Daily on Energy: How Democrats gave Virginia’s biggest utility no choice but to commit to 100% clean energy

“It’s a matter of, we are going to get there, and you can either be part of the conversation on how to get there or not,” Jennifer McClellan, a Virginia state senator representing the Richmond area who was the lead sponsor of the state’s recently passed 100% carbon-free electricity legislation.

McClellan, in an interview with Josh, explained how Virginia this month became the first state in the south to target 100% clean power, after the Virginia House and Senate passed the Virginia Clean Economy Act, with the support of only two Republicans, one in each chamber.

Just a month earlier, Dominion announced its own net-zero emissions by 2050 goal, a not-coincidental reversal from the utility’s previous position that such a target was unattainable.

Dominion’s change in posture: As recently as June 2019, Dominion CEO Thomas Farrell told Josh: “It would be easy for me sitting in 2019 to say we are going to be 100% by 2050. But we don’t do things that way at our company. I don’t see a path with today’s technologies to 100%.”

Farrell added that Dominion would continue to use natural gas to produce electricity for
“years and years to come,” and said 100% clean power wouldn’t be possible without advancements in long-duration energy storage — which would enable greater use of wind and solar — carbon capture for coal and gas plants, and advanced nuclear reactors.

“Dominion’s initial goals were not ambitious enough,” McClellan said.

The new path: Now, under the Virginia law, Dominion must get 100% carbon-free electricity by 2045.

It allows for renewables and nuclear to meet the 100% clean electricity target, and keeps open the potential for carbon capture if Dominion can get approval on a proposal for a CCS plant from state regulators.

Otherwise all fossil fuel plants, including gas, run by Dominion must shutter by 2045.

McClellan said Dominion was convinced to change course after she and other Virginia policymakers, along with a coalition of environmental and clean energy groups led by Advanced Energy Economy, presented a study showing 100% clean power was possible. The study showed that boosting energy efficiency targets and allowing third-party providers to provide wind and solar, injecting competition to utilities, were crucial factors in the bill that could enable 100% clean power.

McClellan acknowledges the new law does not require getting to zero gas “overnight,” but rather intends to phase it out with periodic check-in targets to measure progress. If the targets prove to be unreachable, Virginia’s utility regulator, the state corporation commission, can work with legislators to adjust.

“Dominion will continue to produce gas, but in lesser amounts,” McClellan said. “We really use market incentives to make it less desirable for Dominion to want to put a new gas plant in place.”

Aaron Ruby, who manages gas communications for Dominion, recently told Abby that natural gas will play “an essential role” in helping the utility achieve net-zero.

Dominion is investing in so-called renewable natural gas, using captured methane and biomass from agricultural production.

McClellan insists the new law’s goals are “achievable” and she’s convinced Dominion will get there, because there is a political mandate to do so.

“What I heard on the campaign trail in 2019 across Virginia, especially among young people, was a very strong desire to move away from fossil fuels all together,” she said.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Josh Siegel (@SiegelScribe) and Abby Smith (@AbbySmithDC). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.

DOE MAKES MOVES ON TRUMP’S SPR ORDER: The Energy Department took the first step Thursday to fulfill President Trump’s order to buy low-priced crude oil to restock the nation’s emergency Strategic Petroleum Reserve. DOE announced a solicitation for purchase of an initial 30 million barrels, with the intent to eventually buy 77 million barrels, the full amount of open capacity in the SPR.

Energy Secretary Dan Brouillette said the agency will focus on buying sweet and sour crude from small to midsize U.S. oil producers that are “facing potentially catastrophic losses” from the coronavirus and “the intentional disruption to world oil markets by foreign actors.” DOE said the SPR can be filled at a rate of up to 685,000 barrels per day. Sellers must be U.S.-based and employ fewer than 5,000 people.

DOE also acknowledged it will need funding from Congress to fulfill Trump’s SPR order.

Treasury Secretary Steven Mnuchin told Fox Business on Thursday that he will recommend Trump ask Congress for as much as $20 billion to keep the SPR full for a decade as part of a stimulus package responding to the coronavirus. (That number seems totally outlandish and way more than the $2 billion — depending on the prevailing oil price at the time — required for fully restocking the SPR based on current capacity).

GOP House Leader Kevin McCarthy later tweeted, “Congress will act to provide money soon.”

A NEW OIL EMBARGO? One Republican senator has a new idea to help domestic shale producers and to show the U.S. “won’t be bullied” by Saudi Arabia and Russia: stop importing oil from them.

North Dakota Senator Kevin Cramer suggested the approach in a letter to Trump on Wednesday, saying the president should halt imports of oil from the two countries dueling over prices, as well as other OPEC nations like Iraq. His letter is a sign that pressure from oil state Republicans isn’t likely to subside as producers in their states suffer from cheap prices and falling demand due to the coronavirus outbreak.

Cramer’s letter also came the same day he and Alaska Senator Dan Sullivan led a call with several Republican colleagues and the Saudi ambassador to the U.S. to discuss the oil markets. More in Abby’s story from yesterday.

NAM ASKS FOR $1.4 TRILLION BAILOUT: The National Association of Manufacturers, a trade group that includes energy companies like Exxon Mobil, is joining the limbo line of business interests asking Congress for a bailout to manage the economic harm from the coronavirus.

NAM requested Wednesday that federal policymakers create a “Manufacturing Resiliency Fund” filled with $1.4 trillion in loans to provide “desperately needed” liquidity to manufacturers and small businesses.

The group also called on the government to adopt a federal designation that deems the manufacturing supply chain “essential” to help mitigate potential delivery disruptions.

NAM is unpopular among environmental groups and Democrats for its long-time opposition to federal government action to combat climate change. The group has recently shifted its rhetoric in support of “innovation” funding to address climate change, but it still opposes carbon taxes despite some of its largest members (Exxon included) supporting it.

DON’T FORGET RENEWABLES: The clean energy industry is also asking Congress for some emergency measures to ensure the coronavirus doesn’t harm their ability to take advantage of federal tax credits.

In a letter to top lawmakers in both chambers Thursday, a coalition of renewable energy trade groups asked Congress to extend the beginning construction and safe harbor deadlines companies must meet to qualify for the federal incentives. Those deadline extensions are especially important as renewable energy companies face supply chain disruptions due to the coronavirus pandemic.

The industry and House Democrats are also pushing for extensions of the overall wind, solar, and other clean energy tax credits in any broader, long-term economic stimulus package Congress may consider. More in Abby’s story from this morning.

CORONAVIRUS PANDEMIC HITS FEDERAL AGENCIES: The EPA, in a note to employees Sunday, said a staffer at the agency’s regional office in Montana had tested “presumed positive” for COVID-19, the Hill reported Wednesday. Employees on the same floor as the staffer have been asked to self-quarantine, and staffers in the Montana office are able to telework voluntarily through April 3, an EPA spokesperson told The Hill.

According to Politico, three additional EPA workers, in the agency’s Chicago office, could have been exposed to the coronavirus, too, and one of those staffers has fallen ill, though it isn’t clear if they’ve been tested.

An Energy Department staffer, who works in the Washington headquarters, has also tested positive for COVID-19, Politico reported, adding the department will deep-clean the staffer’s office and surroundings.

PJM SATISFIES CLEAN ENERGY CONCERNS OVER FERC ORDER TARGETING SUBSIDIES: PJM, the country’s largest grid operator, issued a plan Wednesday to implement FERC’s recent proposed order imposing a price floor to combat below-cost bids from state subsidized renewable and nuclear.

The grid operator had expressed concerns that FERC’s order was too broadly applied and could result in some states that subsidize clean energy removing themselves from the PJM market.

PJM’s response to FERC, in the form of a so-called “compliance filing,” seemed to satisfy some concerns of clean energy groups that worried the order would encourage companies to build more gas and to keep online coal — by raising prices for state-subsidized renewables and nuclear.

PJM’s filing would allow projects to advocate for a lower price floor price on a case-by-case basis, and lower the overall floor price, Utility Dive reported.

“PJM’s proposal provides the flexibility necessary for renewable resources to demonstrate that they are among the lowest cost and most reliable sources of capacity available today,” said Amy Farrell, senior vice president of government and public affairs for the American Wind Energy Association.

NATIONAL PARKS ARE FREE ENTRY: But keep your social distance.

Interior Secretary David Bernhardt announced Wednesday the National Park Service would waive entrance fees for parks that remain open during the coronavirus outbreak, to allow Americans to enjoy the outdoors even as they’re encouraged to self-isolate. But the agency urged any visitors to keep their distance from each other and wash their hands frequently.

The Rundown

Wall Street Journal Overloaded storage facilities likely to mean even lower oil prices

Reuters Majors look to store jet fuel at sea as air travel is drastically curbed

Wall Street Journal US power use weakening after plunging in Italy amid coronavirus

New York Times He set up a big solar farm. His neighbors hated it.

Bloomberg Environment Virus could bite into environmental enforcement, ex-officials say

Pittsburgh Post-Gazette Shell to temporarily suspend construction at ethane cracker plant after days of pressure amid COVID-19

Calendar

FRIDAY | MARCH 20

House is out. Senate is considering coronavirus legislation.