<h4><em>Under review</em></h4>
<p>Energy is the capacity of some object or system to do work. As such, it is essential for all of the activities we do as individuals and as a society. While virtually all of the energy potential on the Earth can be traced back to the sun, we use a variety of sources to power our everyday needs from transportation to industrial production to keeping the lights on at home. According to the U.S. Energy Information Administration, the United States consumed approximately 98 quadrillion British thermal units (Btu) of energy in 2010. Of this total, 83% comes from fossil fuels such as coal, crude oil, and natural gas, and some 22% represents net energy imports (see U.S. EIA's <a href="http://www.eia.gov/totalenergy/data/monthly/pdf/flow/total_energy.pdf">… Flow</a> and ELI's <a href="http://www.eli.org/sites/default/files/images/d19_07graphic_map.jpg">En… Flows in the United States</a> graphics).</p>
<h3>Legal Regime for Energy Production and Distribution</h3>
<h5>Federal Regulation of Energy</h5>
<p>Like other areas of law related to the environment, energy production and distribution are governed by both federal and state law. However, federal authority is generally limited to a few areas, while most regulation occurs at the state level. At the federal level, the Federal Energy Regulatory Commission (FERC) is responsible for regulating interstate transmission and transportation of electricity, natural gas, and oil, as well as handling permits for constructing hydroelectric dams and liquefied natural gas (LNG) terminals. A separate entity, the Nuclear Regulatory Commission (NRC), is responsible for regulating nuclear power generation.</p>
<p>The federal government began regulating energy with the Federal Power Act of 1920, which has been amended several times in the past century. In 1977, Congress established the <a href="#" title="Although the Department of Energy (DOE) is a cabinet-level agency of the federal government, it does not directly regulate energy production or consumption in the United States. Regulation is generally left to FERC, NRC, and state authorities. The DOE’s focus as an agency is on promoting science and technology to address energy needs and addressing nuclear security and cleanup issues. For example, the DOE funds advanced research projects on new energy sources and oversees the Energy Star energy efficiency program in conjunction with the EPA. DOE website - energy.gov; Energy Star website - energystar.gov; DOE Advanced Research Projects Agency (ARPA-E) - arpa-e.energy.gov.">Department of Energy</a> (DOE and reorganized energy regulation by creating FERC. FERC is governed by a five-member Commission and employs administrative law judges (ALJs) in its internal process for resolving disputes. Commissioners are appointed by the President for staggered 5-year terms, but as an independent agency, FERC decisions are not reviewed by the President or any cabinet agency, but instead are reviewable in federal courts in accordance with the Administrative Procedure Act.</p>
<h5>State public utility commissions</h5>
<p>At the state level, <a href="http://www.naruc.org/Commissions/CommissionsList.cfm&quot; target="_blank">state public utility commissions</a> are generally responsible for regulating production and distribution of electricity. Although federal authorities regulate interstate transmission of electricity, state regulation and electricity pricing can vary significantly. Electricity distribution is a good example of a “natural monopoly” in that it would be impractical to build overlapping distribution systems due to high cost. While the majority of electricity sold to end users (residential, commercial, etc.) in the U.S. grid is distributed by privately owned entities, state commissions regulate these utilities in order to ensure fair and reasonable pricing. States may, for example, regulate prices by supervising auctions between electricity suppliers (i.e., generators) and distributors.</p>
<h5>Regulation of Energy Transmission and Distribution</h5>
<p>The electricity “grid” includes three components: electricity generators, transmission networks, and electricity distributors (i.e., utilities that provide electricity to end users). Over the past century, the trend has been toward interconnection of transmission lines in an effort to lower costs and spread out electricity loads, although occasional large blackouts, such as the Northeast Blackout of 2003, illustrate the potential risks of this approach. Electricity transmission in the United States is divided into <a href="http://www.npr.org/templates/story/story.php?storyId=110997398&quot; title="NPR, Visualizing the U.S. Electric Grid">three independent transmission grids</a>—the Western Interconnect, which generally covers the area west of the Rocky Mountains; the Texas Interconnect, which covers most of the state of Texas, and the Eastern Interconnect, which includes the rest of the country. Regional reliability councils (one each in the Western and Texas Interconnects, and six in the Eastern Interconnect) oversee monitoring and compliance with standards designed to ensure the reliability of electricity in the U.S. <a href="http://www.nerc.com&quot; title="Under the Energy Policy Act of 2005 (EPAct), FERC granted authority to a non-governmental entity, the North American Electric Reliability Corporation (NERC), to issue and enforce binding reliability standards.">grid</a><a href="#_msocom_5"></a>.</p>
<p>Since the 1970s, federal regulation has encouraged setting up competitive markets for electricity generators by requiring open access to transmission networks. In addition, for roughly two-thirds of the population of the United States, electricity transmission is now operated by independent system operators (ISOs) or regional transmission organizations (RTOs) that are independent of utilities and electricity generators. In other areas, vertically integrated utilities or government-owned or cooperative enterprises control transmission.</p>
<h5>Renewable Energy</h5>
<p>Concerns about pollution, climate change, and the finite nature of fossil fuel and nuclear power resources have led to demand for and development of energy from renewable resources. The most widespread form of renewable electricity generation is hydroelectric power, which is derived from energy that is replenished by the Earth’s water cycle. However, because hydroelectric dams have an impact on land and water environments, and because dams can only be efficiently located in a limited number of places, some newer laws have been designed to encourage electricity generation from other renewable sources, such as wind, tides, geothermal energy, solar energy (photovoltaic cells, concentrated solar power, and solar thermal energy), landfill gas, etc.</p>
<p>Many of these renewable sources present practical challenges. First, renewable electricity must be connected into existing transmission and distribution grids. Many renewable sources, particularly wind and solar, tend to be most plentiful in areas that are far from major population centers. Offshore sites provide potential wind resources closer to cities but are generally more expensive to develop and carry additional environmental risks. Second, because electricity cannot be easily stored—it must be transmitted and used immediately as it is generated—existing grids must be adapted in order to handle periodic generation. For example, solar energy is strongest during the middle of the day and varies according to seasons and weather conditions; these patterns generally do not match up with peak electricity demand periods that occur in the morning and evening as people wake up or return home from work. As a result, growth in renewable electricity does not necessarily translate to possibilities for reducing conventional capacity, because electricity providers must still turn to fossil fuel sources to meet demand at peak times.</p>
<p>As of 2012, 31 states and the District of Columbia have some form of mandate for renewable energy, although these vary widely both in the level of the mandate as well as the types of energy sources that can be counted toward the total. Most states use a percentage target for the state’s renewable portfolio by a certain year; a few states use targets measured in megawatts of capacity that the state must develop. An additional 7 states have non-binding renewable portfolio <a href="http://www.c2es.org/us-states-regions/policy-maps/renewable-energy-stan…; title="For a list and comparison of state renewable energy requirements, see Center for Climate and Energy Solutions, Renewable &amp; Alternative Energy Portfolio Standards. ">goals</a>.</p>
<p>In many states, consumers can choose to pay an additional premium or opt to purchase electricity (distributed by the same utilities) from suppliers that use renewable sources. For example, in Maryland, many companies offer 100% renewable “green” electricity plans which are available for a higher price than conventional electricity <a href="http://webapp.psc.state.md.us/ecm/home.cfm">supplies</a>.</p&gt;
<h3>Environmental Impacts of Energy</h3>
<p>What does energy have to do with the environment? Energy and environmental law are often interrelated because energy production and consumption represent a significant portion of human impact on air, water, and land resources, as well as the Earth’s climate.</p>
<h5>Air</h5>
<p>Fossil fuels store useful energy potential in bonds between carbon atoms. Combustion reactions break these bonds, releasing energy, as well as carbon dioxide and water vapor as byproducts. However, when combustion is incomplete or impurities are present in the fuel, the reaction also leads to the emission of various other molecules that can adversely affect human health and the environment. Fossil fuels—especially coal in electricity generation and gasoline for transportation—are the biggest source of conventional air pollutants, such as sulfur dioxide (SO<sub>2</sub>), nitrous oxides (NO<sub>x</sub>), and carbon monoxide (CO). Fossil fuel burning also releases hazardous and toxic air pollutants; for example, coal-fired electricity generation accounts for over half of <a href="http://www.epa.gov/mercury/about.htm">mercury emissions in the United States</a>.</p>
<p><a href="http://www.eli.org/keywords/air-1">Emissions from energy production and consumption into the air are regulated under the Clean Air Act (CAA)</a>. Under the CAA, the EPA establishes nationwide air quality standards for each air pollutant and oversees state regulatory plans designed to meet those standards. Environmental authorities conduct reviews of major sources of air emissions, including power plants, in order to prevent significant deterioration of air quality or bring areas toward attainment of quality standards. In addition, Title II of the CAA regulates mobile sources of emissions, such as motor vehicles. Mobile source regulation includes standards for motor vehicle engine emission control systems as well as requirements for fuels and fuel additives.</p>
<p>Renewable energy sources can have additional or different air quality impacts. While wind energy does not produce any emissions of air pollutants, wind turbines can create air disturbances, noise, or hazards for birds and bats. Burning renewable fuels, such as ethanol, can reduce air pollutant emissions, but critics argue that gasoline blended with too much ethanol can interfere with emissions control systems in some automobiles and actually lead to higher emissions.</p>
<h5>Water</h5>
<p>Energy production has an environmental impact on water resources both in terms of the quantity of water used, as well as effects on water quality, in the form of pollution or discharges that increase water temperature.</p>
<p>Many forms of energy production methods use water in various stages. Electricity generators typically use steam turbines to transform energy from the burning of fossil fuels such as coal into electricity that can be used for residential, commercial, industrial, or transportation purposes. Nuclear, fossil fuel, and concentrated solar power plants require methods for cooling plant equipment and/or cooling steam; this is often accomplished by cycling through large quantities of water, although technologies for “dry cooling” exist as well. In the United States, electricity generation accounts for roughly half of all water withdrawals. While some water used, especially in coastal areas, is saltwater, the majority comes from surface freshwater in lakes or <a href="http://ga.water.usgs.gov/edu/wupt.html&quot; target="_blank" title="USGS, Thermoelectric Power Water Use">rivers</a>. Thus, energy production and consumption can have a tremendous impact on water availability in arid climates or other areas where freshwater resources are scarce.</p>
<p>In addition to the quantity of water used, energy production and electricity generation can affect the quality of water used or in surrounding areas. For fossil fuel and nuclear energy, processes for extracting raw materials, such as mining and drilling, can discharge pollutants into nearby waterways. Power plants, after using water to cool equipment or in other stages of electricity generation, must discharge the water back into oceans, rivers, or lakes. Excess heat from power-generating reactions increase the temperature of the water as it is discharged, which in turn raises the temperature of the overall aquatic environment. Significant temperature increases can make surrounding areas inhospitable for fish and other animals or plants.</p>
<p><a href="http://www.eli.org/keywords/water">The Clean Water Act</a> regulates the environmental effects of energy production on water resources. Under the Act, energy production facilities must obtain permits that are regulated by the EPA and state authorities for any discharges they make into waterways subject to the Act’s jurisdiction. One current issue is the EPA’s proposed standards for the design and location of cooling water intake structures under Section 316(b) of the Act (See EPA's <a href="http://water.epa.gov/lawsregs/lawsguidance/cwa/316b/">webpage</a&gt; and Cornell's <a href="http://www.law.cornell.edu/uscode/text/33/1326">webpage with the statute</a>).</p>
<h5>Land</h5>
<p>One key issue in energy production is siting—that is, determining where power plants or other facilities should be located. Energy generating facilities can have a direct environmental impact on existing ecosystems, such as wetlands, that occupy the land converted for use in energy production. Hydroelectric power plants can disturb upstream land by creating reservoirs as well as downstream land by controlling or limiting water flow and changing water temperature. Nuclear power plants have the potential to disturb surrounding land in the event that radioactive material escapes and generate radioactive waste that must be carefully transported and stored.</p>
<p>For other types of facilities, environmental factors to be considered include air and water quality in surrounding areas that may be affected by emissions or discharges. Land impacts for fossil fuel energy also include disturbances associated with resource extraction, such as land used for mining coal and drilling for natural gas or oil. Siting for electricity generation or other facilities can also raise issues of environmental justice if it causes a group of people to bear a disproportionate burden of negative effects that result from proximity to those facilities.</p>
<p>When the federal government is involved in developing an energy project, the <a href="http://www.eli.org/keywords/natural-resources">National Environmental Policy Act (NEPA)</a> requires a review of the project’s impacts on the environment, including consideration of potential alternatives. Impacts on wetlands are governed by the <a href="http://www.eli.org/keywords/water">Clean Water Act</a>.</p>
<h5>Waste</h5>
<p>Energy production raises specific issues regarding the handling and treatment of waste. Nuclear power generation produces extremely hazardous radioactive byproducts that must be safely handled, transported, and stored for long periods of time. The NRC is responsible for regulating the processing of radioactive source material, such as uranium, as well as radioactive byproducts, although many states have agreements with the NRC under which they exercise their own regulatory authority (see NRC's <a href="http://www.nrc.gov/about-nrc/radiation/protects-you/reg-matls.html">Reg… of Radioactive Materials</a> and <a href="http://www.nrc.gov/about-nrc/state-tribal/agreement-states.html">Agreem… State Program</a> webpages). The EPA, on the other hand, sets standards for radioactive air emissions and drinking water contamination.</p>
<p>One current controversy in managing waste from energy production involves coal combustion residuals, or coal ash—a byproduct of coal-fired power plants. Coal ash contains a variety of toxic compounds and can present a health concern if it leaches into groundwater or escapes from storage sites. A major spill of coal ash in Tennessee in 2008 drew attention to the issue, and in 2010, the <a href="http://www.epa.gov/osw/nonhaz/industrial/special/fossil/ccr-rule/index…; title="EPA page on coal ash.">EPA proposed regulating coal ash</a> under the <a href="http://www.eli.org/keywords/toxic-substances#rcra">Resource Conservation and Recovery Act</a> (RCRA), either under RCRA’s hazardous waste provisions, which would give EPA more extensive authority, or under the non-hazardous waste provisions.</p>
<h5><a href="http://www.eli.org/keywords/climate-change-0">Climate</a></h5&gt;
<p>In advanced industrialized economies such as the United States, energy consumption is the main driver of greenhouse gas (GHG) emissions that contribute to global climate change. Fossil fuel combustion (including transportation and electricity generation) accounts for nearly three-fourths of U.S. emissions of the most significant GHG, carbon dioxide (<a href="http://www.epa.gov/climatechange/Downloads/ghgemissions/US-GHG-Inventor…; target="_blank" title="EPA, 2012 US GHG Inventory, Executive Summary.">CO<sub>2</sub></a>). While the United States does not have a comprehensive national plan for mitigating climate change or addressing GHG emissions, federal and state governments have developed a number of regulatory programs designed to limit the climate impacts of energy generation and consumption.</p>
<p>Since 2009, when the EPA issued its endangerment finding regarding CO<sub>2</sub>, the Agency has taken steps toward regulating <a href="http://www.eli.org/keywords/climate-change-0">GHG emissions under the Clean Air Act</a><a href="#_msocom_21"></a>. Regulating GHGs under the CAA includes mobile sources as well as stationary sources, such as power plants, that emit large quantities of CO<sub>2</sub>. Setting standards for stationary sources will be challenging because the CAA uses technology-based standards for setting emissions levels. Unlike other air pollutants, CO<sub>2</sub> is an intended and necessary product of combustion, which means that CO<sub>2</sub> emissions cannot be “reduced” in the same way that SO<sub>2</sub> can, for example, by eliminating impurities or scrubbing flue gas at power plants; rather, reducing emissions will likely require efficiency improvements or some method of CO<sub>2</sub> capture for storage or reuse.</p>
<p>In addition, the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007 added renewable fuels mandates to the CAA with the goal of reducing net CO<sub>2</sub> emissions from the transportation sector. The <a href="http://www.epa.gov/otaq/fuels/renewablefuels/index.htm">Renewable Fuels Standard</a> (RFS) program requires fuel suppliers to incorporate a minimum quantity of renewable, biomass-based ethanol or biodiesel into gasoline supplies.</p>
<h3>Bibliography</h3>
<p>National Association of Regulatory Utility Commissioners – <a href="http://www.naruc.org&quot; target="_blank">www.naruc.org</a></p&gt;
<p>North American Electric Reliability Corporation (NERC) – <a href="http://www.nerc.com&quot; target="_blank">www.nerc.com</a></p&gt;
<p>Electric Power Research Institute – <a href="http://www.epri.com&quot; target="_blank">www.epri.com</a></p&gt;
<p>Edison Electric Institute – <a href="http://www.eei.org&quot; target="_blank">www.eei.org</a></p&gt;
<p>-Public Policy Advocacy page – information on federal and state legislation and regulation – <a href="http://www.eei.org/whatwedo/PublicPolicyAdvocacy/Pages/default.aspx&quot; target="_blank">http://www.eei.org/whatwedo/PublicPolicyAdvocacy/Pages/default.aspx</a>…;
<p>U.S. Energy Information Administration – <a href="http://www.eia.gov&quot; target="_blank">www.eia.gov</a></p&gt;
<p>Federal Energy Regulatory Commission (FERC) – <a href="http://www.ferc.gov&quot; target="_blank">www.ferc.gov</a></p&gt;
<p>MIT Study on the Future of the Electric Grid – <a href="http://web.mit.edu/mitei/research/studies/documents/electric-grid-2011/…; target="_blank">http://web.mit.edu/mitei/research/studies/documents/electric-grid-2011/…;
<p>NPR, Visualizing the U.S. Electric Grid – <a href="http://www.npr.org/templates/story/story.php?storyId=110997398&quot; target="_blank">http://www.npr.org/templates/story/story.php?storyId=110997398</a></p&gt;

Great Cars, But Ultimately Still Niche Products
Author
Henry Payne - Detroit News
Detroit News
Current Issue
Issue
2
Parent Article

I bought a Tesla Model 3 this year, and it is perhaps the coolest car I have ever owned. It’s an iPhone on wheels, with a minimalist driver interface. It’s a stoplight dragster with instant torque. It’s an apex-carving athlete with a low center of gravity. It’s a fuel saver.

Yet the Tesla’s inherent limitations as an electric vehicle make it — like the Toyota Prius last decade — a fashionable niche car rather than a harbinger of a broader, battery-powered future.

EVs are still hobbled by range, infrastructure, and customers that don’t see the environmental urgency of going electric. If there is a mass application for electric cars, it’s likely an autonomous future with electrified, self-driving fleets.

The first viable auto startup in my lifetime, Tesla has brought Silicon Valley’s unique perspective to the automobile. Like other digital geniuses (Uber’s Travis Kalanick, Google’s Sergei Brin, Amazon’s Jeff Bezos) who have re-defined services and products from taxis to books, Elon Musk has re-imagined the car. Most reminiscent of Apple’s Steve Jobs, Musk is a brash, controversial figure who understands the allure of bold design in selling a technological vision.

But as new as the Model 3 feels, battery-powered vehicles have been around a long time.

They are clean and easy to operate, but their cost and range disadvantages have doomed them to play second-fiddle to the internal combustion engine for a hundred years. In the early 20th century companies like Detroit Electric enjoyed success with wealthier customers by producing easy-starting battery cars compared to cranky, crank-start gas-mobiles. The advent of the starter motor spelled electrics’ doom.

Battery-power made a resurgence in the early 21st century as Greens rose to political power — stoking fears of peak oil and global warming. The wildly popular Toyota Prius became the first battery-powered car to sell over 100,000 units a year in the United States.

The egg-shaped “Pious” was a must-have accessory for eco-conscious celebs as gas prices pushed $4 a gallon in 2008. Manufacturers flooded the market with gas-battery vehicles like the Ford Fusion hybrid, Ford C-Max, Chevy Bolt, Honda Insight, Lexus ES, and more.

Pundits predicted a hybrid sales boom, and in 2011 Toyota declared that the Prius would eclipse the Camry as its best-selling vehicle by the end of the decade.

Everyone was wrong.

The oil shale boom vaulted the United States to the world’s number-one oil supplier, gas prices plunged under $2 a gallon, and not only are Prius sales down 35 percent (to less than 90,000 units), but the best-selling Toyota model is now an SUV — the RAV4, at 400,000-plus annual sales. Hybrid sales have stalled at below 3 percent market share, and the Volt and C-Max are in the dustbin.

Electric vehicles face similar challenges. The Model 3 has electrified EV marketing, but range issues persist. Most EV sales have been in California where the weather (temperate) and political climate (big subsidies) are favorable. But here in Michigan, my 310-mile range Model 3 could not make a routine, 240-mile business round-trip to Battle Creek this December because cold weather degrades range by 30 percent.

I had to add 30 minutes into my commute in order to refuel at a Battle Creek Tesla Supercharger. While I waited, another plugged-in Model 3 owner lamented the challenges of his weekly Chicago-Detroit business trips.

The problems are more acute for EV owners without access to Tesla’s exclusive charging network. Most of my peers cringe at the complications of charging EVs outside their homes. Just as in the early 20th century, Teslas make sense to upscale households with multiple vehicle options.

Mainstream EVs like the Chevy Bolt, meanwhile, have struggled to gain sales traction. Meanwhile, governments are forcing EVs on a reluctant American public and carmakers who are reluctant in turn. Essentially, manufacturers are now required to make two types of vehicles — profitable gas cars popular with customers and money-losing EVs popular with pols.

In the Bolt General Motors sees an opportunity to satisfy both constituencies, and the predicted Age of Autonomy may be EVs best chance of adoption. With the Chevy EV as the flagship of its emerging self-driving Cruise Automation fleet, GM — and competitors like Waymo, Uber, and Argo — see batteries as best-suited to ferry passengers and goods 24-7 in cities. In short-range urban environs, fast-charging seems a natural fit for their daily routine.

Of course, superchargers aren’t cheap and pose huge grid challenges as manufacturers push 350 kW charging (beyond Tesla’s current 120 kW draw). That’s a business problem. In the meantime, look to Tesla as the Apple computer of passenger cars: high style, low market volume.

Demystifying Renewable Energy Claims
Author
Sofia Yazykova - Environmental Law Institute
Environmental Law Institute
Current Issue
Issue
2
Sofia Yazykova

There is a movement in the corporate world to voluntarily use more renewable energy and less electricity obtained from fossil fuels. Some companies pledge to become 100 percent renewable, joining such groups as RE100, signing on to the Corporate Renewable Energy Buyers’ Principles, and undertaking other initiatives.

At least 150 large companies, including Apple, Facebook, and Google, have set goals to rely exclusively on renewable energy by a defined date. Many others have set goals to use substantial percentages in portions of their operations or in certain locations.

In addition to setting renewable energy goals, companies are publicly stating how much renewable power they use as a proportion of total energy consumption. This information is often conveyed in annually published sustainability reports, publicly issued statements, and news releases.

Given that there is no legislative requirement for companies to use renewables, and that they set their own goals, a question arises as to what companies mean by their statements about renewable energy use. How should the public understand corporate progress?

In January, ELI published a report that demystifies this world. Corporate Statements About the Use of Renewable Energy: What Does the “100% Renewable” Goal Really Mean evaluates differences in companies’ voluntary goals and strategies, answering a number of questions.

Can differences in companies’ renewables strategies make any difference in the development and deployment of new energy facilities? Does a company that claims a certain percentage actually use renewable power in its operations? Is a higher number always better in terms of its impact on energy development?

We examined corporate reports and other publicly available data for major international companies in the technology and data sectors, as well as some large manufacturers and retailers, in order to understand variations in approach.

Our research found that different companies use different terminology when they describe their progress. They also often differ in approaches toward what they count in reaching their renewables goals. This confusion is not surprising, given that there are no mandatory standards for renewable energy use by the private sector.

However, the lack of uniform terminology and methodologies makes it difficult to understand what different companies mean by their claims. Two firms may have very similar percentage goals, but one may be stimulating the development of new solar farms in places where it is locating or expanding operations, while another may be using available cash to purchase cheap unbundled Renewable Energy Certificates from electric grids far from any of its facilities.

Our research found that the information companies provide publicly sometimes offers little insight into how they obtain renewable power. Specifically, firms provide varying levels of information about how much renewable energy they generate themselves, how much they purchase through contracts, such as Power Purchase Agreements, and how much they purchase in the form of unbundled RECs.

Many corporate reports do not show the different percentages each method of obtaining renewable energy represents, and hence they can unintentionally obscure the extent to which a company’s strategies do or do not contribute to the development of low-carbon energy markets.

The problem is sending ambiguous messages to the public about the extent of the achieved benefits or improvements. High percentages alone do not provide the full picture, given the variety of methods in which renewable energy can be obtained and the variety of possible impacts these methods might have on the overall power market.

In addition to the findings about corporate use of renewables, our report discusses ways to account for renewable energy, existing voluntary standards, and trends and challenges in the power market. We also offer recommendations on what types of information would be helpful for companies to include in their public statements.

Companies appear to be shifting their strategies away from buying unbundled RECs and toward investing directly in renewable generation projects, in PPAs, and in contracts with suppliers, such as what are known as green tariff purchases.

Our study comes at a time when an increasing number of businesses are establishing renewable energy goals, as well as strategies to reach those targets, and are publicizing their achievements in a variety of formats. We know it will prove useful to companies deciding how to report their use of renewables in a more clear and comprehensive manner.

Demystifying renewable energy claims.

States Drive Carbon Policy Forward by Electrifying Transportation Sector
Author
Kathleen Barrón - Exelon Corporation
Exelon Corporation
Current Issue
Issue
2
Kathleen Barrón

Over half of our nation’s carbon emissions are produced by the electricity and transportation sectors. In the Northeast and Mid-Atlantic, nine states have worked collaboratively to reduce emissions in generation through the Regional Greenhouse Gas Initiative, now in its 10th year. With a modest impact on consumer bills, RGGI has raised well over $2 billion to invest in energy efficiency, clean energy, and other programs, produced net economic benefits of $4 billion, created 44,000 jobs, and reduced emissions by over 50 percent.

A number of states are looking to build on RGGI’s success through a first-of-its kind emissions allowance program for transportation, responsible for over 40 percent of carbon emissions in the Northeast and Mid-Atlantic. Collaborating through the Transportation Climate Initiative, the states include Connecticut, Delaware, Maryland, Massachusetts, New Jersey, Pennsylvania, Rhode Island, Vermont, Virginia, and Washington, D.C. New York is actively participating and might officially join later this year.

TCI states could raise a meaningful amount of revenue for investment in clean transportation by requiring wholesale gasoline and diesel distributors to purchase allowances for the embedded emissions of the vehicle fuels they sell in participating states. Even a minimal fee in line with natural price variability would raise a significant amount. As with RGGI, these targeted investments could reduce emissions through investments accelerating deployment of electric vehicles and supporting infrastructure as well as electrifying public transit and other fleets, such as school buses.

Of course, the cost-effectiveness of the TCI program, like RGGI, will depend on how the resulting funds are invested. The regional program’s cap-and-invest structure resulted in economic benefits that well exceeded costs, even before accounting for the significant health and climate benefits of the emissions reductions themselves. A cost-effective program will ensure maximum investment where it is needed the most. Given the scale of the climate challenge, every dollar must be spent wisely to leverage further investment in safe, reliable, and clean transportation for everyone.

Such investments would (and should) vary according to local needs; a notable characteristic of the TCI program is the flexibility it provides for each jurisdiction to focus on programs with the greatest need by the public. Proceeds could be used, for example, on transit and other fleets that bring clean transportation options to low-income and other marginalized communities that may be less able to purchase personal EVs. Further, by cleaning up bus and other depots that tend to concentrate in low-income communities, TCI could have an amplified benefit by improving local air quality. The initiative represents the all-too-rare instance where disadvantaged communities may realize a meaningful share of benefits from clean energy investments.

During 2019, the TCI jurisdictions will dig into policy design, including the identification of regulated entities and fuels and the development of emissions cap levels, monitoring and reporting guidelines, and cost containment and compliance flexibility mechanisms. As with the implementation of RGGI, reaching consensus on many of these issues will be challenging, but is critically important for the region. Given the continued lack of federal action on climate issues, the leadership of the states in pursuing innovative emissions reductions programs like TCI and RGGI is essential in the fight to protect our environment.

TCI and RGGI are notable for another reason: they are examples of states coming together on a regional basis to address a problem. Like electrons in the power grid, people using the nation’s transportation infrastructure cross local and state lines without regard to boundaries. Indeed, the very purpose of a vibrant transportation system is to allow the smooth movement of people and goods across large areas. A system wherein multiple modes of clean transportation “work” across state boundaries is just as essential as a reliable, resilient, and clean power system.

It is exciting to see states bring to the transportation sector the creativity they have used to achieve emissions reductions in the electricity sector. As other jurisdictions consider opportunities to address our climate challenges, they should look to the regional, market-based approaches being used in the Northeast and Mid-Atlantic states — vibrant examples of how to do things right.

States drive carbon policy forward by electrifying transportation sector.

Are Electric Cars the Future?
Author
Jeff Allen - Forth
Forth
Current Issue
Issue
2
Are Electric Cars the Future?

The transportation system is on the cusp of disruption — and not a moment too soon. Getting to and from work and play and running errands incurs, after housing, the second-highest total expenditure for most U.S. families — an average of $9,500 a year. Even in walkable, bike-friendly, livable cities like my home town of Portland, Oregon, where we drive about 25 percent less than the national average, most trips are still made by private automobile, and the average Portlander is still projected to drive over 20 miles a day in 2040.

The internal combustion engines that have powered our cars for more than 100 years rely on dozens of chemically inefficient contained explosions every second to drive pistons up and down, which is mechanically the wrong approach. It’s no surprise such a Rube Goldberg contraption doesn’t actually turn much of the energy in gasoline into forward motion. As if to purposely create irony, this machine also releases a lot of harmful combustion byproducts to the atmosphere, while obtaining adequate fuel requires subsidizing despotic regimes.

So much for the prime mover; what about the vehicle as a whole? We love our cars! We live in our cars! But the average car is parked about 95 percent of the time; when in motion, it is typically carrying an average of 1.08 people. In fact, the average car is used at less than 2 percent of capacity. It’s like owning a home you live in only one week a year.

However, the modern mobility industry is now seeing upheaval at a scale and pace unique since the widespread proliferation of the automobile a century ago. Companies like Uber and Lyft aim to put private cars to work more hours of the day. Car-sharing companies like Car2Go and ReachNow have proliferated. Firms like Lime, Bird, Scoot, Jump, and others are replicating that model with electric scooters, bikes, and other vehicles. Luum and Scoop are revolutionizing the commute and carpool experience. Technology to allow self-driving vehicles is advancing rapidly, with pilot deployments popping up all over the country. Some consultants have predicted that these forces could reduce car ownership in the United States by 99 percent in coming decades.

Meanwhile, the basic vehicle hardware is undergoing a major transition as well, from those inefficient and dirty internal combustion engines. Electric-drive vehicles are faster, simpler, and — with double-digit annual decreases in battery costs — increasingly cheap to purchase and operate. Sales of electric vehicles are growing fast, with automakers seeming to announce new models and major investments every quarter. Well over half of all new cars sold in Norway are now battery powered, and over 1.1 million electric vehicles were produced and sold globally last year. China is responsible for over half that number. Owners are happy — electric cars accelerate more quickly, are cheaper to maintain, and come with a bevy of high-tech options.

It’s not just cars that are going electric. Dozens of transit companies have pledged to electrify their entire fleets, finding that battery buses are cheaper to operate over their lifetime than their diesel equivalents. Companies like Daimler and Tesla are taking orders for electric long-haul trucks, many school districts are testing clean school buses, and even airplanes are getting an electric-drive makeover.

All this disruption comes not a moment too soon. Our cars and trucks have always been one of the largest sources of unhealthy air pollution in our cities. More recently, the transportation sector has overtaken generation and manufacturing as the largest (and fastest growing) single source of carbon pollution in the United States. Our transportation system also kills some 30,000 people a year in collisions in the United States alone, wastes billions of hours of our time in traffic jams, and causes a host of other problems.

But changes have been underway in earnest for less than a decade, and they are quickly raising in their wake a host of legal and policy questions. In particular, the electrification of the transportation system creates for the utility sector a number of opportunities, challenges, and questions.

Power companies have a lot at stake here. Utilities across much of America have seen stable or declining demand, even in the face of rapid economic growth. This is a tribute to the increasing effectiveness of energy efficiency, the growth of rooftop solar and other forms of distributed generation, and an increasingly smart power grid. It is in many ways a great trend. However, it also creates a problem: how will we continue to pay for the grid we rely on for reliable power while integrating diverse generation sources and loads — and keep costs affordable?

Electrifying mobility is one of the most promising ways to replace declining load, and to do so in a way that takes advantage of an increasingly smart and clean system. Electric cars buy a significant amount of power, generating revenue for utilities, but naturally tend to charge at night when there is a lot of cheap, excess power. In other words: they are a profitable market for generators. One study by California consulting firm E3 found that each electric car in the Golden State was worth between $2,778 and $9,799 to the utility and ratepayers over its lifetime. Studies in other states have also found substantial, if more modest, benefits.

Electric vehicle charging can also be managed fairly easily — nearly every car allows a driver to schedule charging for the middle of the night, while smart chargers allow rates to vary slightly in real time to create a shock-absorber effect. Cars’ large batteries can potentially provide other valuable services to the grid, even storing excess wind or solar power to be released later as needed.

In addition to providing profitable and flexible load, transportation electrification can also strengthen the utility’s brand and thus its relationship with consumers. A survey by the Edison Electric Institute found that almost two thirds of ratepayers want their power company to take a leadership role in promoting electric transportation. People tend to have an emotional bond with their cars, and utilities can become a trusted partner in that relationship.

Electric utilities are increasingly recognizing the potential of transportation electrification. California utilities have led the way, but others are following quickly. According to the Atlas EV Hub tracking site, 25 utility program filings in 14 states have been approved by regulators across the country, which will result in $1.1 billion in total investment. Another 31 filings in 16 states are under review by regulators and would add another $1.4 billion. And this is just the beginning: roughly 40 percent of all utility proposals tracked by Atlas EV Hub since 2012 were filed in 2018.

Environmental advocates also have a lot at stake in transportation electrification. Increasingly, they are realizing that the path to a low-carbon economy will require not only squeezing the heat-trapping element out of every kilowatt-hour, and squeezing more work out of every kilowatt-hour through efficiency, but also electrifying as much of the economy as possible. In other words, decarbonize the grid, then electrify everything.

Transportation is one of the most promising places to start, especially because it is so inefficient to begin with. The Union of Concerned Scientists regularly produces “well to wheels” comparisons of gasoline and electric vehicles, and most recently concluded that driving an average EV in the United States is equivalent to owning a gasoline car that gets 80 miles per gallon. Furthermore, while most cars get dirtier every year as they age, electric cars actually get cleaner, as the grid gets cleaner. Electrifying mobility has to be the core of any long-run carbon strategy.

At the same time, most environmental advocates working in transportation share a strong dislike for private automobiles, and bear the scars of years of fights with auto companies. As one progressive advocate said to me, “Why would we make it easier to charge your car downtown? We don’t want your car downtown!” Environmentalists have tended to focus more energy on encouraging good transit systems, bike and pedestrian facilities, sound land use planning, and measures like congestion pricing to reduce excessive reliance on cars. These are all important tools and we will still need them all in a zero-emission mobility system. Too often, though, they are seen in opposition to efforts to encourage cleaner cars, rather than as equally vital pieces of an “all of the above” strategy.

Automakers are also conflicted. They have long fought the Zero Emission Vehicle Mandate imposed by California and several other states, which has required them to sell increasing numbers of EVs. Most car companies still make 99 percent of their sales, and all of their profits, from gas and diesel cars, and have little incentive to disrupt themselves. Many car companies are still only selling their electric cars in small numbers, in a few segments — there is still no battery-powered pickup truck — and in a few geographic markets (notably those ZEV states). Outside of those markets, it has been exceedingly difficult to move transportation electrification forward.

More recently, however, many car companies have begun to see electric vehicles as the future of their industry. Electrification is the only viable path forward in the face of concerns about air pollution and climate change; markets around the world are pushing in this direction; governments are imposing mandates and other inducements; and frankly, the technology is just better. As a result, nearly every major automaker has made a substantial public commitment to electrifying its fleet. Manufacturers are increasingly embracing plug-in hybrids that reduce gas usage, battery-only vehicles, and fuel cell vehicles that use hydrogen to produce electricity. Collectively they have committed to dozens of new models and billions in new investment. Meanwhile, new entrants like Tesla are demonstrating the huge consumer interest in battery vehicles, and heavier-duty electric vehicles, like transit buses and trucks, are also becoming increasingly cost-competitive — and available nationwide. In a major development, General Motors recently floated its own proposal for a national ZEV program.

Utility ratepayers also have a lot at stake in electrifying transportation — and not in the way you might think. Critics — especially oil companies — have been fostering the argument that “I don’t want to pay extra on my power bill because some millionaire drives a Tesla.” It’s a natural concern — but misplaced. The truth is that more electric vehicles will mean lower power bills for everyone. As noted above, electric vehicles are profitable load for utilities, allowing them to spread the fixed cost of generating and transmitting power across more power sales. That lowers costs for everyone. These benefits become even greater if utilities actively manage charging, channeling cheap excess power into cars when it’s not needed and slowing charging during peak periods. Electric vehicles can even provide emergency power during natural disasters or other grid problems — over 7,000 homes in Japan already use this technology, and Nissan Leaf cars were used to power streetlights there after the Fukushima typhoon in 2011.

Electric vehicles have broader economic benefits, too, returning money to owners that would otherwise be spent on gasoline, much of it imported from unstable regions. A study by the California Electric Transportation Coalition found that every dollar shifted from buying gasoline to making other kinds of purchases produces 16 times more jobs. Other studies have found that every electric car purchase can increase state GDP by as much as $2,000 per year. The potential benefits of this “electric dividend” are enormous. A recent report by M.J. Bradley & Associates found that increased use of battery-powered cars would save Minnesota residents — even those who do not own one — $120 per year on their power bills, while providing net benefits of $30 billion statewide by 2050. People who drive electric cars save even more money: in most of the country, “filling up” on electricity is equivalent to paying about $1 per gallon for gasoline, and drivers can expect to save hundreds of dollars every year.

Despite these benefits, ratepayer advocates and regulators have often been slow to support transportation electrification proposals from power companies. To some extent, this is exactly because utilities have become more aggressive — after all, ratepayer advocates and regulators spend a lot of their time acting as a check on what utilities want to do. Specifically, policies and regulations have spent the last few decades creating incentives to reduce power use — which has been conflated with reducing energy use. Advocacy groups have pushed in this direction with substantial success. Load building has become a pejorative. With battery mobility, however, the best way to reduce energy use is by using more electric power — and correspondingly less gasoline. This requires some major changes to the way we think about, and regulate, power companies. It also requires some major shifts in political alliances and relationships.

It is also important that we build equity and inclusion into this work from the beginning, not as an afterthought. As noted, transportation is the second highest expense for most households, and an even greater burden for low-income Americans and communities of color. Major transportation investments have a history of reinforcing inequality — whether it’s a freeway demolishing neighborhoods or a bike lane that accelerates gentrification. We need to learn from these mistakes and ensure that electric and other advanced mobility technologies benefit traditionally underserved communities. This is not just a moral imperative — it’s a very practical one. Bringing them the benefits of electric mobility will have greater economic and environmental benefits than bringing it to affluent suburbs. Furthermore, if we fail to do so, we deliver potent ammunition to our political opponents, who have already shown that they will use it.

With these cross currents and headwinds, it’s hardly surprising that utilities, environmentalists, ratepayers, transit systems, and car companies are not yet singing in harmony. Promising alliances such as the Transportation Electrification Accord are slowly emerging to even out the score. However, advocates across all sectors need to be faster and bolder — we need a stronger, more strategic campaign to electrify mobility via coordinated state and local implementation of forward-looking, problem-solving national policies.

The cleanup of our grid offers one promising model for improving transportation in many respects. In the early days of renewable energy, advocates had to justify wind and solar power based on the preexisting utility regulatory structure as sources of grid stability, price stabilization, etc., or perhaps based on the potential future risk of carbon regulation. Eventually, advocates shifted strategy to establishing a renewable portfolio standard that simply requires utilities to buy or supply a minimum amount of renewable energy (typically starting at 15 percent, and increasing over time.) The more traditional roles of utility regulators — such as ensuring prudence and cost effectiveness — were then applied as constraints shaping strategies to meet that goal.

Iowa adopted the first RPS in 1983. At last count 29 states and the District of Columbia have adopted such standards, and several of those are now approaching 100 percent. This system has worked well — and helped us reach a point where renewables are now cheaper than fossil-fueled power plants in many cases. This effort benefited from national coordination and support of state-level campaigns; it required new and stronger coalitions between stakeholders; and it took decades to come to fruition.

We are far from that kind of a framework with transportation electrification. Only a few states, so far, have even explicitly allowed utilities to spend ratepayer funds to accelerate transportation electrification. Only California and Oregon have required utilities to do so. Neither of those last two states has set a legally binding target, comparable to an RPS, though California is inching in that direction.

Even in the most progressive states, utilities are whipsawed between competing and often directly contradictory policy direction from different state and local governments. Utility cost-of-service regulation does not generally allow consideration of other goals, such as clean air. In a single state, it’s common to have an energy or environmental agency pushing transportation electrification to reduce carbon emissions, while the public utility commission slows power investment, a transportation department pushes for higher fees to offset lost gas tax revenue, and cities make it difficult to site charging facilities.

It is up to advocates and decisionmakers to align the goals of state and local energy, environmental, and economic policy with clear intentions and policy goals. An organizing principle similar to the RPS is a good place to start. State legislatures should require that power companies promote the electrification of the transportation system. These laws should set specific targets, with an ultimate goal of 100 percent of new vehicles being fully electric no later than 2040. States should then require utilities to submit plans intended to achieve and support electrification of transportation.

Just as RPSs set clear long-term expectations for renewable energy, this kind of “electric mobility standard” will create objective and clear guidance for utilities and other stakeholders and allow us to start with the end in mind. Utility regulators and ratepayer advocates can then focus on what they do best — making sure that we pursue those social goals as cost effectively and fairly as possible. Ideally, this kind of policy should be paired with a country-wide mandate to ensure vehicle model availability, such as the national ZEV program proposed by General Motors. There are certainly other supporting policies needed, from updated, “EV ready” building codes to streamlined permitting for charging. However, these efforts will be much more effective when supported by clear, objective, long-term goals and clear implementing directions to utilities.

Once we have clear policy direction, what should a robust role for utilities look like? It will appear different around the country, and will change over time. After all, this is a rapidly moving field, with new business models and technologies emerging constantly. However, we know it will need to be a wide-ranging role with many different components.

Most stakeholders recognize that there should be some utility role in charging infrastructure, for example, and that’s important. Selling power to drivers as a fuel is simply not profitable at this point, and won’t be until we have a lot more electric cars on the road. Fast chargers that allow vehicles to drive away in 20 to 30 minutes are particularly important — and expensive. If we want to enable drivers to take their cars anywhere, we need a network of these chargers, and some of them will have to be in remote rural areas that will not be used very often. For example, several key fast chargers in Oregon that enable travel to the coast or to other parts of the state are only used a few times a week. But without them, electric car adoption in the state is constrained.

Electric utilities know how to provide reliable service, and how to support new customer needs, whether it’s air conditioning in the last century or an EV charging station today. Regulated utilities also have the patience to build infrastructure, even when it may take 10 or 20 years to pay back. That’s why we counted on them to bring power to our rural communities and farmsteads decades ago, and we need them to enable clean transportation there as well. A national network of chargers is also an important driver of electric vehicle adoption — which, to repeat, will benefit all ratepayers, even those who don’t drive. However, this focus on charging has often overshadowed the many other important roles power generators need to play to transform the mobility system.

Utilities should also play an active role in managing charging load to maximize benefits and minimize costs to all consumers, and their rate design is an important piece of this puzzle. However, some past proposals have tried to force zero emission vehicle owners onto “time of use” rates or into complex and confusing systems that could complicate or discourage electric vehicle adoption. Meanwhile, stakeholders also need to help utilities revisit demand charges. These charges, based on maximum potential load, are intended to assign costs to customers with expensive infrastructure needs but low utilization. However, they are particularly problematic for fast chargers and large workplace charging installations, where they can make up over half the monthly cost of operating such necessary infrastructure.

These installations are critical to encouraging widespread use of electric cars, thus providing benefits far beyond their local use — but may not be used enough to cover demand charges for many years, if ever. While rate design is important, it’s just one tool for managing and rewarding charging behavior that maximizes benefits for everyone — and stakeholders need to keep the overriding goal of a clean, electrified mobility system front and center.

We also need utilities to play a major role in driving consumer engagement. There is no coordinated education campaign to promote electric vehicles, and it shows. Even in California, where the electric revolution is most advanced, over half of consumers cannot even correctly name a single battery-powered car model — and that statistic has not improved in the past six years. Power companies are a natural and trusted source of information about electricity and efficiency. Utilities have helped transform other markets in the past, building on their consumer relationships and community partnerships. For example, energy efficiency campaigns across the country have been hugely effective in reducing power demand. Many of these programs rely on contractors and regional partnerships, including multi-state compacts, and this will be important in transportation as well. Many people will travel a long distance to buy a new car, and media markets can be even larger. What’s clear, though, is that the transition to battery drive will take at least the same level of effort and investment from utilities that energy efficiency programs have required, and will provide equally large benefits to ratepayers going forward, which is to say all of us.

Just as power companies generally have dedicated programs to help low-income customers pay their bills, we need them to have dedicated programs to help those customers access clean electric mobility. However, many attempts to address this issue so far have been primitive or even counterproductive. For example, several utilities have agreed to install a certain share of chargers in low-income areas. However, if people in those areas don’t own electric cars, such charging doesn’t help them and may even drive gentrification. Likewise, zero emission transit buses can help, but only where communities are already well served by transit. Shared electric cars may work for some easy to schedule needs (grocery shopping, medical appointments) but not for others (commuting). The first step to getting equity right is to listen hard to neighborhood needs and make sure that impacted communities are in the room shaping the strategy. Current ratepayer advocates know a lot about low-income energy needs, but may not understand low-income mobility needs. There are promising pilot projects around the country, but we need more equity-focused organizations engaged in this vital work.

It has taken us decades to transition from coal to renewables in power generation. Moving from oil to electricity in transportation will be even harder. While a kilowatt-hour is a kilowatt-hour — a commodity that’s invisible to most people — the way we get around is much more personal, and emotional. A mile riding in an aging diesel bus in urban traffic is different than driving a mile in an electric convertible on an open road. Advocates will also face much harder opposition and inertia. The coal and natural gas lobbies are powerful, but pale in comparison to the oil lobby — and to the inertia of individual drivers.

As it should, most of the action will occur where utility regulation already takes place, at the state level — operating under national policies, programs, and standards, with city governments also playing a role, particularly in charging infrastructure and in transforming transit. To succeed, government officials at all levels need to work with drivers, car companies, bus systems, mobility advocates, and environmentalists to help utilities play a leadership role in transportation electrification. TEF

COVER STORY ❧ Getting America’s power companies to invest in the clean transportation revolution is critical to reducing air pollution and the emissions that cause climate change. It will save us all money. The key is creating a system that allows utilities to lead the way.

Data Show Renewables Alone Don't Always Equate to Carbon-Free
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Kathleen Barrón - Exelon Corporation
Exelon Corporation
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Kathleen Barrón

In recent years, an increasing number of companies have adopted renewable energy procurement goals as part of their sustainability programs. These targets have been established not only to respond to customer and corporate concerns regarding climate change, but also to encourage the adoption of policies at the federal, state, and local level in support of clean energy. Reflecting this desire to show leadership, corporations are becoming increasingly vocal — and taking meaningful action — on greenhouse gas reductions.

Corporate renewable energy programs have begun to evolve with the urgency of climate projections. Companies are evaluating the impact of their programs and whether they will be sufficient to shift the generation fleet to net zero carbon. In doing so, they are realizing that a focus on clean — rather than just renewable — may be more effective in achieving needed carbon reductions. In late 2018, Google, the world’s largest buyer of renewable energy, published an in-depth review of the emission impacts of its renewable electricity commitments. The firm determined that, while it had succeeded in matching 100 percent of its annual consumption with purchases of renewable electricity, this was not the same as eliminating emissions from its use of power. The carbon intensity of Google’s operations varied with the carbon intensity of the regional electricity grid, even when it over-procured renewable electricity where available.

For example, according to the Google report, a purchase of 100 percent renewable energy to power a data center in Finland results in 97 percent carbon-free performance due to the high penetration of around-the-clock carbon-free generation like nuclear, hydropower, and biomass in the Finnish grid. At this data center, Google also learned that with sufficient penetration, more renewables doesn’t necessarily reduce carbon, particularly where a new renewable is simply displacing an older renewable or other carbon-free resource.

It can get worse: When Google analyzed a North Carolina data center, it learned that only 67 percent of electricity consumption could be considered carbon-free even though the data center had achieved the same 100 percent matching with renewable generation. This is because the variability of wind and solar generation caused over- and under-production of electricity relative to the data center’s consumption over a 24-hour period. Because the power grid surrounding the data center remained carbon-intensive, shortfalls in renewable production were filled by fossil-fuel generation. Even though this was later matched with extra renewable power exceeding the data center’s real-time consumption, Google’s actual environmental footprint was not carbon-free when evaluated on a daily basis.

Rather than declare success for having offset its energy consumption with renewable power in the aggregate, Google has doubled down, with a new goal of matching each of its data centers with carbon-free energy in every hour of the year. This shift from renewable to carbon-free is designed to allow the firm to call on a more diverse pool of emissions-free generation that includes not only solar and wind power, but also nuclear, geothermal, and biomass.

The data giant calls on governments, utilities, and other energy market players to carefully consider the impact of the retirement of existing carbon-free generation on the ability to meaningfully decarbonize the electric system. As Google concludes, the “scientific evidence is clear: tackling climate change is an urgent global imperative and will require full-scale decarbonization of the world’s energy systems. And that is our vision: a world that runs exclusively on carbon-free energy — 24 hours a day, 7 days a week, 365 days a year.”

The actions taken by Google to align its sustainability policies with the real-world impact of its energy decisions represents an important leap forward in corporate climate leadership. And states are beginning to agree. In 2018, California transitioned from a renewable electricity goal that, as Google demonstrated, was not necessarily producing equivalent carbon reductions. In its place, California established a nation-leading requirement that electricity be 100 percent carbon-free by 2045. California retains within that overall goal a requirement that 60 percent of energy come from existing renewable technologies and challenges the market to develop and expand other carbon-free generation, including technologies we haven’t yet invented. Other states are considering similar performance goals focused on decarbonization rather than specific technologies that may have widely varying levels of carbon efficacy.

The shift to performance-based outcomes by Google and California is what we need to fully decarbonize the electricity sector and position it to help drive carbon reductions in other sectors. To meet our urgent climate challenge, many others must follow this path in 2019 and beyond.

The author is grateful for the assistance of Mason Emnett and Kathy Robertson.

Data show renewables alone don't always equate to carbon-free.

As Our Problems Out Race Our Solutions, Humanity Needs a Completely New Strategy
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As Our Problems Out Race Our Solutions, Humanity Needs a Completely New Strategy

On the first Earth Day, in April 1970, Senator Edmund Muskie called for “a total strategy to protect the total environment.” We have had time to pull this off — nearly a half-century after Muskie’s clarion call — but have failed. Yes, gains in environmental quality have happened, but as time has passed, we have witnessed the emergence of global-level, existential threats. These include the thinning ozone layer, the crash of biodiversity, ocean acidity and the demise of top predator fish and coral ecosystems that spawn marine life, sea-level rise and the forced relocation of hundreds of millions of people, and of course the accelerating change in the Earth’s overall climate and the resulting change in weather patterns and spawning of monster storms.

The human race is pushing on or through what the Stockholm Resilience Center has called “planetary boundaries” with a certain reckless abandon even as the governance mechanisms needed to address these threats are under daily assault by anti-state activists and science deniers among the pundit class. The environmentalist Bill McKibben, commenting on last fall’s report of the Intergovernmental Panel on Climate Change, observed that, “We’re running out of options, and we’re running out of decades.”

Over the past 50 years, society has pinned its hopes on a variety of actors: companies that have moved beyond compliance and embraced sustainability, cities pursuing novel strategies to meet urban environmental challenges, citizens mobilized with new technologies, from blockchains to big data to artificial intelligence. But none of these alone, no matter how well funded or motivated, can solve the environmental challenges we now face. As the IPCC concluded, the changes needed have “no documented historical precedent.”

What follows is a coming together of sorts that focuses on the bricks and mortar of a possible strategy to address our total environment at a time of urgent need. The discussion took place at the ELI-Miriam Hamilton Keare Policy Forum, with a panel of experts drawn from industry, academia, the legal community, and the public sector who discussed a preliminary sketch for a new environmental paradigm presented by ELI’s Scott Fulton and David Rejeski in the September 2018 edition of the Environmental Law Reporter.

Scott Fulton: Our purpose today is to talk about the emergence and convergence of some new and important drivers of environmental behavior and how to harness them and integrate them into a composite that helps us achieve the future that we all want. Two new drivers are private-sector environmental governance systems and technology.

To tee up this conversation, here is the central thinking from an article that our moderator, David Rejeski, and I wrote for the September 2018 edition of the Environmental Law Reporter entitled “A New Environmentalism: The Need for a Total Strategy for Environmental Protection.”

We came up with a chart to encapsulate our analysis. We put a vertical axis to reflect that some of the drivers are top-down in operation and some of them are bottom-up. We added a horizontal axis to reflect that some of the drivers are externally induced while others are internally motivated. That creates four quadrants. Each encapsulates and describes both a driver and a resultant system that emerges.

Working counterclockwise, let’s start at the quadrant in the upper right hand corner. In Quadrant 1, the driver is law and the system is traditional government action. Variations of command-and-control regulation are here.

In Quadrant 2 the driver is risk management and the system is private environmental governance that manages and reduces that risk — whether reputational or financial. This quadrant emerges from what we believe are enduring changes in the business orientation toward the environment. These are changes that derive from the environmental values that we carry into our jobs. These values are strongly reinforced by shareholder initiatives, desires for sustainability, and customer and supply chain demands. Managers increasingly regulate environmental behavior not only of their own operations but also of suppliers.

These values are reinforced by investor and insurer demands that perceive environmental challenges as financial risks. They are also driven by the opportunity to pivot from a risk-reduction orientation to brand enhancement, with green branding offering a marketing distinction. We should note that the accountability system associated with this quadrant is powerful. The levers are market access and access to finance, the very lifeblood of business.

In Quadrant 3, the driver is technology and the system is autonomous monitoring and correction. That includes systems that automatically change in the face of observed phenomena. In our article, we use the example of a sensor-based snowpack monitoring system in the Sierra Nevada. That in turn informs operation of a hydroelectric dam and the distribution of water resources for irrigation and human consumption. With the advent of artificial intelligence and blockchain approaches, it’s reasonable to expect that we’ll see self-monitoring systems proliferating in the future.

In Quadrant 4, the driver is Big Data. The system is a community platform for sharing those data and the stories that they tell. There is a data tsunami coming — we will all be monitoring our local air quality and the water we drink in much the same fashion that many of us monitor our heart rate and other biometrics.

Across these four quadrants, the drivers are going to operate in an interactive way. For example, data-based community pressures can be expected to influence behaviors in both private governance and public governance. Autonomous systems, to the extent that they are well designed and effective, can be expected to reduce the demand for the other three drivers. Effective private governance systems should in theory reduce the need for intervention by public governance mechanisms.

What is emerging will ultimately influence the shape of the governmental role going forward, and that’s ELI’s traditional area of engagement, partly because law-based systems in Quadrant 1 can either be barriers to or enablers of the evolution of the other three quadrants. Work needs to be done to ensure that law provides a supporting system for the changes we value.

But these other quadrants have attributes that relate to and may draw from government experience, in that they are in effect rules-based systems, built on contracts, preferred-sourcing criteria and sustainability criteria — even the social license to operate. The accountability mechanisms, ranging from denial of capital or market access, to product deselection, to public or social media rebuke, are different but nonetheless relatable to government compliance assurance systems.

Our moderator today is David Rejeski, who is the head of the technology initiative at ELI and came to us from the Woodrow Wilson Center, the Environmental Protection Agency, and the White House.

David Rejeski: I’m going to start with Michael Vandenbergh, who is the David Daniels Allen Distinguished Chair of Law at Vanderbilt and a leading scholar on private environmental governance. He is the author of Beyond Politics: The Private Governance Response to Climate Change. Mike also runs a project at Vanderbilt on how to reduce carbon emissions at the individual and household level.

Michael Vandenbergh: From my perspective, the great ideas out there are only great if they can also be institutionalized. I would like to see more focus, particularly from an organization like ELI, on the institutional strategy that would push companies and communities toward a more sustainable, lower-carbon future. But what kinds of institutions are needed to move technology in the right direction? We can have all the best technologies in the world, but if the incentives are not right, companies won’t deploy them.

Much of what guides the way people think about the environment is worldview. How do you account for the effects of worldview on behavior in striving toward sustainability? That is a challenge that has bedeviled the Intergovernmental Panel on Climate Change. I don’t know that you’re going to solve it, but a sophisticated incorporation of some kind of behavioral component would be a useful addition to the decisionmaking model.

David Rejeski: Ann Condon is now an ELI visiting scholar, after a long career at General Electric focusing on its chemical stewardship program and the company’s sustainability work.

Ann Condon: Among my challenges at GE was figuring out how to meet our greenhouse gas goals, how to green our supply chain, and how to deal with reporting on conflict minerals.

Attorneys are comfortable with public law. We’re even comfortable with private environmental governance. But Big Data, additive manufacturing, blockchain — it is all happening so fast. Lately people have been telling me how blockchain is going to solve sourcing traceability problems. But we need all four of Scott and David’s quadrants to enable a tool like blockchain to work. Because if you don’t have standardization in deploying it, there will be four thousand blockchain traceability systems: one for every platform.

Take the conflict-free sourcing initiative which involved a lot of work to standardize the data gathering. That was critical to ensure the material traceability efforts were usable. These common data fields have to be negotiated, which requires collaboration. Collaboration in turn requires organizations that can facilitate that standardization. It also requires a push from the regulators.

If we don’t figure it out, we are going to look back in five or six years and realize blockchain will be just like other initiatives, RFID comes to mind, that showed great promise but haven’t solved the problem. If you can get the data right, it can be very powerful.

David Rejeski: Michael Mahoney is Pfizer’s vice president and assistant general counsel, and chief environmental health and safety officer and compliance counsel. He’s also a member of the Environmental Sustainability Steering Council and the past chair of the Environmental Law Committee of the New York Bar Association.

Michael Mahoney: I started at Pfizer as an environmental engineer in the mid 1980s. I spent most of my time helping the company comply with command-and-control regulations. It was never perfect because of the nature of the way the regulations were promulgated, but we worked hard to comply.

In the mid 1990s we witnessed the birth of private governance. I was very fortunate to be involved in the drafting of our environmental, health, and safety standards. We did it because we thought it was the right thing to do.

In 2006 we developed our environmental sustainability program. We went to management and sold it as the right thing to do. But we also sold it as a means to differentiate Pfizer from our competitors.

Today, we are beginning to see customers, including large governmental buyers, become more interested in our environmental footprint. Those companies that have good programs are going to be selling to these entities and those that don’t will not. The market opportunity is developing very quickly. It’s driving companies to action. But to succeed a company needs to have a solid program, including how it manages its supply chain.

We need a system where all these drivers are working in harmony. That would be the most efficient and effective. But in the meantime we should leverage those drivers for the opportunities they currently present.

So I would emphasize the market as a driver. Customers are demanding sustainability throughout the supply chain.

David Rejeski: Adrienne Hollis is both an environmental toxicologist and an environmental lawyer. She works on environmental justice issues and is director of federal policy in the D.C. office of WE ACT for Environmental Justice. I’ll ask her to give the perspective from a community level.

Adrienne Hollis: David and Scott’s article resonates with me both from a scientific perspective and also from a legal perspective.

Because I work with environmental justice communities, I look at it through that lens. In a perfect world, we would be touching all four quadrants equally. But there are some factors that people normally don’t take into account in such an analysis, and that’s the trust of the community.

In Quadrant 1, the role of government is to promote the will of the majority while protecting the rights of the minority. That really hasn’t happened, at least not recently. In this administration we see a shift away from legislation designed to protect the public. Privatization is also a big issue for communities. It is not just an economic issue, but an economic justice issue as well.

I want to talk about the need for community science. We used to call it citizen science, but it is really community science because we’re talking about exposure to everyone. Perfect examples are the immigrant camps and the people who are situated next to facilities that may be emitting toxic substances.

But I need to speak about the fact that science is under attack. It makes me question the fourth quadrant. Until we can reach a point where we respect the data, that quadrant is definitely at risk. The whole theory of the four quadrants is at risk.

David Rejeski: John Lovenburg is the environmental vice president for BNSF Railway. His portfolio includes remediation, hazardous material sustainability, environmental litigation, compliance, environmental permitting, agency engagement, environmental engineering, and environmental policy.

John Lovenburg: The four quadrants appear to be an accurate representation of what we are seeing in the environmental space. A good example of where integration is occurring is in data.

For instance, there are now very active community air monitoring programs. High school students are doing air monitoring. Agencies are doing mobile air monitoring. The result is a real explosion of data.

While there are obvious opportunities, from industry there is some initial reluctance. So from a public governance role, there is a real value in the agencies building the confidence of all of the stakeholders to trust the data.

I was a consultant during the 1990s and 2000s. We spent a lot of money collecting highly precise, very expensive data points. With current technologies, we’re collecting hundreds of data points very cheaply and very rapidly. As we get our arms around that data, the level of confidence among all stakeholders is going to go up.

As to private governance, for BNSF, environmental management systems are our way of internalizing all of the external systems — best practices, audits, corrective actions. I tell my team that if they find an error, use that as an opportunity to find potential system-wide fixes. This flips the usual attitude on its head. We are looking for errors so we can turn them into positives for the whole organization.

This is one way that private governance takes governance to an nth degree above an external system alone. For us the ratio is probably twenty to one: faults that we find internally through audits and other means versus problems a regulator may find during an inspection.

So in terms of what’s missing from this ecosystem of drivers, in Quadrant 2, included is managing risks, but there is also opportunity in discovering and handling issues.

A good example is TCFD, the new carbon reporting framework put together by the G20 nations. TCFD, the task force for climate-related financial disclosure, looks at opportunities and risks around climate. It is the first model that I have seen that dispassionately looks at policy, carbon pricing, physical risks, and impacts on markets.

Balancing risk and opportunity would be a good addition to the framework.

Second, I would add sustainability and sustainable solutions as the best way to find common ground.

I am co-leading an initiative with the railroad around electrification. It is a win-win because electric vehicles have triple the efficiency of internal combustion vehicles. That means using two-thirds less energy to move trains, trucks, cargo-handling equipment, et cetera.

Our team is charged up around BNSF’s electrification initiative because it is a sustainable solution. We eliminate onsite emissions, because we get electricity from offsite power plants. We can cut operating costs by two-thirds. We’re going to use fewer resources. We’re going to reduce our carbon footprint. That’s a perfect example of a sustainability win-win solution, and why I would add it to this framework.

David Rejeski: Paul Hagen practices both U.S. and international law as a partner at Beveridge & Diamond. He also works with corporations and trade associations.

Paul Hagen: Most of my work is in the product stewardship space. Our orientation creates a race to the top, because there is often a market access driver. The EU requires the electronics sector to fully understand what is in their products and to create a timeline for eliminating certain restricted substances. Today, whether you’re selling products in Vermont or Beijing, you have to orient yourself around global market access requirements and supply chains. We’ve seen what happens with conflict minerals as a for instance across the economy.

But the legal infrastructure that we’re working with is cumbersome and often antiquated. If we look at the four quadrants, and the evolution of data in driving technology solutions, in promoting environmental governance, those don’t operate in a vacuum. They operate in a world with disparate countries’ laws and international legal frameworks.

I spend a lot of my time working on the circular economy. Companies are committed to extending the life of products through repair and reuse. By reusing products, materials, and recycling, we really take advantage of those environmental and economic benefits at scale. Some of that is being driven by the EU, but a lot is driven by scarcity and efficiency interests.

Unfortunately, we are moving used and end-of-life products across international borders under a 30-year-old environmental treaty that the United States has not ratified. I have sat in the back of the room with U.S. government and other non-party observers to the Basel Convention on hazardous waste, watching as other governments decide how we’ll classify and move used products across frontiers.

One of the areas the circular economy focuses on is the reuse of plastics. In an effort aimed at minimizing plastic pollution, Norway has proposed bringing a larger universe of waste plastics under control under the Basel Convention. For parties to the Convention, it is a question of controlling certain shipments. But because the United States is a non-party, that’s really an import and export ban for us. The United States is operating in a legal framework that’s entirely different from the other 185 countries because we are a non-party.

It is hard for companies to innovate and for NGOs to collaborate if the legal infrastructure is not keeping up. So don’t overlook the importance of that legal quadrant. It’s the one on which these other dynamics can be built and operationalized.

David Rejeski: It’s time to bring in the audience, and I know Douglas Keare has a question.

Douglas Keare: I was pleased that the last three speakers focused on risk in the system. The consideration of risk in private-sector governance, whether financial or reputational, is nowhere even in the ballpark of the kinds of risk we should be paying attention to.

There are two factors that motivate me to stress this. The first is an excellent article by Henry Kissinger in The Atlantic, which is spurred by the headlong rush into artificial intelligence. It concentrated on the fact that science and technology, each motivated by their own monsters, are rushing to the future without restraint because what we have is an exponentially widening gap between what science and technology are discovering and our ability to understand it, let alone manage it or control it, and that’s not sustainable. The second factor is that some of the directions they’re rushing in are not desirable.

I am in favor of linking opportunity and risk. Maybe the way to look at the diagram is that it ought to be a pentagon rather than a square. The fifth section should be managing or identifying and avoiding existential risk but doing it within an opportunity framework such that a new technology emerges somewhere in the system.

Dave Rejeski: Gary Marchant of Arizona State University raises what he calls the pacing problem — to what extent can the legal framework of Quadrant 1 keep up with the rate of change — whether the instrument of change is AI, or blockchain, or anything else. Every time we discuss the issue of science and tech and the existential risks they raise, we find we are unable to figure out how to make this system change. Michael Lewis in his new book The Fifth Risk raises the issue of the way governments deal with existential risk.

Michael Vandenbergh: The overall goal of the system is to avoid catastrophic risk. Any chart like this assumes roughly an equilibrium status moving forward with growing GDP. If you take that away, then boom, everything goes haywire.

In terms of transitions, you can argue about what the Founders thought concerning how information would flow in a democracy and how that has changed. With today’s technology, if you wish you will only hear one side of what used to be an impartial presentation of the day’s events. That makes structuring a democratic discourse on environmental protection difficult. The very ability of governance systems, whether public or private, to function is being directly affected by developments in technology.

David Rejeski: Dan Hillis, who was one of the people who invented parallel computing, recently wrote an article titled “The Enlightenment is Dead, Long Live the Entanglement.” His thesis is that we are all essentially entangled with one another — through our machines and our organizations. That is going to lead to behavior that is difficult to predict and govern and to indeterminacy in a legal system.

Michael Vandenbergh: Many of us may not know that household electricity use has gone down in the last couple of years for the first time since World War II. A recent economics paper shows that the decline correlates almost perfectly with the introduction into the market of attractive, low cost LED light bulbs. Why did that happen? It happened partly because of government.

Ann Condon: “Ban the Bulb.”

Michael Vandenbergh: Indeed — government had a role but also companies like Walmart said if you can make one under $10 that looks good, we’ll sell it. So the manufacturers played a role as well. None of this was anticipated.

Paul Stern: I’m Paul Stern, working nowadays at the Social and Environmental Research Institute. But after a long career at the National Research Council, where I was a director in a number of projects in some of these areas, I wanted to focus on the issue of data in Quadrant 4 and the question about whether we’re getting a tsunami of information. Data are useful when they’re trusted and trustworthy. Data producers may be biased. They may be perceived to be biased. You want good data and you want trust for good data in order to inform decisionmaking.

I see this as an institutional challenge. How do you design institutions that allow the various parties interested and affected by decisionmaking to have data that they trust and that they ought to trust?

John Lovenburg: Let’s talk about corporate use of data. I received an updated number from our technology VP just two days ago. We generate 35 million readings per day from the sensors that we have on the railroad — thermal, acoustic, hyperspectral, cameras on locomotives, cameras in yards, drones flying over track. We use these sensors for safety, efficiency, and environmental purposes.

After track construction, you plant native vegetation to restore the ecosystem. The way we used to do it is to hire a biologist who would over the course of a week look at 30 miles of new track. Now we are flying a drone in ten minutes over the same area. It uses infrared cameras that plug into agricultural algorithms — and I can get quantitative data on restoration progress.

The issue of trust comes up when there are shared data. With air quality data, there can be skepticism among multiple parties that there could be the needed level of trust. With time, we’ll build some confidence. When you have overlapping data that produce the same answer, you start building confidence in the system. That speaks to the role agencies can play, to step in and help multiple parties adjudicate that data and build confidence.

Adrienne Hollis: On the issue of trust — people are going to have their own agendas. When communities are able to participate in data gathering, and to develop guidelines, that generates trust.

There are now personal air-quality monitors that update in real-time. In practice, ten people in the same community who were exposed to the same pollution plume and suffered adverse health effects would have a response to an industry monitor that says there was no release above the government standard.

So whom do you trust? Do we need to get people to agree that there is one particular trusted source of information that we all must acknowledge? Or do we say there’s a certain protocol that must be followed in order for data to be seen as valid?

Scott Schang: I’m Scott Schang with Landesa and formerly with the Environmental Law Institute. One point and two questions.

I wonder if we’re missing a driver in the form of private capital from philanthropies and unaccountable political donations that these days has such a force.

I wonder what this would look like if you did it in a developing world context. Is it the same map? Maybe it is but I’m not sure. Will it look like this in China, India, Myanmar, and Malawi? It might be interesting to ask that question, because it might inform our thinking about what our system looks like.

And then, finally, resources. What happens in each of these four quadrants when you resource them or don’t resource them? I would argue the only one of the four that is really resourced is technology. The other three, including private environmental governance, are largely starved because companies aren’t really putting much money into it.

Ann Condon: Can I weigh in on the developing country aspect? Because the model, maybe not the specifics of AI or Big Data, but of sustainable business tools, is actually even more important in many respects in the developing world because some of the other institutions aren’t very strong. There may be different tools in the buckets, but the concept is right.

Scott Schang: Where I work in the developing world, it’s the government that is acting as the business promoter, trying to get land to companies, and the companies are being asked to act like the government by providing basic social services and the environmental rule of law. So the roles have been exactly swapped and I wonder if that’s where we’re headed in the United States as well.

Holly Elwood: I’m Holly Elwood. I work at EPA. And for me, looking at the quadrants, I see my work very much 100 percent in the left quadrants. We are thinking of it as purely where the private sector lives, but there’s a really strong role for the federal government there. And as purchasers, as developers of product sustainability standards that we use to meet our sustainable procurement requirements, that’s a place where trust is absolutely vital.

I am glad you brought that topic up because without it no one will use those standards or eco-labels and we won’t be able to get to an agreed understanding of what we are trying to make happen in the market. I see a lot of work happening in that space right now and a lot of engagement from the private sector.

Michael Vandenbergh: I couldn’t agree more. You could argue that the disclosure of the Toxics Release Inventory data was one of the drivers for what you see in the private sector. As to trust, maybe this is a place where the public and the private side come together. Maybe it is time for a certification and standards system that applies to community-based data. That’s a place where the private sector might play a role if the public sector can’t.

Paul Hagen: Holly raises an excellent point in that this is a domain where there is a lot of evolution, a lot of action, particularly in the green-electronics space. There are expanding product certification schemes. There are governance issues. There are green procurement requirements.

The government is learning and adjusting. The private sector is learning and adjusting. The NGO community is trying to figure out how to come up with what Scott has described as the optimal solution space. Lawyers are not used to dynamic systems, where you have steady adjustments over time rather than etchings in stone.

Unfortunately, even the best private environmental governance schemes are operating at a scale that might be noteworthy but ultimately is insufficient.

Instead, we need to appreciate the role of governments. If we can come up with an approach with all the OECD governments, for example, it might take a little bit more time, but it would operate at a larger scale. Instead of letting one jurisdiction, for example, set the energy-efficiency standard for a product and everybody else has to fall in line because it’s a global marketplace, there is more of a collaborative process across multiple OECD countries. And then we could roll that standard or framework into the developing world.

David Rejeski: The trust issue actually goes through all four quadrants. I had an interesting discussion with somebody at the Defense Advanced Projects Research Agency. DARPA has a group focused on explainable AI. One of their big worries is the machine learning algorithms are starting to make decisions that they can’t explain to the humans. Do we trust the algorithm? If you’re the decisionmaker in a company or you’re a CIA analyst, it’s a huge issue of whether this machine learning algorithm has told you something you didn’t know.

Thomas McHenry: I am the dean and president of Vermont Law School. This has been a fascinating discussion. It makes me wonder. Three quarters of our students come to Vermont Law School because they’re interested in pursuing careers in environmental law. What should we be teaching to allow students to take advantage of this paradigm?

Ann Condon: I have hired many legal interns over the years. Teaching environmental law is an important foundation, but a lot of folks that I see coming out of these very specialized environmental programs do not understand basic contracts. They don’t understand commercial relationships, including antitrust law. If lawyers don’t have that essential business background, they can’t integrate the environment into core business strategies.

Michael Mahoney: I would add that building a business case is vital to embedding sustainability in an organization. It is important that lawyers have the fundamentals in business and in finance. Students coming out of a sustainability background can really move a program if they have the tools. They can work with the right people in the company, explain where the trend is going, then make a business case. But lawyers coming out of school don’t have those basic tools. I didn’t when I graduated. I often think of going back and getting an MBA, because I think it is important to marry that with law.

Michael Vandenbergh: I published a short piece called “The New Private Advocacy” last fall that is directed at private lawyers. It is designed to do what you are saying. This is not just happening in law. I talked to a manager of one of the big environmental groups not long ago, and he told me he had to find a bunch of new people who understand the supply chain contract for bananas. It wasn’t enough to know which Senate committee did what. A complete lawyer today is someone who understands the public and the private side of environmental governance and knows all those different instruments.

Cross-training is really helpful. We teach a class with MBA students and law students together. They have to figure out how to interact with one another. That helps because their thinking patterns are so different.

Monica Medina: I now run a small environmental newsletter called Our Daily Planet, but I was in the government for a long time in and out many administrations.

The world of weather data is highly advanced and is a useful model. There may be lessons that could be learned from the way the World Meteorological Organization has pulled together science and business and created products and tools that we all know and use. The European model is more accurate potentially than the U.S. model, but the point being that there are a lot of data that have been collected for a long time on weather. The data sit in the government but are shared very well. There is an infrastructure in place to allow government-to-government sharing even with governments we don’t get along with.

Dave Rejeski: One of the earliest citizen science projects was connecting citizen meteorologists together via the telegraph. That was the Victorian Internet. It led to breakthroughs in forecasting. The Weather Service has been able to take legacy data from a century ago and integrate it with current data and use that for prediction. Weather forecasting is an area to look at for models, for anyone who is trying to learn how to do data integration, aggregation, and basically how to use distributed networks of both human and other types of sensors including satellites.

Unidentified Questioner: I have a question on the impact of what’s happening in Quadrant 1 on Quadrant 2. I speak as someone who spent the last 28 years in Quadrant 1. In the United States, as resources are being radically cut at the federal level and even as the legitimacy and role for environmental regulations are being questioned, will that have an effect on the demand in Quadrant 2 on the private side? I would like to think not­ — that reputational risk and financial risk will grow regardless of what is happening again at the national level in Quadrant 1. But am I being too hopeful?

Ann Condon: Standardization may drive the process here. When there are lots of conflicting requirements, product manufacturers will say, “Now we need to standardize.” Because if you have the Ohio rule and California rule and the Beijing rule, it almost becomes impossible for a manufacturer to figure out. If the federal government isn’t going to do it, then we need to have a private effort. That is when you get the push for private environmental governance.

Paul Hagen: Most of the folks we work with say they like a robust regulator because they can occupy an important part of the conversation. Even with the most well-regarded companies or NGOs, there’s always a conversation to frame.

John Lovenburg: We often get customers who will ask for carbon emissions data. We normalize our emissions by weight transported. If they want it normalized by volume, there is a disconnect. A different language is being spoken.

So BNSF is involved with EPA SmartWay and the Smart Freight Centre, all striving to come up with a single way of normalizing supply chain transportation carbon emissions.

Dave Rejeski: I spent yesterday with the Food and Drug Administration, which was having two days of meetings to create an enabling environment for the next 20 years of protein development. I was stunned with the foresight that FDA had. They’re listening to technology developers and creating an enabling environment. That could be setting standards, thresholds for data collection, whatever.

Michael Mahoney: If industry sees a reason to standardize because they see that the environment needs to be better protected, they can go a long way toward building the framework for a program that the government might step in and implement more widely. This is thus a great opportunity for partnership, where the industry can do some of the work until the government has the information and resources it needs.

Michael Vandenbergh: Lawyers can serve an enormously important role. One of the greatest benefits we bring to the table is that we’re comfortable working with environmental engineers and physicists and others. That’s a role ELI can continue to play as the field goes from being essentially a subfield of administrative law to something much broader.

We might think here as an institution about how to create convening settings where people from lots of different disciplines can work on common problems. This conversation was a start. TEF

On the first Earth Day, in April 1970, Senator Edmund Muskie called for “a total strategy to protect the total environment.” We have had time to pull this off — nearly a half century after Muskie’s clarion call — but have failed. Yes, gains in environmental quality have happened, but as time has passed, we have witnessed the emergence of global level, existential threats. The human race is pushing on or through what the Stockholm Resilience Center has called “planetary boundaries.” The old approaches have failed. But what would a new paradigm, built on lessons learned, look like?

The Opportunities and Challenges for States' Clean Energy Policies
Author
Kathleen Barrón - Exelon Corporation
Exelon Corporation
Current Issue
Issue
6
Kathleen Barrón

In prior columns, I have discussed efforts by the Federal Energy Regulatory Commission and some states to reconcile the operation of competitive wholesale power markets with state policies that preference the use of clean generation technologies. The latest chapter in this saga involves PJM, the regional grid operator for 13 eastern states and the District of Columbia.

Stakeholders in PJM have been debating the impact of state policies on the wholesale power market for several years. Over the last decade, the majority of states in PJM have implemented some form of renewable portfolio standards or renewable energy credits under which wind, solar, and other preferred resources receive payments for desired attributes. More recently, two PJM states have enacted zero emission credit programs under which qualifying nuclear plants receive similar payments when they generate emissions-free power.

The debate over the impact of these RPS, REC, and ZEC programs on PJM’s power markets came to a head in June, when FERC concluded that state support for preferred types of generation is undermining the competitiveness of PJM’s auction-based capacity market. Capacity is the commitment to be available to PJM when called upon in the future, and most generators in the PJM footprint are required to offer their capacity to PJM in annual auctions.

Fossil-fuel generators have complained that payments to non-emitting resources under state clean energy programs give those resources an unfair advantage over emitting generation when offering capacity to PJM. FERC agreed, concluding that payments under state programs represent an “untenable threat” to the competitive integrity of PJM’s market.

To address this threat, FERC is seeking comment on a series of reforms to the PJM market that could fundamentally reshape wholesale power markets — and opportunities for clean generation — across the PJM region. The mechanics of FERC’s proposal are technical and complicated, but in a nutshell, FERC is proposing that states with clean energy goals would opt-out of PJM’s capacity market for a portion of their electricity demand. For that portion, they would purchase capacity directly from preferred resources, and buy capacity for the remainder of their demand through the PJM auction, effectively bifurcating capacity procurement between PJM and the states.

If states do not take advantage of this bifurcated structure, FERC’s June order says that resources receiving state support must have their offer prices in the capacity auction reset (i.e., increased) by PJM to remove the economic benefit of the state payment. FERC concluded that this action was necessary to ensure the competitive integrity of capacity prices in the auction. However, it will likely increase electricity prices for consumers throughout the PJM footprint with no benefit to clean energy; in fact, the opposite is possible, as the additional capacity market revenue will go to emitting resources. Customers therefore will end up paying twice for capacity: first through state programs procuring clean energy, and second through PJM’s purchase of capacity to replace the state-supported resources.

FERC’s bifurcated capacity market proposal creates new opportunities — but also challenges — for states desiring to support clean generation. Reducing the amount of capacity procured in the PJM auction by the amount of state-incentivized clean capacity through the opt-out will make it possible for states to cost-effectively meet and expand their energy policy targets without fear of PJM “replacing” renewable and nuclear energy supported by the states with emitting generation purchased through the capacity auction. Moreover, states will have greater flexibility to create portfolios of clean energy that meet state policy objectives while also satisfying the performance obligations of capacity resources in PJM.

However, FERC has established an aggressive schedule for implementing this new framework. State procurement mechanisms must be in place prior to the next capacity auction, normally held in May of each year although PJM obtained FERC approval to hold its next auction in August 2019. State legislators and utility regulators have months, not years, to develop or modify procurement mechanisms to conform to the opt-out mechanism being developed by FERC.

Complicating matters further, FERC’s opt-out proposal is just that — a proposal that is subject to a comment period that runs through November. States, the environmental community, and other stakeholders should make their voices heard. PJM’s capacity procurement rules will have a lasting impact on the ability of states to cost-effectively achieve carbon reduction and other environmental goals. Working together, we can ensure that states retain the authority and flexibility they need to achieve those goals.

The author is grateful for the assistance of Kathy Robertson in developing this column.

The opportunities and challenges for states' clean energy policies.

Verification, Accreditation Provide Assurance
Author
Ann Howard - American National Standards Institute
American National Standards Institute
Current Issue
Issue
6
Parent Article

President Reagan famously said, “Trust but verify.” What applied to negotiations with a nuclear-armed and sometimes hostile Soviet Union may apply to today’s situation with verification of carbon reductions by countries and by companies, all of which are in competition with each other. It is also necessary to ensure the competency of third-party verification bodies, a process called accreditation.

Verification bodies evaluate the accuracy of an emission claim. Accreditation ensures that verification bodies are up to the task. Recent history with both mandatory and voluntary systems shows that this double layer of accountability can provide the assurance needed to meet Reagan’s dictum.

There is already a rich array of experiences implementing carbon reduction programs. The World Bank’s Carbon Pricing Dashboard, which provides information on existing and emerging carbon pricing initiatives, lists 51 globally. As a result, we already have several lessons learned about what frameworks work best.

A central lesson is you need a system that builds capacity. Many programs have made improvements over time in response to stakeholder feedback, analysis of results, and, frankly, mistakes. Continual improvement harmonizes processes and cultivates best practices, which strengthens the institutions involved with the carbon abatement scheme. Efforts undertaken by organizations such as the International Organization for Standardization, the UN climate convention, and the World Resources Institute harmonize reporting and verification frameworks globally, improving the overall system of accountability.

Another lesson is that to achieve credible reductions, a coherent framework of clear rules and oversight is essential. For example, the Kyoto Protocol’s Clean Development Mechanism provides for Certified Emission Reductions generated by projects located in developing countries. CERs are based on approved methodologies, and validated and verified by an accredited third party.

Similarly, in Canada, provinces with GHG reporting requirements for industry require third-party verification. The majority of provinces require verification by a body accredited by an International Accreditation Forum member against international standards.

In California, a state program has had great success with similar components. The EU’s Emissions Trading Scheme has continued to improve with the implementation of program reforms and harmonization of accredited verification. Countries such as Kazakhstan and Singapore are establishing similar programs and supporting institutions.

What these programs all have in common are clear rules for reporting GHG emissions and supporting layers of quality assurance. This includes clearly defined roles and responsibilities for participating institutions.

As an example, the International Civil Aviation Organization Council recently adopted reporting and verification rules for the Carbon Offsetting & Reduction Scheme for International Aviation. CORSIA is a global system to address annual increases (above 2020 levels) in total CO2 emissions from international civil aviation. Airlines will be required to calculate emissions from flights and offset them. Doing so will require third-party accredited verification, competent to carry out assurance of GHG estimates.

ICAO recognizes that “capacity building efforts and partnerships must be strengthened in order for ICAO member states to implement what is needed in a short amount of time.” Capacity building here helps not only the aviation sector but also efforts to strengthen national reporting programs.

While assurance that the verifying is done well is sometimes lost in the larger picture, it also plays a leading role. Ensuring that there are sufficient accredited verification bodies in emission trading schemes is an essential first step.

There are over forty accreditation bodies operating GHG programs against international standards and many in development. While the GHG schemes they work with vary from one region to the next, the approach to third-party verification is harmonized and focused on continual improvement.

This quality is achieved through Multilateral Recognition Arrangements. An MLA provides confidence that verification bodies and their activities are assessed equally and consistently by accreditation bodies against international standards and GHG scheme requirements. Such schemes are increasingly interested in utilizing this framework to ensure quality and drive continual improvement.

Climate change is a collective-action program. Without cooperation and coordination, effective mitigation cannot be achieved. Luckily there is an existing framework already established to help.

A Voluntary Federal Framework
Author
Charles Hernick - Citizens for Responsible Energy Solutions
Citizens for Responsible Energy Solutions
Current Issue
Issue
6
A Voluntary Federal Framework

States and local governments have established their own policies to shift toward clean energy for over a decade, and the private sector is providing customers with more clean energy solutions in every part of the economy each new year. Hybrid cars are commonplace, electric vehicles are on the rise, homes and businesses are more energy efficient than ever, and utilities across America are providing renewable power on demand to corporate and residential customers.

As a result, U.S. greenhouse gas emissions have fallen to their lowest levels since 1991, and power-sector emissions are 28 percent below their 2005 peak. Thousands of companies and municipalities now calculate their emissions and have taken measurable steps to reduce their carbon footprint. Green bonds — financial tools often used to reduce greenhouse gas emissions — attracted over $150 billion of investment last year, double what it was the year before.

While these are encouraging signs, there is opportunity to harness these decisions in a more comprehensive way. Currently, these actions are not reported to a single system where they can be aggregated, and their collective impact better understood and optimized. Beyond making reductions on their own, many businesses pay someone else to reduce, avoid, or sequester carbon because it’s cost effective. In the United States alone, a $28 billion a year offset credit market has grown to meet this demand.

Instead of superseding these actions and actors, federal policymakers should build on the achievements of states and momentum inside the private sector by creating a voluntary reporting and offset exchange system that empowers additional actors and actions. A voluntary greenhouse gas emissions registry and standards for carbon offsets will mainstream emissions reductions efforts and increase capital investment in clean energy.

The pressure faced by Congress to address climate change — especially from millennials — and the Trump administration’s simultaneous proposals to replace the Clean Power Plan call for pragmatic policy solutions. Focusing on reporting and offset exchanges is consistent with the market-based mechanisms that states have been using to reduce greenhouse gases for over a decade. Currently, 10 states use compliance-driven cap-and-trade markets; it’s expected that 12 will do so within the next year.

Carbon capture and storage offsets may be a particularly important approach for CPP replacement rulemaking. It is more cost effective than ever since Congress established “45Q” tax credits for this type of voluntary offset early in 2018. However, there must be systems for accounting and transferability to assure American taxpayers of the value and longevity of this approach.

While a voluntary federal reporting and offset accountability system will not satisfy the proponents of firm-handed federal caps and mandates, it is the most politically viable approach to supporting states’ rights and local action and guiding the invisible hand of free markets to further drive down emissions and mitigate climate change.

Rapid adoption of corporate social responsibility practices, sustainability and even shareholder demands are causing many companies to voluntarily report and reduce their emissions. These private efforts are notable and shouldn’t just be applauded—those emissions reductions should be counted.

There is substantial money flowing into these voluntary reductions. The market for green bonds has grown significantly. Green bonds are issued to finance projects — like wind and solar power installation, or capital investments in energy efficiency — with specific environmental outcomes, namely reducing carbon emissions. To date, these bonds have been issued by corporations like Apple and Starbucks, universities, and municipalities across the United States. The doubling of investment in green bonds in just one year happened in part because they are being bundled into mutual funds.

A strictly voluntary federal registry would assist organizations in measuring, reporting, and verifying the carbon in their operations so they can better manage and reduce emissions. As a voluntary approach, there would be no federal mandate, but there would be a national tracking mechanism that could link to, or build off, the existing mandatory federal carbon registry for power plants. A centralized reporting mechanism could be very helpful to the leaders of over 400 cities and municipalities joined together as The Climate Mayors to reduce their own emissions. Additionally, more than 3,500 mayors, governors, CEOs, college presidents, faith organizations, and tribal leaders have moved to similarly track and reduce emissions.

Sometimes it is more cost effective to reduce emissions elsewhere rather than cut emissions on your own. To that end, offset credits can be purchased voluntarily to compensate for emissions that occur elsewhere. Offset credits are generated by certified projects or activities that reduce, avoid, or sequester carbon — for example, by switching to cleaner fuel sources, by planting trees that pull carbon dioxide from the air, or by injecting carbon dioxide into the ground. These are offset markets in which a voluntary transaction takes place because the seller has a business interest in developing offset credits and the buyer is either seeking to reduce its own emissions or is regulated and finds it more cost effective to purchase offsets.

The buyers of voluntary offset credits typically represent for-profit organizations from the energy, finance and insurance, consumer goods, and events and entertainment industries. General Motors is a top voluntary offset buyer, offsetting 8 million tons of carbon dioxide equivalent over five years, with a budget of $40 million. Other top-offsetting U.S. corporations include Delta Airlines and Pacific Gas and Electric Company.

In the United States, dozens of businesses and organizations develop and sell offset credits totaling 10 million tons of carbon dioxide equivalent valued at $28 million in 2016. Offset projects are spread across the U.S. Methane capture projects make up over 40 percent of the offset market and have been developed in every state. Many forestry projects take place in the Southeast and rice projects are common in the South.

To facilitate growth in offset markets, the federal government should develop guidelines for the voluntary exchange of carbon offset credits — it could, for example, establish common trading units for offsets. A federal standard could result in lower costs for local and state governments to meet emissions-reduction goals. By creating market standards, barriers for small businesses to engage these markets will be reduced and the door to additional markets that have emissions trading systems in Europe and China could someday open.

Creating a framework for common accounting could make local markets more efficient — and assure that voluntary developers of offset credits are accountable for the products they are selling. It may also be particularly important and useful for transparency, since Congress established a tax credit for carbon capture and storage as the first mechanism for voluntary offsets purchases by the American taxpayer.

Focusing on a voluntary reporting and offset exchange is consistent with the market-based mechanisms to control pollution that states have been using for reducing greenhouse gases for over a decade. Indeed, it would preserve states’ rights and leadership in this space. Market-based instruments encourage behavior change — they guide the invisible hand through changes in prices, rather than through explicit directives regarding pollution-control levels or methods. Market-based approaches encourage businesses or individuals to undertake pollution-control efforts that are in their own interests and that collectively meet policy goals if they are well designed and properly implemented.

As they relate to limiting carbon emissions, market-based instruments can be grouped into three categories: government subsidies to clean energy generation, carbon taxes, and tradable carbon emissions permits or allowances. Consistent with the first approach, states have provided subsidies to zero or low-carbon power sources through renewable portfolio standards. RPSs require the increased production of energy from sources such as wind, solar, biomass, and geothermal. In practice, this has created an economic incentive to develop solar and wind projects in particular. Roughly half of all growth in U.S. renewable electricity generation and capacity since 2000 is associated with state RPS requirements. However, these systems can be complex and vary state by state. For example, 29 states use 10 different systems for accounting for RPSs, complicating trading across the country.

A subsidy through direct clean energy tax cuts, however, has never been implemented in any state or at the federal level. While tax credits for solar and wind investment and production are in place, they are scheduled to phase out over the next few years because these subsides were originally intended to help a nascent market get off the ground. Mature markets don’t need help from Uncle Sam. It’s possible to go further and pursue supply-side clean tax cuts. Basic logic dictates that if you want more of something, tax it less. Tax cuts linked to carbon emissions would put a price on carbon by rewarding capital flows to carbon-conserving solutions. This approach requires accounting for carbon reductions, monitoring, and enforcement.

The second type of market-based approach is a carbon tax, which would limit emissions by increasing business costs for carbon-intensive industries. In economic terms, the tax shifts the marginal private cost curve; it is a Pigouvian tax. While carbon taxes have been proposed in various formations at the state, regional (via PJM Interconnection), and federal level, to date no carbon taxes have been implemented in the United States. A key challenge is establishing the level. Any schedule for tax increases must be set by one-time legislation, since Congress will have a hard time adjusting the tax once it is established. The federal gas tax for highway funding — which hasn’t changed since 1993 — is an indication of how hard it is to adjust taxes once they have been established.

Setting the tax escalation rate depends on difficult-to-make assumptions about technological innovation over the period of the policy. If the tax is too high, a rapid shift in the energy market could displace workers and shock the economy. If the tax is too low, the policy won’t achieve emissions reductions goals. There are also major questions about what to do with the revenue collected from a carbon tax. Some have suggested carbon dividends, which would provide direct payments to Americans. But other carbon tax proposals would direct cuts to the corporate tax rate to assure revenue-neutrality and eliminate any additional government bureaucracy needed to administer the program and calculate dividends. However, an additional significant challenge is that a federal carbon tax would need to be wedded with the state-level efforts to decrease emissions through carbon trading.

Carbon trading — more formally tradable carbon emissions permits or allowances — is the third type of market-based approach. While in the halls of Congress, cap-and-trade has been out of favor for years, at the state-level this market-based approach has firmly taken root. Just last year, nine northeastern and mid-Atlantic states renewed their participation in the Regional Greenhouse Gas Initiative, and California, America’s most populous state, extended its cap-and-trade system too. These are compliance-driven cap-and-trade markets. Businesses participate by buying a limited number of emissions allowances sold at auction or by trading unused credits among each other. Right now, nearly one-third of the U.S. economy is already under a compliance-based cap-and-trade program. RGGI states plus California make up 30 percent of our national gross domestic product. If Virginia and New Jersey join the initiative, as their governors anticipate, then over 35 percent of the U.S. economy will be within one of two cap-and-trade systems.

Concerns that a regional cap-and-trade system would create a costly bureaucracy and that markets could be manipulated have proved unfounded. RGGI held the program’s initial auction in September 2008 — the very same month the stock market crashed, bringing on the Great Recession. The RGGI model focused on accountability and transparency, and carbon prices have been lower than expected and the auctions and trades worked as planned. The long-term commitment to RGGI provided enough business certainty for industry to justify investing in clean energy resources, research and development, and updated infrastructure.

The results speak for themselves. Since RGGI was established in 2005, carbon dioxide emissions are down 45 percent and ratepayers have saved billions on their utility bills. The new goal agreed to in 2017 is to reduce the carbon emissions cap by another 30 percent between 2020 and 2030.

This growth is important because cap-and-trade systems become more economically efficient with more states and businesses participating. Larger carbon markets with more competition and options help keep the costs of compliance down.

A voluntary reporting and offset exchange system could make sense of the myriad approaches by states and the private sector by consolidating data and making it more publicly accessible. The benefit to opting into a voluntary system is federal assurance of full public disclosure. A limited federal effort could help protect investors and maintain fair and orderly functioning of voluntary carbon markets. State-level compliance markets would still need their own enforcement mechanisms. But for private actors in the voluntary space, the federal stamp of recognition could crowd-in investment. Perhaps most importantly, a voluntary greenhouse gas emissions registry and standards for carbon offsets will not invent a new federal system that attempts to supersede state progress.

Establishing consistent rules for measurement and exchange could be the missing piece to magnify the impact of the free enterprise system and avoid the legal challenges certain to continue following the Clean Power Plan and its proposed replacement.

Last August, EPA proposed the next regulatory steps to limit carbon emissions from existing power plants. To avoid lawsuits, the Trump administration’s final Affordable Clean Energy rule must both stay within the limitations of the Clean Air Act as defined by Congress and must be responsive to the Environmental Protection Agency’s 2009 endangerment finding. EPA’s approach is constrained by CAA Section 111(a)(1). This part of the law limits the scope of regulation to technologies that can be applied to a single stationary source — the power plant. This is also known as an inside the fence approach that regulates each power plant and smokestack individually. EPA’s mandate under Section 111(d) is limited to writing guidelines for states, so that state-level plans can be approved by the federal government. To inform this guidance, EPA’s rule will focus on the definition of a standard of performance or Best System of Emission Reduction. In other words, how much can emissions be reduced with an acceptable level of financial strain on the power plant?

This type of technology- and performance-based standard is classic command-and-control policymaking. These standards prescribe uniform requirements allowing relatively little flexibility in terms of how goals will be achieved. Although standards may be effective, forcing all businesses to resort to equally expensive means of controlling pollution can lead to relatively high total compliance costs. Because the costs of controlling emissions may vary greatly among power plants, and even among sources within a single plant, the appropriate technology in one situation may not be cost-effective in another. Control costs can vary enormously due to production design, physical configuration, age of assets, or other factors.

Experts say it is not entirely clear how much more can be done to improve coal plant efficiency, at least not without dramatically raising plants’ costs. For example, heat rate improvements were one of the proposed emission-reduction strategies described in the final version of the Obama CPP; but even regional targets may prove too costly to achieve. Plant-by-plant emissions targets are possible but represent a very heavy-handed approach.

A narrow reading of the act and an inside-the- fence power plant standard of performance is sound from a legal and technical standpoint, but it’s not the most cost-effective means for precise emissions reductions. Indeed, it risks ignoring a decade of policy leadership and capital investment by states and businesses. It could bring us back to command-and-control methods for reducing pollution. Only allowing reductions to occur within the fence is unnecessarily narrow. Carbon dioxide and other greenhouse gases are global pollutants. From a global climate change viewpoint, reducing emissions at the power plant is the same as reducing emissions anywhere else. In other words, as far as carbon in the atmosphere goes, avoiding a ton of emission from a power plant is the same as sequestering a ton of carbon through a forestry project. That’s why market-based approaches make the most sense for carbon.

Considering the opportunity for offsets and the use of compliance-based cap-and-trade by 10 states, EPA should focus on creating a flexible approach to limiting carbon. States possess — and must be guaranteed — considerable flexibility in developing their plans. EPA should create options for limiting emissions reductions inside the fence and establish a mechanism for purchasing verified offsets outside the fence. Furthermore, allowing for a broad definition of how the cost calculations can be developed may allow third-party investment via offsets or green bonds to minimize costs to ratepayers. This represents a key opportunity for enabling carbon capture and storage. CCS involves turning the smokestack on a power plant upside down so that emissions are stored underground instead of released into the atmosphere. While there are numerous geologic conditions that need to be just right, the technology exists and works but thus far isn’t cost effective outside of enhanced oil recovery operations.

Establishing consistent rules for measurement and exchange will make market-based solutions more transparent and unleash the free enterprise system to achieve emissions reductions goals. A voluntary greenhouse gas emissions registry and guidelines for the exchange of carbon offset credits will help raise the profile of existing voluntary actions that take place absent government regulation and help crowd in investment. The federal government should encourage buyers in this market motivated by self-defined environmental goals and sellers motivated by environmental interests and economic gain.

Several certification processes and non-governmental organizations verify offsets. Demand has been consistent for years. But the market could be bigger and offsets could play a larger role in driving down emissions if offsets were allowed by EPA’s new rule. Allowing offsets would create technical options for minimizing the cost of carbon emissions reductions.

An era with blossoming financial instruments, multiple means of measurement, and poor market coordination is not unprecedented. Before the stock market crash of 1929, most investors gave little thought to the systemic risk that arose from poor information and the need for basic market rules. The crash was a devastating way to learn a lesson about the need to protect investors and maintain orderly, functioning markets. Out of the ashes, the Securities and Exchange Commission was established to protect investors and markets and to facilitate capital formation. The result has been an economy that remains the envy of the world. With a plethora of market-based approaches being implemented to limit carbon across the United States, a similar approach based on coordination and protection could be helpful to meet today’s challenges.

By establishing a voluntary federal greenhouse gas emissions registry and a system for the voluntary exchange of carbon offset credits, the federal government won’t dictate how carbon emissions will be reduced. It will establish a reliable economic and environmental framework that could help unleash the market’s potential to solve the problem. By promoting public disclosure and a common accounting system for carbon trades, private and public actors at all levels will get credit for emissions reductions that are already taking place. And there will be a bigger spotlight on those actors who are leading emissions reductions. Improved information and clear market signals will help guide finance, including green bonds, to clean energy. The result could be very powerful. And make the United States’ market-based approach the model for how to solve the climate change problem. TEF

CENTERPIECE ❧ Establishing a nationwide system for carbon reporting and an offset exchange will empower states, municipalities, and businesses to decrease emissions while increasing investment in clean energy and improving transparency and accountability.

Blaming Workers "Very" Poor Policy
Author
Stephen R. Dujack - Environmental Law Institute
Environmental Law Institute
Current Issue
Issue
5

Since moving to Washington almost 40 years ago, I’ve had two main editorial gigs. In addition to my current post, I was editor of the American diplomats’ magazine, the Foreign Service Journal, during the Reagan years. Most of the Journal’s audience are Foreign Service officers, who sign after their names, “Esq.” Most of The Environmental Forum’s audience are lawyers, who also sign, “Esq.”

That was just an amusing coincidence between two professional magazines, but now both of the agencies they mainly cover, the State Department and the Environmental Protection Agency, have been threatened with having their budgets and staffs savaged. To date, Congress hasn’t gone along, but the danger is causing poor morale at these agencies and hundreds to already quit voluntarily. As these workers’ longtime chronicler, critic, and champion, I feel compelled to respond.

It seems the esquires and other professionals at State and EPA are now deemed to be a “deep state” conspiring to its own ends and disloyal to the new administration and its policy priorities. Suspicion of career officials is not new, but over time all previous presidents have come to respect the civil service; they recognize that, bureaucratic inertia aside, its ranks are loyal to their country and eager to carry out mandates designed to better the lot of Americans.

A cost-benefit analysis of American diplomacy would note that since the end of World War II, an unprecedented era of worldwide peace and prosperity has grown and endured. Experienced diplomats established the financial and trade institutions that underpinned a huge expansion in wealth driven by improvements implemented by workers, business, and agriculture. Since 1960, global per capita GDP has increased 22 times in constant dollars. Human life spans have leaped from 48 years in 1950 to 71 years in 2015 — and a decade more in developed countries.

Professional diplomats were also at the epicenter during the Cold War and kept the pressure on the Soviet Union via containment until it collapsed. And the Foreign Service helped create the military alliances whose might created the environment for that implosion.

The Foreign Service can only take partial credit, for helping to create the framework and oiling the gears, but the United States has benefited hugely from its tiny investment in fielding a professional diplomatic corps whose numbers couldn’t even fill a hockey arena.

Now the international system they have helped to build is subject to attack. “Other presidents have understood,” the Washington Post said, “that the United States has gained, disproportionately, from a system in which it helps keep the peace without keeping crabbed accounts on its national ledger.” The same can be said about Trump’s attacks on the world trading system, where he sees other countries as robbing the American “piggy bank.” He blames the situation he beholds on his Oval Office predecessors and especially the weak professionals at State.

According to Foreign Policy, a Trump acolyte in the department is combing through social media to compile a list of officials who have supposedly been disloyal. Trump has experienced diplomats processing FOIA requests and has refused to name ambassadors to key countries or to fill other crucial posts. Trump also nearly tweeted away diplomatic immunity, exposing our government workers to real danger.

The fact that 99 percent of foreign affairs — of maintaining “our first line of defense” — is at the level of daily transactions among professionals serving in hundreds of countries has not occurred to him. Or as Defense Secretary James Mattis has said, if State’s budget is reduced, “Then I need to buy more ammunition.” But when asked about Trump’s proposal for a 30 percent cut, Secretary Mike Pompeo said cryptically, “I’ll make sure we have every single dollar we need and not one dollar more.”

Likewise, EPA is a useful and good agency Trump wants to ravage to upend its successes. The benefits of environmental protection have vastly outweighed the cost to American businesses and taxpayers, by between $113-741 billion a year, according to 2014 OMB data. Yet Trump and his first agency administrator came into office seeing the skilled professionals who helped accomplish this as an enemy — it was time to “deconstruct the administrative state.”

Scott Pruitt began the process by measuring his success using a different yardstick than his predecessors: beating down the professionals who dutifully implement and enforce the statutes passed by Congress and signed by the president, as detailed and directed under law and under careful court scrutiny. “When you look at what’s going on at the EPA, that agency has been a bastion of liberalism for years and years and years,” Pruitt told a radio host. He said the agency “was weaponized historically” against business. Representative Betty McCollum (D-MN) countered, “‘Staff has been under attack during your tenure’ and ‘there’s documented retaliation, as far as I’m concerned,’” according to the Washington Post. In fact, “the U.S. Office of Special Counsel is investigating whether . . . Pruitt retaliated against staffers who questioned his spending and management decisions.”

Pruitt is gone. According to E&E News, acting Administrator Andrew Wheeler “has signaled an increase in press access and engagement with career staff,” both principles that were anathema to his predecessor. And at State, Pompeo, who succeeded the dour institutional decimator Rex Tillerson, is said to be more popular among the Foreign Service employees and other civil servants who staff the department headquarters and overseas posts.

If they care to listen to professionals who want nothing more than to uphold their oaths of office, Wheeler and Pompeo will be well served in implementing the president’s policies.

Notice & Comment is written by the editor and represents his views.

 

Critics Call Bailout of Coal, Nuclear Plants “Trump Socialism”

The Trump administration’s plan to bail out the beleaguered nuclear and coal industries continues to draw sharp reaction from critics, with activists now claiming it will cost Americans as much as $34 billion more a year for electricity.

Meanwhile, Howard Learner, executive director of the Chicago-based Environmental Law & Policy Center, claims the directive that was announced June 1 is largely a result of lobbying on behalf of FirstEnergy Corp. by President Trump’s former campaign manager, Corey Lewandowski. . . .

Murray Energy is a major mining company that supplies coal to many affected power plants.

“Clearly, FirstEnergy and Bob Murray of Murray Energy have been aggressively lobbying the Trump administration for a bailout,” according to Mr. Learner, who said the directive would interfere with the marketplace to ensure cash flow for executives from noncompetitive corporations.

“President Trump is asking the public to subsidize the losers,” Mr. Learner said.

Former U.S. Nuclear Regulatory Commission board member Peter Bradford [said], “This is about favors and political paybacks. . . . It’s not Bernie Sanders socialism. It’s Trump socialism, because the benefits aren’t going to the public at large.”

The Toledo Blade

 

“Scott Pruitt’s . . . claim that benefits have been inflated in EPA regulatory decisionmaking is simply not borne out by the facts, and in today’s far-reaching announcement, he is doing nothing short of cooking the books so that polluters always win, and people always lose.”

— Sara Chieffo, vice president of government affairs, League of Conservation Voters

 

The Tragedy of the Commons Writ Large

Maybe planet-wrecking behavior is generic to technology, or so says astrophysicist Adam Frank, as reported in Popular Science. The venerable publication cites an article in a more obscure journal, Astrobiology, and notes, “A generic feature of any planet evolving a species that intensively harvests resources for the development of a technological civilization” is what biologists, geologists, and anthropologists call the Anthropocene, the era in which Earth’s environment has been shaped by humans.

“Frank borrowed from population ecology to devise models that represent the relationship between a civilization and its planet, using mathematical equations similar to those used by anthropologists to represent the rise and fall of ancient civilizations, like the one on Easter Island.” The result? “When you get advanced enough, and start consuming resources and energy at a fast enough clip you necessarily start to change your home planet on a global scale.”

Frank says that because of feedback loops that allow civilizations to respond to environmental stressors, dystopia isn’t the necessary result. Disturbingly, however, it’s the immutable outcome in three out of four scenarios. He labels the three bad results on graphs showing the declines as either a gradual die off, a brutal collapse without resource change, and a still severe collapse with resource change. In other words, if humanity does nothing, we all die, either in a cataclysm or slowly. But even if we do alter course, chances are the collapse still occurs.

The fourth outcome is sustainability. Strangely, the popular magazine doesn’t define what that means or how to get there, which makes sense because The Environmental Forum has also puzzled over sustainability. It would appear that humanity needs to recognize its resource constraints, but faster and more aggressively than in the outcome in which constraints are recognized but there is still a collapse.

But let’s not fault Popular Science here for not describing sustainability. Gro Brundtland laid down the challenge to humanity in 1987’s Our Common Future. Her definition suffers from tautology, however: sustainability is living such that you do not deprive succeeding generations of the resources they will need. Maybe surviving means we sustain the means of survival.

Right now we are using resources at a rate equivalent to two planet Earths, so we are outside Brundtland’s boundary. That is a challenge to environmental professionals, who are in the best position to inform policymakers and the public about defining sustainability and how to get there.

Christie Manning is an assistant professor of environmental studies and psychology at Macalester College whose field encompasses “how people respond to information about climate change.” She says, “If you want to encourage action, fear is often counterproductive.” Further, it “narrows our thinking and makes us less willing to work with those who are different.”

Blaming Workers "Very" Poor Policy