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Democrats' blueprint for fighting climate change sees FERC playing key role

The Federal Energy Regulatory Commission would be given sweeping new authorities to help address climate change under the recommendations of a plan the Democratic majority on the U.S. House Select Committee on the Climate Crisis released June 30.

Formed in early 2019, the committee was due to deliver a set of policy recommendations for congressional climate action by March. However, the release of the panel's 547-page plan, "Solving the Climate Crisis," was delayed as lawmakers grappled with the federal response to the COVID-19 outbreak.

On June 30, House Democrats touted their proposal as a means to save the planet and build a clean energy economy providing "good-paying jobs" as the nation battles through an economic recession.

In a departure from a 622-page bill passed in January that would have authorized the U.S. Environmental Protection Agency to require state climate plans, the House Democrats' plan calls for a major rewrite of the Federal Power Act, or FPA, to give FERC a greatly expanded role in efforts to achieve a 100% carbon-free power grid.

Among hundreds of specific policy recommendations, the plan said Congress should direct FERC, which has exclusive authority over wholesale electricity markets and interstate power transmission, to develop "a comprehensive, long-range electric infrastructure strategy" in line with a 100% net-zero-by-2040 goal that also supports any state policies that are more stringent.

Noting that a previous effort to enable the U.S. Department of Energy to relieve congested transmission corridors ran into legal trouble, the plan said the FPA should be amended to direct FERC, rather than the DOE, to designate National Interest Electric Transmission Corridors. It also said FERC should be empowered to exercise backstop siting authority within those corridors when one or more states have approved a proposed transmission line but one or more states have denied the project or withheld approval for more than two years.

The recommendation is significant because permitting battles have inhibited the build-out of the nation's high-voltage transmission infrastructure, an essential step in accommodating a high level of renewable energy penetration.

Recognizing the nation's vast offshore wind potential, the plan also would call on FERC to develop a plan for national offshore wind transmission, break down barriers to the interconnection of offshore generating facilities and develop cost allocation methodologies for those projects.

The Democrats' plan also would direct FERC to find under an amended FPA that wholesale electricity rates are unjust and unreasonable if they do not incorporate the external costs associated with planet-warming greenhouse gas emissions. However, any amendment to the FPA should not preempt state clean energy programs or stricter state-level standards, the plan added.

In another nod to states' efforts to combat climate change, the plan said the FPA should be amended to bar FERC from discriminating against states' clean energy policies. The provision, if enacted, would effectively nullify a set of controversial commission orders targeting state subsidies that critics have claimed were aimed at freezing in place fossil fuel-heavy energy mixes.

Moreover, the plan said FERC's governance structure should be overhauled to prohibit the five-member commission, which was intended to function as an independent agency insulated from politics, from reflecting 3-1 partisan majorities when only four commissioners are seated.

If FERC only has three commissioners, those members could only constitute a voting quorum for up to 180 days from the date of the last commissioner's vacancy and, even then, only if no more than two members are from the same political party, the plan said. FERC has three Republicans and one Democrat after President Donald Trump declined to follow tradition by pairing his latest GOP pick with a member of the opposing party.

With FERC focused on the power grid, the EPA would primarily be tasked with using its Clean Air Act authority to regulate greenhouse gas emissions from the U.S. transportation sector, now the nation's largest source of carbon pollution.

Specifically, the plan said the EPA should require at least a 6% year-over-year pollution reduction over five years, starting in 2026, relative to a baseline for passenger cars and light-duty trucks. The plan also included a package of recommendations on developing zero-emission vehicle technologies and said all states should be allowed to adopt California's tough vehicle standards.

Extraction and critical mineral provisions

The plan focuses on methane pollution from the oil and gas sector as well, setting stricter emission-reduction goals on the industry over time.

It would direct the EPA and the U.S. Bureau of Land Management to enact rules, such as those requiring active monitoring for methane leaks, across the entire industry to meet those targets. If enacted, the oil and gas sector would have to cut at least 65% of methane emissions by 2025 and 90% by 2030 compared with 2012 levels. The EPA and the Bureau of Land Management would also require oil and gas operators to use, sell or re-inject 100% of their flared gas by 2030.

The blueprint also calls for legislation requiring natural gas pipeline operators to install and use advanced leak detection technology and to capture emitted gas during normal operations. Pipeline operators would have to "report and immediately repair any large loss event," including major gas leaks. The plan would also establish a DOE program to offer states funding for incentives to promote leak detection, repair and replacement along natural gas pipelines to eliminate such leaks.

Additionally, the proposal would establish a reclamation fund to plug and reclaim orphaned oil and gas wells on public lands and extend the fee on coal mine operators that supports the Abandoned Mine Land Trust Fund to put people back to work cleaning up coal mines.

The plan also puts a priority on securing domestic minerals supplies such as lithium needed to produce electric vehicles, solar panels and wind turbines. It said Congress should direct the DOE to develop a national strategy for securing critical minerals in the renewable energy supply chain "in an environmentally, economically, and socially responsible way" and called on legislators to authorize the department's Critical Materials Institute, a minerals supply chain research program formed in 2013 that was never formally approved by Congress.

The plan also said that should the federal government enact a price on carbon or "domestic subsector emissions standards," such policies must be paired with a "border adjustment mechanism," which could include import tariffs and export subsidies, for emission-intensive sectors. A carbon pricing mechanism should be only considered "one tool to complement a suite of policies," according to the plan.

Restructuring DOE

The plan claims the DOE's organizational structure is "outdated and cannot adequately address the climate crisis" and seeks to create a congressional commission to reorganize the department. Congress would require the DOE to focus on decarbonizing the energy sector, mitigating climate change, boosting climate change resiliency, and improving the competitiveness of domestic clean energy manufacturing and environmental justice.

The report said the DOE should also work with local and state governments and the private sector to identify and evaluate climate threats to the electricity grid and develop a research, development and demonstration program to enhance the power system's resiliency. Federal agencies would also be tasked with setting resilience standards for federally funded or licensed electricity infrastructure projects.

In addition, the plan would double federal investments in clean energy and increase those funding levels over time to keep pace with China's proportional energy investments.

Helping water infrastructure adapt to climate change

The Democrats also aim to bolster the nation's flood infrastructure, including by increasing funding for the Federal Emergency Management Agency's national dam safety program and other agencies' related programs.

The plan would direct the U.S. Army Corps of Engineers to set resilience-based codes for levees that account for climate change and to report on levees and dams that are repeatedly damaged by flood events. And the Democrats would expand eligibility for federal funding for dam safety to include small hydropower-generating dams and increase federal credit assistance for water infrastructure projects.

The nation's dams and levee systems, like most other infrastructure, are aging, and scientists expect that climate change will exacerbate flooding and other events that will put those facilities under even greater stress. For instance, heavy rains in May prompted the failure of a system of hydroelectric dams in central Michigan that had been out of compliance with federal standards.

Environmental justice measures, climate risk disclosures

The plan acknowledged that for the transition to a low-carbon economy to work, the nation must ensure workers can earn family-sustaining wages in safe work conditions. Therefore, any new federal investments and incentives for clean and resilient infrastructure should be first directed to communities most affected by the transition, such as counties across the Appalachian region that have long relied on coal mining for jobs and tax revenues. The plan also includes measures to bolster apprenticeship and other training programs related to jobs in clean energy technology.

In addition, public companies would have to report on their climate risks in their financial disclosures. The U.S. Securities and Exchange Commission would have to update its guidance on disclosures to include "clear and enforceable triggers" for reporting climate-related physical, transition and liability risks. The Federal Reserve would be charged with requiring large financial institutions to identify and mitigate their climate-related risks.

Republicans to seek common ground

While many Republicans and representatives from the fossil fuel industry will likely condemn the Democrat-led report, House Select Climate Committee Republicans said they are interested in "opportunities for common ground" and are reviewing the proposal. They noted that China continues to lead the world in emissions and warned against domestic climate policies that add costs and "burdensome regulations."

"Although there will not be a formal committee markup, preventing the opportunity for the select committee to endorse bipartisan recommendations, we are hopeful that the prospect for bipartisanship is not lost," the Republican lawmakers said in a June 30 joint statement. "Bipartisan recommendations to increase the resilience of our communities and address global emissions — while strengthening the American economy and getting families back to work — are worth pursuing."