Climate 411

DOE has a big opportunity to decarbonize industry. Here’s how it can leverage a new program.

By Sonali Deshpande / Published: December 20, 2022
Factory with pollution

Photo Credit: Canva

This blog is the second of a series of analyses being developed by a coalition of NGOs engaged in decarbonization of the U.S. industrial sector. It focuses on investment priorities for $5.8 billion in funding for industrial decarbonization in the Advanced Industrial Facilities Deployment Program (AIFDP), passed by Congress as part of the Inflation Reduction Act. We and our partners will continue to update our blogs to references one another’s work. See the recent posts by ITIF, and NRDC+RMI.

The Inflation Reduction Act made a historic down payment on climate and clean energy progress across the economy, including new investments that take aim at a notoriously tough-to-decarbonize sector: industry. A key provision in this law is the $5.8 billion Advanced Industrial Facilities Deployment Program (AIFDP), which is intended to support early-stage demonstrations of technologies and processes that could cut emissions in the industrial sector. The Department of Energy now has the opportunity to design this program to maximize breakthroughs in technologies and benefit communities.

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Also posted in Innovation, Policy / Comments are closed

Strategies and Principles to Decarbonize Your Local Gas Utility

By Michael Colvin / Published: December 20, 2022
Natural gas pipelines

Photo Credit: Canva

This blog was co-authored by Jolette Westbrook, Director and Senior Attorney, Equitable Regulatory Solutions.

“What will it take to decarbonize the gas distribution system?” That was the key question that a group of stakeholders from the non-profit and utility sectors across the United States tried to answer over the last year. There are many changes required to decarbonize a system that is currently designed around the transport and distribution of a fossil fuel. So how do we do it?

In the first convening of its kind at a national scale, these stakeholders produced a new report setting out guiding principles and strategies to inform decarbonization of the gas utility and corresponding end uses. Despite uncertainties about particular technologies, fuels, and customer adoption, all of the roundtable stakeholders share the belief that urgent action is necessary. The report provides key considerations for policymakers and regulators on how to navigate this transition that will guide future utility investment and decision-making toward economy-wide decarbonization.

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Also posted in California, Carbon Markets, Cities and states, Clean Power Plan, Greenhouse Gas Emissions, Policy / Comments are closed

Growing the California Grid

By Michael Colvin / Published: October 12, 2022

Photo of a solar farm with a city skyline in the background

California’s electric grid is amongst the cleanest in the country, and it’s getting even cleaner. The state recently cemented our clean energy policy leadership by requiring 90% zero-carbon electricity sales by 2035, and 95% by 2040. Given the long-lived nature of energy infrastructure, these dates are not some far off future problem — the first of these milestones is just around the corner.

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Also posted in California, Cities and states, Policy / Comments are closed

Top 10 Wins for the 2022 California Legislative Session

By Katelyn Roedner Sutter / Published: October 4, 2022

Photo of the California Capitol Building

In the intense August heat of Sacramento, the California Legislature wrapped another year of policymaking. The second year of the 2021-2022 legislative session included some significant wins on long-term climate ambition, environmental justice, and clean transportation investments, even as the state fell short in drought response and near-term climate goals. These achievements, coupled with the new game-changing federal climate law, will allow the Golden State to supercharge clean economic growth, drive down climate pollution, and support healthier and more resilient communities.

Here are the top 10 wins (and a few losses) from this year’s legislative session, starting with Governor Gavin Newsom’s climate priorities that were released in August. Four out of those five priorities made it across the finish line:

1. The California Climate Crisis Act

With the passage of this bill (AB 1279, Muratsuchi), California has locked in a pathway for it to reach net-zero greenhouse gas emissions no later than 2045. This enables the legislature, communities and businesses to start long-term planning, with certainty, for a safer future today. Critically, this bill also requires California to slash emissions by 85% — ensuring the state uses solutions at our fingertips now to sharply cut pollution from industrial facilities, vehicles, power plants and more, even as the state starts to build out necessary carbon removal strategies.

2. A framework for carbon capture with community protections

Carbon capture is likely to be a key part of the suite of climate solutions. But solutions meant to reduce emissions should not harm local air quality or public health, especially in communities historically overburdened by pollution. With the passage of SB 905 (Caballero & Skinner), the California legislature has taken a significant step toward responsible deployment of carbon capture technology with a framework that includes essential community protections and environmental integrity provisions.

3. Health and safety setbacks around oil wells

Governor Newsom directed the California Geologic Energy Management Division to establish a regulation to create a public health and safety setback around oil wells in 2021, and with this legislation (SB 1137, Gonzalez & Limon), the policy is now enshrined in law. This long-overdue protection aims to reduce oil and gas pollution harming communities of color and people living below the poverty line, who disproportionately bear the brunt of these health impacts. Thanks to tireless advocacy from California’s environmental justice organizations, state leaders have finally taken decisive action to protect public health.

4. Pathway to 100% zero-carbon electricity by 2045

California has an existing goal to achieve 100% renewable or zero-carbon electricity by 2045. This session, the state has codified interim targets (SB 1020, Laird) to ensure we are moving swiftly and consistently on a path toward a fully clean electricity sector on the timeline the climate demands. The bill sets targets for California to achieve 90% renewable or zero-carbon electricity by 2035 and 95% by 2040 while on the way to the existing 2045 goal.

Legislators also delivered important wins above and beyond the Governor’s climate package:

5. Major investments in zero-emission cars and trucks

Breathe a little easier: The state is making big investments in zero-emission vehicles (ZEVs), just as the federal government is doing through the Inflation Reduction Act. Gov. Newsom, the legislature and clean transportation advocates did an amazing job at securing $10 billion of ZEV funding. This includes money for both cars and medium- and heavy-duty trucks, with an eye towards public health and equity. In 2021, EDF worked with Senator Leyva to pass SB 372, which enabled CARB to offer innovative ZEV financing, but it needed amendments to enable CARB to work with a greater number of experts, and those amendments were finalized in 2022. We expect this legislation to have a growing impact on truck financing over the next few years.

6. Support for community solar and storage

This bill (AB 2316, Ward) allows any customer to receive benefits from community-based clean energy facilities regardless of whether they own a home, empowering customers to save on their energy bills, invest directly in their local community, and help fight climate change. The bill requires community solar projects to include energy storage, which creates a clean power reserve when the sun sets. That ability to store power will also help every Californian by improving the resiliency of our power grid and reducing the risk of blackouts. Moreover, this combination of solar and storage will reduce California’s reliance on old and dirty power plants.

7. Cleaning up the backlog of essential electricity transmission projects

The state passed a suite of major transmission reform bills to help make the California electric grid both cleaner and more reliable. The state continues to face a major backlog and certain smart reforms were enacted, including two key bills (SB 887, Becker) (SB 1174, Hertzberg) that will make new transmission come online in a responsible and more timely manner.

8. Achieving net-zero greenhouse gas emissions from state agency operations

While California’s leaders codified an economy-wide net-zero goal, the legislature also directed our state government agencies to start planning for how to achieve net-zero greenhouse gas emissions by 2035 — or as soon as possible thereafter — from their own operations. This means decarbonizing state buildings and transitioning state vehicle fleets to ZEVs and more. This planning goal in Senator Becker’s SB 1203 is a full ten years ahead of the economy-wide goal, meaning the government of California itself is going to help forge the path to a decarbonized economy.

9. $40 million for the Multi-Benefit Land Repurposing Program

With California’s ongoing drought, some agricultural land will necessarily have to go out of production, which could have an array of impacts if not managed strategically. Funding from the Multi-Benefit Land Repurposing Program at the Department of Conservation helps growers and communities an opportunity to repurpose these lands into new beneficial uses that require little to no water, including creation and restoration of habitat, multi-benefit groundwater recharge and low-impact solar. Importantly, benefits to disadvantaged communities are prioritized. While the $40 million investment is far short of the $500 million proposed by the Senate, which was supported by EDF and our allies, we are confident the significant demand for this program (as evidenced by the $111 million in requests in the first round of grant applications for which there was only $50M available) and the myriad benefits it provides growers and communities will support greater investment in the next year.

10. Expanding the universe of support for zero-emission trucks

Gov. Newsom also recently signed bills that include extending sales tax exemptions for transit buses (AB 2622, Mullin), creating of a ZEV Market Development Office and a ZEV Equity Advocate (SB 1251, Gonzalez), accelerating deployment of ZEVs in the state fleet (SB 1010, Skinner), extending the Carl Moyer funding program (AB 2836, Garcia) and providing continued support for good quality infrastructure reliability for ZEVs (AB 2061, Ting).

While the $10 billion zero-emission budget and each of these transportation bills is important in their own right, they contribute to the universe of support for the Air Resource Board giving direction for a strong Advanced Clean Fleets (ACF) rule in October, and will collectively greatly reduce air and climate pollution while the ACF saves California billions of dollars. Zero-emission trucks truly are a win-win.

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While this was a big year for meaningful environmental action in California, a few key proposals fell short, including the last bill in the Governor’s climate package (AB 2133, Quirk). This bill accelerated California’s 2030 economy-wide greenhouse gas reduction goal from 40% below the 1990 level to 55%. This would have catalyzed an important increase in near-term ambition — which is key for averting the worst impacts of climate change — but fell just short of the needed votes in the Assembly.

Passing this essential legislation is a big step forward, but now California needs to implement these measures swiftly to reduce emissions, increase resilience and ensure equitable outcomes, especially for those communities at greatest risk of climate change. With the adoption of these measures, California continues to provide a leading model for action for other states.

Also posted in California, Cars and Pollution, Cities and states, Policy / Comments are closed

The ambition-raising opportunity of reducing methane emissions

By Alice Alpert / Published: September 21, 2022

This blog was authored by Alice Alpert, Senior Climate Scientist at EDF.

Evening silhouette of oilfield pipeline. Source: Getty Images

Meaningful methane emission reductions are not only possible—such efforts can potentially have a massive impact on warming.

Readily available methods to reduce methane can deliver a whopping 0.25°C of avoided temperature rise by 2050. This year the Intergovernmental Panel on Climate Change (IPCC) stated that reductions of methane emissions would also lower peak warming and reduce the likelihood of overshooting the warming levels described in the Paris Agreement. In pathways limiting warming to 1.5°C, methane is reduced by around 33% in 2030 and 50% in 2050. But not all countries define methane targets or even include methane in their Nationally Determined Commitments (NDCs).

The Global Stocktake process, also called the Paris Agreement’s ambition “ratchet,” allows countries to assess collective progress toward the Paris Agreement’s long-term goals on mitigation, adaptation, and finance. A successful stocktake will help countries implement their existing climate commitments and provide the impetus and information necessary for them to raise the ambition of their next NDCs. EDF is collaborating on an extensive project with C2ES to help shape the Global Stocktake process by highlighting opportunities to scale up climate ambition.

As work in the Global Stocktake continues toward its conclusion at next year’s COP28, it’s important for all NDCs to include methane-specific targets, and policies and strategies to achieve those targets. Read More »

Also posted in Climate Change Legislation, International, Policy, Science, United Nations / Comments are closed

As Washington state sets the rules for its ambitious climate program, regulators shouldn’t overlook this policy tool

By Caroline Jones / Published: September 13, 2022

This post was co-authored by Natalie Hurd, Western states climate policy intern at EDF.

Landscape of Washington state

Photo Credit: George Dodd for Getty Images

Washington state is on the cusp of finalizing the rules to launch its ambitious new climate policy. This comes at an important moment of opportunity for states to lean into their climate commitments and increase their ambition. The passage of the Inflation Reduction Act will drive an unprecedented level of investment in fighting climate change and building a clean energy future, making it even easier for states like Washington to meet their climate goals. By enacting ambitious cap-and-invest legislation last year, Washington has taken an important step forward — but now it’s up to regulators to deliver the strongest possible cap-and-invest program.

The Climate Commitment Act (CCA) pairs carbon emission reductions with new tools to tackle local air quality disparities — all in the same policy framework. One of the valuable tools included in the cap-and-invest legislation is an emissions containment reserve (ECR) — a mechanism that guards against long-term uncertainty by ensuring that the program will be made more ambitious if prices for the program become lower than expected. Right now, Washington’s Department of Ecology is making decisions about the details of how to implement the program, including whether or not to include a functional ECR, and EDF has made it clear that Washington should include a well-designed, effective ECR in the state’s cap-and-invest program. Regulators once again have the opportunity to lead the way on the West Coast by including a functioning ECR in Washington’s program design.

What is an emissions containment reserve?

An ECR is a design feature for cap-and-invest programs that was first implemented by the Regional Greenhouse Gas Initiative (RGGI), a multi-state climate program on the East Coast. The primary role of an ECR is to ensure that, when demand for emissions allowances decreases, the overall supply of allowances is reduced. By reducing the supply, the ECR reduces the overall amount of climate pollution allowed under the program. In other words, allowances are reserved from the market and unable to be purchased, to make sure that the overall allowance budget is adjusted so that emissions are further contained. The amount of allowances that can be removed from the supply and placed in the ECR is relatively small ー for example, in RGGI, the size of the ECR is up to 10% of the allowance budget of participating states.

A figure describing how an ECR functions

Figure 1: Overview of an ECR (Adapted from Resources for the Future)

An ECR is activated when the allowance price hits a “trigger price”, which is a set price that would reflect lower-than-expected demand for allowances. In an auction, if demand for allowances is relatively low, the price of allowances at auction will decrease. If the price of allowances decreases enough to reach the ECR’s trigger price, then a predetermined number of allowances will be removed from the overall allowance supply available at the auction. By reducing the supply of allowances when the trigger price is reached, an ECR translates lower demand and lower prices into greater climate ambition.

One reason why demand for emissions allowances and allowance prices might drop, thus requiring the intervention of an ECR, is if regulated entities are able to cut emissions more quickly than expected.. For example, if a policy like a Clean Fuels Standard reduced emissions more swiftly than anticipated, then the entities impacted by that policy would have lower emissions and therefore require fewer emissions allowances than expected. An ECR helps create a supply for emissions allowances that is responsive to how demand for emissions allowances changes over time.

What does Washington’s program currently do?

Despite the added stability and climate ambition that an ECR would bring to Washington’s cap-and-invest program, as imagined in the Climate Commitment Act, the current proposed design for Washington’s program is missing a critical ingredient: an ECR trigger price. Without a trigger price, there is no way for the ECR to be activated, meaning that Washington’s proposed program does not include a functional ECR.

Why should Washington include a functional ECR in their program?

Economic modeling has shown that including an ECR in an emissions market improves performance by making the market more efficient and securing additional emissions reductions. On top of these benefits, an ECR would help ensure that a program like Washington’s will keep running smoothly long-term. For one, the inclusion of a functional ECR can reduce price volatility in the long run, which decreases uncertainty for market participants. Stable market expectations are important to the durability of the program. Cap-and-invest in the state is more likely to be successful going forward if market participants can better anticipate market behavior year-to-year and plan accordingly. In addition, an ECR provides a predictable, rule-based approach for supply adjustments, helping to avoid the need for other less predictable adjustments to supply by the Department of Ecology to keep Washington on track to meet its climate goals.

Finally, an ECR can increase the environmental ambition of the program by reducing the overall supply of allowances if demand for allowances falls, thereby reducing the total climate pollution that can be emitted by regulated entities. This is critical because Washington’s cap-and-invest program serves as a backstop, working alongside a suite of programs and investments that will help drive emissions reductions. As these programs and investments interact, it’s essential that the cap-and-invest program’s overall limit on emissions remains ambitious enough to incentivize continued efforts to address climate change, and an ECR can help do this by reducing the supply of allowances when demand for allowances is low.

Implications for linking with other carbon markets

In addition to enhanced environmental integrity and economic stability, a functional ECR with a trigger price may be an important factor in potential future program linkage between Washington and other carbon markets. Program linkage — or connecting carbon pricing systems across borders — can facilitate quicker reductions in emissions regionally. By establishing an ECR, Washington would set an important precedent for other states, as well as provide a strong example of climate policy. The ECR program design has already spread from its initial inception in RGGI, and Washington now has an opportunity to be a leader for states on the West Coast.

Market-based mechanisms to reduce climate emissions are not the only policies that need to be implemented to address the climate crisis, but they are a critical part of a suite of climate solutions, including sectoral strategies to deliver near-term reductions in climate pollution. In addition to maintaining the strength of its cap-and-invest system, it’s crucial that policymakers in Washington and elsewhere work meaningfully with communities to ensure that these policies are designed and rolled out in an equitable and just way, explicitly addressing the disproportionate burden of pollution that is primarily borne by low-income communities and communities of color. While cap-and-invest programs are only part of the solution, making them as strong and as stable as possible — such as with the implementation of an effective ECR with a trigger price — will help facilitate more ambitious and broad climate action for decades to come.

During the comment period for Ecology’s latest CCA rulemaking, EDF made it clear that Ecology should include a functional ECR with a trigger price in the final rules. Including a trigger price would help the program’s ECR function properly while driving greater reductions in climate pollution when prices are low. By building a strong ECR into its cap-and-invest program, Washington can continue to lead the way with effective, ambitious climate action that’s a model for other carbon markets.

Also posted in Carbon Markets, Cities and states, Climate Change Legislation, Economics, News / Comments are closed