Selected category: Energy

3 Keys for the American Petroleum Institute’s New Climate Task Force

AdobeStock_56840116By Ben Ratner, Director, EDF's Corporate Partnerships Program

The climate change discussion is percolating even in surprising places. The latest sign: the American Petroleum Institute’s recent formation of an internal task force on climate change. Reportedly the new task force’s mandate is to revisit API’s approach to this crucial issue, going into an election year and with ever greater scrutiny on fossil fuels.

It is too soon to know whether the task force will rubber stamp a business-as-usual approach defined by glossing over climate concerns and attacking policy measures, or chart a new path instead.

But if the task force is serious about a fresh look at the issue, here are three keys for the task force to consider as it ponders the future of API on climate.

Face the Facts

The oil and gas industry must be responsive to growing pressures from its investors, corporate customers, and Americans affected by oil and gas operations – from local pollution to climate change.

The historic global climate agreement reached in Paris, supported by nearly 200 countries including powerhouses like the United States and China, was also supported by a wide cross-section of American businesses – including PG&E, which as a natural gas distribution company and power generator is a user of API members’ products and a face to climate-conscious consumers.

Last April, over 400 investors representing more than $24 trillion in assets under management urged stronger leadership and more ambitious policies to lessen risk to investment and retirement savings of millions of Americans. Since then, the 2016 investor shareholder resolution season yielded a record breaking number of resolutions – 94 – addressing climate change, many levied as challenges to large oil companies.

And American public concern on global warming is reaching an eight year high, with nearly two-thirds of adults saying they worry about global warming a “great deal” or “a fair amount”, according to Gallup.

Facing all the facts, not cherry-picking them, can ground the task force’s work in today’s dynamic environment and enable an effective response in a changing world.

Solve Methane

While understanding and concern on the methane challenge has snowballed, API’s response has severely lagged.

But it doesn’t have to.

The methane emissions from the U.S. oil and natural gas industry account for the climate damage over a 20-year timeframe equivalent to roughly 240 coal fired power plants. And yet, when the Environmental Protection Agency issued rules earlier this year requiring operators to implement basic safeguards to detect and prevent emissions, API’s public response was to decry new environmental rules as “unreasonable and burdensome”.

Months prior, API’s combative regulatory filing questioned the authority of EPA even to regulate methane emissions, resisted twice-a-year inspections for accidental leaks and urged inspection exemptions that ignore insights on leak unpredictability.

The next round of methane rules is around the corner, and better late than never for API to embrace the United States’ goal of a 45% reduction in methane emissions from the oil and gas sector and to support effective national methane rules grounded in science and economics. Supporting a level playing field to address the invisible but undeniable methane problem would increase investor confidence and keep more product in the pipelines working for the economy, not against the climate. And it just might help build public trust in an industry that according to Edelman lags only the pharmaceutical and financial services industries in that category.

Truth be told, new regulations and compliance are not cost-free, but neither are exploration and drilling. Investing in effective rules will provide climate and environmental safeguards – a needed advancement responsive to legitimate pressure that is only rising.

Support Carbon Pricing

Implementing a market based approach to reducing greenhouse gas emissions is widely thought to be the ultimate key to achieving U.S. climate goals including cutting emissions 80% by 2050. Geographies from northeastern states and California to South Africa and the EU have implemented various forms of carbon pricing. A number of mostly European API members have publicly supported pricing carbon, for example BP recognizing “that carbon pricing by governments is the most comprehensive and economically efficient policy to limit greenhouse gas emissions.”

And yet, some prominent API members have to date withheld support for carbon pricing, or provided lukewarm quasi-endorsements but not lobbying muscle.

The oil and gas industry has survived through evolving, and it’s time to evolve on carbon pricing. An economically rational policy can provide the investment clarity companies want, while delivering the greenhouse gas reductions that societies, supply chains, and ecosystems need.

API is a large organization with diverse views represented, and the climate task force’s job won’t be easy. But the time for change couldn’t be better.

This post first appeared on the EDF + Business Blog

Also posted in Economics, Greenhouse Gas Emissions, Jobs| 1 Response

The Bar for Corporate Leadership on Climate Has Been Raised

As the legal briefings pile up over the Clean Power Plan (CPP), I’m inspired by the growing number of companies and business organizations standing up for the most significant step in U.S. history toward reducing climate pollution.

The bar continues to rise for companies that want to lead on sustainability, and it’s great to see companies aligning their corporate sustainability strategy and policy advocacy. Today’s corporate-led amicus briefs in support of the Clean Power Plan and smart climate policy are the latest example.

IKEA, Mars, Blue Cross Blue Shield MA and Adobe (collectively called Amici Companies) praised the EPA’s Clean Power Plan as a viable solution that will create market certainty and directly benefit their organizations. “It is important to the Amici Companies that they reduce their carbon footprints by procuring their electricity from zero- and low-emitting greenhouse gas (GHG) sources, not only to be good stewards of the environment, but to also because it preserves their economic interests.”

Tech industry leaders Google, Apple, Amazon and Microsoft (collectively called Tech Amici) also threw their weight behind the plan, saying, “delaying action on climate change will be costly in economic and human terms, while accelerating the transition to a low-carbon economy will produce multiple benefits with regard to sustainable economic growth, public health, resilience to natural disasters, and the health of the global environment.”

These leading companies represent half a trillion dollars in revenue, demonstrating robust business sector support for the Clean Power Plan. Their filings continue the important momentum started in July 2015 by 365 companies and investors that sent letters to governors across the U.S. stating their support as being “firmly grounded in economic reality.”

Dynamic power sector voices are supporting the rule as well. Three advanced energy associations, representing a $200 billion industry, have stepped up to intervene in defending the Clean Power Plan. Numerous major power companies are also defending the rule in court: Just today, Dominion Resources filed a brief endorsing the Plan's "flexible, accommodating" approach.

In fact, leading companies argue that inaction on climate will “subject companies to unacceptable risks” — risks that force businesses to bear economic and social disruptions to their operations due to the uncertainty of future energy resources. Companies who support the Clean Power Plan are major energy consumers and purchasers; planning for future energy resourcing is critical to their long-term business strategy.

Sixty percent of the largest U.S. businesses have established public sustainability and clean energy goals. That’s fantastic, but literally billions of kilowatt hours are still needed to meet renewable energy goals. Companies no longer want to rely on unstable fossil fuels. They are looking to the Clean Power Plan to spur investment and increase reliability, energy efficiency and low-cost clean energy options. Kudos to the industry leaders that are standing up to outdated views and the false choice between business and the environment.  Real corporate sustainability leadership takes courage and a willingness to support the smart policy changes required to preserve the natural systems that people and the planet rely on.

I’m looking forward to seeing more businesses follow their lead.

This post originally appeared on our EDF+Business blog.

Also posted in Clean Air Act, Clean Power Plan, EPA litgation, Policy| Comments are closed

The Supreme Court Decides in Favor of a Critical Clean Energy Resource: Demand Response

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Supreme Court of the United States of America

Today, the Supreme Court issued an important decision in support of a vital clean energy resource: demand response. The case, FERC v. EPSA, revolves around demand response, a resource that helps keep prices low and the lights on, all while being environmentally friendly.

It’s a significant victory for anyone in favor of a cleaner, cheaper, accessible, and more reliable grid. That describes a diverse group — consumer advocates, environmentalists, economists, states, grid operators, and leading legal scholars all filed in support of a critically important and well-designed policy creating access for demand response in wholesale energy markets.

How Demand Response Works

The incredible support for demand response exists because of how the resource works. Demand response reduces energy demand when power is needed most, rather than increasing supply from costly, carbon–emitting fuels. It relies on people and technology, not power plants, to affordably meet our country’s rising electricity needs. Think of it like crowd-sourced energy reductions, helping to reduce costs for everyone by taking the place of very expensive generation.

The Supreme Court Case

The Federal Energy Regulatory Commission (FERC) is the federal agency responsible for keeping our electricity rates “just and reasonable” (that is, fairly priced). FERC created Order 745 to further that goal, with the Order giving demand response access and equal footing in wholesale energy markets, where electricity is bought and sold. It levels the playing field between demand response and traditional sources of electricity, letting the resource compete alongside others.

And demand response has done more than compete – it’s reduced our use of unneeded, costly electricity – the exact type of electricity that should be limited if one wants “just and reasonable” rates.

In a strong, 6-2 decision written by Justice Kagan and joined by Chief Justice Roberts and Justices Kennedy, Ginsburg, Sotomayor, and Breyer, the Supreme Court ruled in favor of FERC, stating that “[w]e will not read [FERC’s authority], against its clear terms, to halt a practice that so evidently enables the Commission to fulfill its statutory duties of holding down prices and enhancing reliability in the wholesale energy market.”

Continuing Demand Response Benefits

The Supreme Court’s decision ensures that demand response will keep providing important benefits — and these benefits are numerous. For example, demand response saved customers $11.8 billion in the mid-Atlantic region of the United States in 2013 alone. It likewise helped avoid blackouts during the polar vortex in 2014. And it gives customers the choice and opportunity to save money – for the grid and themselves – by taking part in demand response programs. All this, while being environmentally friendly and carbon reducing.

Also posted in News| Comments are closed

These three states have a head start on the Clean Power Plan. You'd never guess who they are

This solar energy plant in Nevada can power 75,000 homes during peak demand and will generate $73 million in tax revenues over 20 years. Source: Solar Reserve.

Everyone in Colorado skis, all Oklahomans can rope a calf, and native New Jerseyans like me all talk like Pauly D did on Jersey Shore. Right?

You may also stereotype when it comes to clean energy: Progressive states such as California are pumping out clean, renewable energy while others insist on clinging to old, dirty power plants. Well, it’s more complicated than that.

California, which has a market-based system for cutting carbon pollution, does lead the country. But a number of states, including notably Nevada, Texas and North Carolina, are also making great progress on clean energy – which may surprise some.

Their success is evidence that the supposed divide on clean power may be more about politics than economics and opportunities on the ground.

And that bodes well for the federal Clean Power Plan’s goal of reducing emissions from America’s power plants. Because if Texas is well-positioned to comply, why couldn’t other states do the same?

Energy policies that boost state economies

Texas, home of Big Oil, big hats, and JR Ewing, actually has more energy potential from resources sweeping over its prairies – in the form of wind and sunshine – than from those flowing underneath them. The state leads the nation in wind power and combined heat and power, and has the potential to generate more solar power than any other state.

If energy efficiency used by Austin Energy were extended across the state, it would reduce peak electricity growth by 40 percent, while keeping Texans as high-powered as ever.

Nevada, meanwhile, has also been smart about exploiting its huge solar energy potential. The state’s current renewable energy standard requires utilities to generate 25 percent of its power from renewable resources by 2025, with 6 percent coming from solar energy by 2016.

With more than 250 days of sunshine a year and abundant wind and geothermal energy potential, this goal is well within reach. Nevada’s forward-thinking energy policies and commitment to clean energy are part of the reason Tesla chose it as the location of its multi-billion dollar gigafactory to produce batteries for electric cars.

Finally, in North Carolina, tax credits and a modest renewable energy portfolio standard created opportunities to build a strong clean energy industry.

North Carolina is now one of the top four states in installed solar capacity and second behind California in large, utility-scale solar projects. Clean energy added nearly $5 billion to the state’s economy last year, and today provides nearly 23,000 jobs.

Earlier this year, tech giants like Google, Apple and Facebook told lawmakers that state policies “made North Carolina particularly attractive to [their] businesses.” Retail giants Walmart and North Carolina-based Lowe’s Home Improvement told lawmakers they want more choice and competition when it comes to energy.

North Carolina’s burgeoning clean energy economy suffered a set-back this year, however, when state lawmakers chose not to extend the tax credit – proving that state legislators are not required to take the Hippocratic Oath.

Back-track or invest in the future?

All this will make a big difference when it comes to implementing the Environmental Protection Agency’s Clean Power Plan, which gives each state a target and flexibility for cutting climate pollution.

As much as some leaders in the Lone Star State and elsewhere complain and sue over this rule, they are actually well on their way to meeting their goals under the plan. If state governments would only take advantage of the natural opportunities they have – be more like Nevada and less like the recent back-tracking in North Carolina – they’d be in great shape.

We need to protect ourselves from the trillions in potential damage that Citibank and others say we’d face from unchecked climate change, so the world is moving toward clean energy. Wouldn’t it be better if state political leaders, who have so much to gain and such an achievable path forward, put their efforts in to creating that future rather than clinging to the past?

Forward-looking leaders do, because stereotypes aside, it ultimately comes down to good economics.

This post originally appeared on our EDF+Voices blog.

Also posted in Clean Power Plan, Greenhouse Gas Emissions| Comments are closed

China's underestimated carbon emissions: What does it mean for climate action?

By Dan Dudek

The New York Times revealed in a Nov. 4 article that China has been burning as much as 17 percent more coal annually than previously thought, citing new Chinese government data.

It was sobering news to all of us who are working to reduce China’s dependency on fossil fuels, but not necessarily a verdict on the country’s – or the world’s – prospects going forward.

It’s important to note, first of all, that China’s revised coal consumption numbers have not changed scientists’ estimates of global carbon dioxide levels in the air. Unlike national emissions data, which is based on fuel consumption statistics, global levels are measured directly.

So what do we make of the news that China, the world’s largest greenhouse gas emitter, has been underestimating coal use since 2000?

China needs good data, and knows it

Significantly higher emissions in any country increase the urgency and difficulty of avoiding the worst impacts of climate change – and this is especially true for an economy the size of China’s. However, it is significant that this story was prompted by the Chinese government reporting its own data corrections, and not by an external watchdog.

China has acknowledged the challenges it faces trying to develop robust emissions estimates, and the new numbers, though troubling, are a sign that the country is making progress in this regard.

This is important not just for the international climate negotiations that kick off in Paris later this month, but also for China’s long-term strategy.

China has made it a priority to upgrade its baseline inventory emissions data, especially for sources that might be included in its national emissions trading system. Good baseline data is a prerequisite to the effective carbon trading and reduction program Environmental Defense Fund has been working toward for 25 years.

Needed now: Deeper emissions cuts 

It’s also important to note that while the emission data was revised, China’s growth in coal consumption has actually been declining, a trend that remains unchanged and will likely continue.

The government has recently targeted 6.5 percent economic growth as the official target for the next five years, down from the recent 7- percent rate. Slower growth, air quality concerns, new requirements to invest in renewables and energy efficiency, and the international commitments to peak emissions and introduce a carbon market will all put continued downward pressure on coal.

China’s data correction does not change our basic understanding of what it will take to reach the crucial turning point where global emissions finally level off and begin to decline.

We have long known that much deeper reductions will be required to get us there. The Paris commitments are shaping up to be a major milestone on that road, but won’t by themselves get us where we need to go.

For China, the solution remains a national carbon market that creates the incentives to  lower emissions as efficiently as possible. China remains committed to launching the market  in 2017.

For all of us who understand the urgency of global climate change, The New York Times story is a reminder that there is still a great deal of work still to be done – in China and beyond.

Image source: Flickr/Nicolò Lazzati 

This post originally appeared on our EDF Voices blog.

Also posted in Greenhouse Gas Emissions, International| Read 1 Response

Polluters are Making the Same Old “Sky is Falling” Claims about the Clean Power Plan

The ink wasn’t even dry on the Clean Power Plan before some power companies filed lawsuits to challenge these historic public health protections.

One of their key complaints? How much the Clean Power Plan is allegedly going to cost.

In their court filing, these companies claimed that they’ll potentially need to spend “billions of dollars” to comply.

Click to expand infographic

This tactic is nothing new, and it’s something we often hear when the U.S. Environmental Protection Agency (EPA) issues a new regulation that will provide cleaner, healthier air for our communities and families.

But it’s almost always wrong.

In defiance of the “sky is falling” predictions, American industry innovates and figures out ways to comply with new, healthier standards at a fraction of the costs initially projected.

This is exactly what occurred with EPA’s life-saving Mercury and Air Toxics Standards, which are providing crucial reductions of toxic air pollutants including mercury, hydrochloric acid and arsenic from our nation’s power plants.

After EPA proposed the Mercury and Air Toxics Standards in 2011, FirstEnergy told its investors that it expected to spend between $2 billion and $3 billion dollars to comply with the clean air standards.

A little later that same year, FirstEnergy cut its estimate roughly in half — to between $1.3 billion and $1.7 billion.

Fast forward to February 2015 (just two months before the initial deadline to comply with the Mercury and Air Toxics Standards), and FirstEnergy announced that it would spend $370 million on compliance.

In other words, its highest initial cost estimate was more than eight times higher than its actual costs.

Similarly, AEP’s highest initial cost estimate for compliance with the Mercury and Air Toxics Standards was as much as two times higher than its later assessment of actual compliance costs.

These two companies are just a few of the power companies that have decreased their cost estimates for complying with the Mercury and Air Toxics Standards, and other public health and environmental standards, in recent years.

The tens of billions of dollars in expected health benefits from the Mercury and Air Toxics Standards has not decreased, though.

It will save thousands of lives every year, prevent heart attacks and asthma attacks, and help protect the hundreds of thousands of babies born in America every year who are exposed to unsafe levels of mercury in the womb.

It’s important that we keep in mind these misguided “sky is falling” claims about environmental compliance costs as EPA carries out its responsibilities under the nation’s clean air laws to address climate pollution from power plants.

The time tested history of the Clean Air Act is quite the opposite of the “sky is falling” – the sky is clearing, and at far less than the costs predicted by industry.

Also posted in Clean Power Plan, Greenhouse Gas Emissions, Policy, Setting the Facts Straight| Comments are closed
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