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NEW PERMITTING REFORM LEGISLATION: Democratic Reps. Sean Casten and Mike Levin, co-chairs of the House Sustainable Energy and Environment Coalition, are out with a new permitting reform measure – likely the last legislative measure overhauling the permitting process to be introduced before the election year.
The bill, dubbed the Clean Electricity and Transmission Acceleration Act (CETA), aims to support the buildout of transmission lines connected to clean energy projects – a key piece of infrastructure that’s critical to the Biden administration’s goals of transitioning away from fossil fuels. However, the industry is facing a series of bottlenecks as it’s struggling to meet demand, with utilities and stakeholders wrestling on where to site lines and who will pay for them.
The measure adopts the language of various Democratic bills, and serves as a “consensus transmission and permitting reform bill of the House Democratic Caucus,” according to Casten.
“Last Congress, Democrats made the single largest investment in climate action in U.S. history,” Levin said. “Now, we must unlock its full potential by addressing the transmission permitting issues that are preventing us from bringing clean energy from where it’s generated to American households.”
What the bill does: By amending the Federal Power Act, the bill would direct the Federal Energy Regulatory Commission to create new rules on improving the interregional planning, siting, and deployment of transmission lines, and would grant FERC the exclusive authority to approve where the projects are placed. The measure also includes provisions to promote the development of renewables with a 30% transmission investment tax credit, and makes changes to improve how the grid is managed.
Other areas the bill touches on:
Renewable energy on public lands: CETA would establish a production goal for clean energy projects, and work to minimize disturbances from the projects for towns and the environment. The bill would also direct revenues to fund conservation efforts.
Offshore wind: The bill would reform the Outer Continental Shelf Lands Act – which establishes U.S. jurisdiction over the region – to further build out offshore wind, while creating a compensation fund for those that may be negatively impacted by the development of a project.
Community engagement: CETA would also aim to improve the community engagement process by requiring agencies to complete community impact statements assessing environmental and public health factors, mandating agencies engage with environmental justice and tribal communities, and requiring the consideration of cumulative impacts and greenhouse gases when conducting an environmental analysis under the National Environmental Policy Act. The bill also aims to increase the capacity to complete environmental reviews, and conduct community engagement at the state and local level and at FERC.
Dead in the House: The bill exclusively focuses on the permitting approval of transmission for clean energy – which is a non-starter for Republicans, who want streamlined permitting for fossil fuel projects as well. So, it’s safe to say that it stands a slim to none chance of passing the House as a standalone bill.
Reading the tea leaves (or rather, the jet fumes): Lawmakers are leaving town today for the holiday break, and once they get back in January, much attention will be paid to funding the government. Plus, it’s an election year, so the odds of comprehensive legislation getting passed into law in a divided Washington will plummet.
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MADURO AND ALI SHOWDOWN: Venezuelan President Nicolas Maduro and Guyanese President Irfaan Ali arrived this morning to Saint Vincent and the Grenadines for a sit-down aimed at deescalating the mounting tensions over the Essequibo, the 61,000-square-mile oil-rich territory controlled by Guyana.
The meeting is being held at the behest of Brazil and the Community of Latin American and Caribbean States and the trading bloc’s president pro tempore, Saint Vincent Prime Minister Ralph Gonsalves.
The hope is for the two countries to discuss areas of collaboration and allay fears that the dispute is going to spiral into outright conflict. But Maduro has continued to stake out bold new claims to the region, including ordering state-run oil companies to begin drilling, ordering existing project developers to halt operations, and vowing to deploy a special military unit to the region.
Asked ahead of the meeting if he would be willing to give up some land in the disputed territory, Ali responded, “Not a single inch.”
NERC WARNS U.S. GRIDS MORE VULNERABLE THAN PREVIOUSLY THOUGHT: The U.S. power grids are even more vulnerable to demand shortages and blackouts in the next 10 years than previously thought, the nation’s top grid monitor warned yesterday.
NERC said in its 2023 Long-Term Reliability Assessment that more than 83,000 MW of fossil fuel plants and nuclear generators are slated to be taken offline in the next five years, coupled with massive peak demand growth—leaving many parts of the country undersupplied.
The report also warned that while power demand is slated to grow by 10% in the next decade, power generation will grow by a much smaller 4% during that time.
What’s driving the problem? The faster-than-projected retirement of aging generators is a major factor. It has reduced baseload capacity in the U.S. at the same time that renewable resources, like commercial-scale wind and solar power projects, have struggled to come online fast enough to make up for the lost capacity.
Another factor is widespread electrification: The rising electrification is in part due to the broader consumer shift to EVs— which rely on power-intensive private and public charging infrastructure— as well as increases in demand from smelters, battery manufacturing facilities, and data centers.
The rise of electrification, coupled with fewer dispatchable resources like wind and solar, has made grid operators’ jobs much more complex.
“New environmental regulations and incentives are likely to drive even higher levels of retirements than what we’ve accounted for,” Mark Olson, the manager for NERC’s reliability assessments, told reporters yesterday. Read the report in full here.
TREASURY OUTLINES CLEAN ENERGY MANUFACTURING SUBSIDY RULES: The Treasury this morning posted proposed guidance for the 45X Advanced Manufacturing Production Credit created by the Inflation Reduction Act, spelling out the terms for credits meant to boost domestic production of solar panels, wind turbines, inverters, critical minerals, offshore wind boats, and more.
The size of the tax credits varies depending on what is being made – for example, it would be 10% of the sale price of an offshore wind vessel.
Unlike the clean vehicle subsidies terms set by the IRA, the 45X credits do not include restrictions on foreign entities of concern, raising the prospect that the benefits could flow to companies controlled by China. Deputy Treasury Secretary Wally Adeyemo said that the administration would review investments by companies with ties to China through the Committee on Foreign Investment in the United States, according to the New York Times. “Ultimately, for a company to get access to this credit, they have to be adding value here in the United States, hiring American workers and paying American taxes,” he said.
Still, Rep. Carol Miller of West Virginia, a Republican member of the Ways and Means Committee, said in a statement that the guidance would lead to $125 billion flowing to Chinese manufacturers. Miller, with Sen. Marco Rubio of Florida, has authored legislation to restrict 45X credits from China and other “adversaries.”
The proposal now goes to a 60-day public comment period.
Early support: Sen. Ron Wyden of Oregon said the guidance “provides the certainty businesses need to fully unleash and revolutionize job creating investments in American manufacturing for solar, wind, batteries, and critical minerals – which will add up to reduced emissions and a stronger U.S. economy.”
Jason Walsh, the executive director of the labor and environmental group BlueGreen Alliance, said that, with the tax credit, the cost of domestically produced clean energy parts “will fall below the price of imports.”
Solar Energy Industries Association head Abigail Ross Hopper also praised the guidance, saying it provides “important clarity” for manufacturers.
WALL STREET GOES BACKWARD ON ENERGY TRANSITION METRIC: Major banks lost ground last year in a metric for climate finance developed by BloombergNEF.
The group says that the ratio of spending on clean energy infrastructure relative to fossil fuels must reach 4-to-1 by the end of this decade. From 2021 to 2022, though, the ratio slipped from 0.75-to-1 to 0.73-to-1.
Trina White, a sustainable-finance analyst for the group, told Bloomberg that “neither real-economy investment nor bank financing are anywhere close to the immediate and rapid scale-up in low-carbon capital flows and phase-down of fossil fuels that we need to see.” Read more from Bloomberg here.
The Rundown
Wall Street Journal The sea-monster-sized ship disrupting Biden’s wind-energy dreams
Financial Times How the COP28 deal was won but the battle for 1.5C may be lost
E&E News How a DOE loan guarantee put Sunnova in Republican crosshairs
