renewable energy market, it will either be unable to meet its ambitious renewable energy goals or else meeting those goals will come at an exorbitant cost to the state's consumers.

On the other hand, if California lowers or eliminates barriers to outside resources, access to huge and highly desirable resources in other parts of the West will allow California to achieve its ambitious climate and renewable energy goals in the most economically efficient manner. Even if California's legislature is unwilling to lower these barriers voluntarily, recent decisions from the federal courts demonstrate that its protectionist policies can be overcome through a legal challenge under the Commerce Clause of the U.S. Constitution.

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Ninth Circuit Upholds California's Low Carbon Fuel Standard, Finding No Discrimination Against Out-of-State Fuel Producers

September 18, 2013

The U.S. Court of Appeals for the Ninth Circuit today issued what may prove to be a landmark decision concerning California's efforts to regulate emissions of greenhouse gases ("GHG"). The Appeals Court concludes that California's Low-Carbon Fuel Standard ("LCFS") does not violate the Commerce Clause even though California uses a life-cycle analysis of carbon intensity that penalizes, for example, ethanol from the Midwest produced using coal-fired electricity, and favors ethanol using less carbon-intensive methods of production. Concluding that California's ambitious efforts to address GHG emissions should not be limited by "archaic formalism," the opinion allows states considerable room to experiment with new approaches to GHG regulation. That being said, the opinion also makes clear that environmental protection cannot be used as an excuse to arbitrarily burden interstate energy transactions. Rocky Mountain Farmers Union et al. v. Corey et al., No. 12-15131 (issued Sept. 18, 2013).

The LCFS, adopted as part of the Global Warming Solutions Act of 2006 (commonly referred to as "AB 32"), is aimed at reducing GHG emissions from California's transportation sector, which account for about 40% of the state's total GHG emissions. Using 2010 carbon intensity as a baseline, the LCFS requires fuel producers and blenders to meet specific carbon intensity limits, which decline annually from the 2010 baseline through 2020. Producers that exceed the limits are awarded credits that can be sold to producers that fail to meet the limits. For gasoline producers, blending gasoline with ethanol is the only practicable way to meet the LCFS.

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A Pair of D.C. Circuit Decisions Portend Increased Regulation of Sewage Treatment Plants, Biomass Energy, and Other Stationary Sources of "Biogenic" Carbon

August 23, 2013

A recent decision of the U.S. Court of Appeals for the District of Columbia Circuit (more popularly known as the D.C. Circuit) portends increased regulation of biomass power plants, as well as landfills, sewage treatment plants, and similar facilities that produce greenhouse gases ("GHG") through "biogenic" processes. The decision is critical both to the forest products industry, which frequently burns wood waste and other byproducts to produce energy, and the owners of landfills, sewage treatment plants, wastewater treatment plants, and similar facilities, both public and private. A second recent D.C. Circuit decision, although narrower in scope, similarly upholds stricter regulation of sewage treatment plants under the Clean Air Act.

Considered together, the decisions underscore the importance of "thinking outside the box," to escape treating wastes as a traditional regulatory problem, and exploring ways to, for example, convert waste into valuable commodities. One innovative solution was recently undertaken by Pierce Transit, the public transit agency for Pierce County, Washington, which is now using methane produced from the Cedar Hills landfill to fuel its bus fleet. Another approach is the advanced waste-to-energy technologies now widely adopted in Europe, which simultaneously maximize recover of useful materials, convert the remaining materials to useful energy, and minimize emissions of GHG and other pollutants. Innovative approaches like these can turn expensive and burdensome regulatory and waste treatment problems into economic and environmental assets.

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Electric Vehicles, Advanced Chargers, and Maximizing the Value of the Pacific Northwest's Electricity Grid

August 12, 2013

A new study examining the environmental impacts of electric vehicle charging demonstrates that the Pacific Northwest is ideally suited to maximize the environmental benefits of an electrified vehicle fleet, further underscoring the already well-documented benefits of electrifying the region's transportation system. Further, if combined with "smart" recharging technology developed by the Pacific Northwest National Laboratory ("PNNL"), electric vehicles offer a means for maximizing the value of the region's electric grid and improving the ability to integrate variable renewable resources like wind, with substantial economic benefits for the region.

The new study, "A Roadmap to Climate-Friendly Cars: 2013," released last week by the Climate Central think-tank, critically examines one of the key environmental questions surrounding electric vehicles: does shifting from from petroleum-fueled vehicles to electric vehicles produce substantial environmental gains when the impacts of producing the electricity are taken into account? Because of the predominance of hydropower and, to a lesser extent, wind and other renewables, electric vehicles are by far the best choice in this region. In fact, the study finds that a gas-powered car would need to achieve fuel efficiency of 383 miles per gallon to attain the same environmental benefits as a electric car charged in Washington. In Oregon, the number is 278 mpg and in Idaho, 202 mpg. The strong advantage for electric vehicles holds up even when the full life-cycle carbon costs of manufacturing the vehicle and battery are taken into account.

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In First Test of Washington's Greehouse Gas Law, Court of Appeals Rejects Challenge to Puget Sound Regional Council's Transportation Plan

August 9, 2013

A recent decision of the Washington Court of Appeals provides a first look at how Washington's courts will apply the state's ambitious 2008 greenhouse gas ("GHG") reduction law. The decision rejects a challenge to the Puget Sound Regional Council's ("PSRC") 30-year transportation plan, suggesting that state agencies retain considerable flexibility in planning despite the law's ambitious GHG reduction goals.

In 2008, the Washington State legislature enacted a law setting limits on future GHG emissions. The statute mandates that by 2020, the state must reduce overall GHG emissions to 1990 levels; by 2035 it must reduce emissions to 25% below 1990 levels, and so on. The statute also mandates that "[a]ll state agencies shall meet" the law's stated GHG limits, but leaves state agencies with little guidance as to how to comply with this mandate.

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Binz There, Done That? Obama FERC Nominee Likely to Stay The Course on Renewables, But Changes in Regulatory Policy May Be In the Offing

July 2, 2013

On June 27, President Obama nominated Ron Binz to replace Jon Wellinghoff as Chairman of the Federal Energy Regulatory Commission ("FERC"). Mr. Binz's track record as Chair of the Colorado Public Utilities Commission suggests that his priorities will be very similar to Chairman Wellinghoff's. That is, we can expect FERC will continue to pursue policies favoring the deployment and integration of renewable energy resources and the construction of high-voltage transmission facilities to support delivery of utility-scale renewables. Mr. Binz's more recent experience as an industry consultant suggests, in addition, that he may focus on the fundamentals of the regulatory system and how the regulatory system can be rationalized in the face of rapid technological change in the industry.

Mr. Binz is a long-time energy industry professional, but it is likely that the policies he advocated during his four-year tenure as Chairman of the Colorado PUC will dominate the political headlines during his nomination process. In that capacity, he helped broker a compromise with Xcel Energy, Inc. to shutter coal-fired generation and promoted action on climate change, renewable portfolio standards, and other policies designed to promote renewable energy and transition away from traditional fossil sources. Given the Obama Administration's recent focus on climate change, and its long-time emphasis on promoting renewable energy, it is not surprising to see a FERC nominee with these priorities.

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May: A Tough Month for Climate Plaintiffs, But Odd Fifth Circuit Decision Leaves the Door Ajar

June 13, 2013

In May, the federal courts rejected two more major cases in which plaintiffs sought damages from large emitters of greenhouse gases based on claims of climate-caused property damage. As a result of the U.S. Supreme Court's action, one of the major theories espoused by plaintiffs -- federal common law nuisance -- now appears to be dead. The fate of other major theories, however, remains uncertain because a federal appeals court could not escape a procedural tangle and therefore failed to definitively address those theories.

In the first case, involving the Native Village of Kivalina, Alaska, the Supreme Court denied a petition for certiorari filed by the plaintiffs, whose claim was earlier rejected by the U.S. Court of Appeals for the Ninth Circuit. As reported here previously, the Kivalina plaintiffs claimed that release of greenhouse gases has caused a significant decline of Arctic sea ice. Without the protection of sea ice, wave and storm damage from the Arctic Sea eroded the land underlying the Village. Under the plaintiffs' theory, greenhouse gas emitters are responsible for this property damage because greenhouse gases have caused the sea ice decline. The Ninth Circuit rejected Kivalina's claims, based on the federal common law of nuisance, concluding that federal common law has been displaced by the federal regulatory scheme under the Clean Air Act, which, as interpreted by the Supreme Court's 2007 opinion in Massachusetts v. EPA, reaches greenhouse gases as well as more traditional "criteria" pollutants. The Supreme Court's denial of certiorari appears to be the last gasp for climate lawsuits based on the federal common law. (Native Village of Kivalina v. Exxon Mobil Corp. et al. (Sup. Ct. Docket No. 12-1072).

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New Washington Energy Legislation: Legislature Continues to Wrestle With Questions Raised by Renewables

May 6, 2013

Reflecting new Gov. Jay Inslee's strong interest in renewable energy and climate change, these issues were hot topics during this year's legislative session. With the conclusion of the regular session at the end of April, the fate of most energy-related bills has now been decided. Because Gov. Inslee has called an executive session to address unresolved tax and budget issues, the final story has not yet been written. But a number of bills important to electric utilities, renewable energy developers, and others in the energy industry have now become law.

As has become routine in recent years, Washington's Renewable Portfolio Standard, Initiative 937 ("I-937") continues to be a flashpoint for controversy. Although comprehensive reforms reflecting a "grand bargain" between environmental and industry interests once again eluded the legislature, three important changes to I-937 were enacted. These are:

SB 5400 (signed April 23): This legislation allows a utility subject to I-937 to count wind energy imported from states where the utility has retail customers toward the utility's I-937 compliance obligations. The bill provides a limited waiver from I-937's requirement that renewable power must come from the Pacific Northwest. For reasons we have previously discussed, this provision is, at best, constitutionally suspect. It is also probably counterproductive because California has used similar territorial restrictions to limit access to its renewables marketplace, causing havoc in the Pacific Northwest renewables industry. As a practical matter, the result of the bill is somewhat limited, allowing PacifiCorp to count otherwise-excluded Wyoming wind resources toward its I-937 compliance obligations.

HB 1154 (signed May 1): This bill amends I-937's prohibition against double-counting of the environmental benefits of renewable generators so that biomass and biogas producers can sell carbon offsets attributable to the destruction of methane (a powerful greenhouse gas), while still receiving credit for renewable energy production under I-937. This change will allow dairy digesters, landfill gas generators, and similar renewable generators to participate in emerging carbon-offset markets like those in California. These markets promise a potentially substantial revenue stream for operators of biomass and biogas facilities. This legislation may therefore kick-start construction of such facilities in Washington.

SB5297 (Governor's signature pending): This bill is follow-up legislation to the complex legislative package passed in 2011 to facilitate the transition of the Centralia Steam Plant from coal to natural gas. Part of the 2011 legislation allowed utilities to purchase long-term "coal transition power" contracts from Centralia to provide the financial assurances necessary for the refueling of the plant. This bill helps facilitate contracts for "coal transition power" by permitting utilities to purchase coal transition power without threatening their eligibility for I-937's "safe harbor" for no-growth utilities. The "safe harbor" provision allows utilities with no load growth to comply with I-937 by spending 1% of their retail revenues on eligible renewable resources, even if that spending does not achieve otherwise-applicable portfolio requirements for renewable resources.

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Will The Fracking Revolution Bouy Renewables?

April 4, 2013

Current conventional wisdom in the energy industry holds that the natural gas "fracking" revolution will lead to an era of sustained supply gluts and low prices. Low natural gas prices, in turn, will allow for rapid expansion of gas-fired electric generation, leading to a period of sustained low prices in the electricity markets. According to the conventional wisdom, then, the fracking boom will create a sustained economic headwind for renewable generators forced to compete with low-priced gas generation. But several recent scientific and economic studies suggest that the conventional wisdom might be wrong.

By now, the tectonic changes in energy markets arising from the massive increase in natural gas production brought about by application of horizontal drilling and hydraulic fracturing techniques -- commonly known as "fracking" -- are well known. As usefully summarized in this recent primer by Harvard environmental policy professors Michael McElroy and Xi Lu, fracking reversed a long-term decline in domestic natural gas production, driving prices down as much as 86% from their 2008 highs. Among the many unanticipated results, coal-fired generation has declined precipitously, reaching a record-low of 34% of generation last year. Because gas-fired generation produces only about one-half the carbon dioxide of coal generation, the nation's carbon dioxide emissions have fallen to 1992 levels despite persistent political paralysis on climate issues.

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