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Democrats to target 100% US clean energy standard in pending climate bill

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Democrats to target 100% US clean energy standard in pending climate bill

SNL Image

U.S. Rep. Frank Pallone Jr., D-N.J., center, who chairs the U.S. House of Representatives' Committee on Energy and Commerce, discussing a draft framework to transition the U.S. to a 100% clean economy by 2050.
Source: S&P Global Market Intelligence

The U.S. would need to derive 100% of electricity sales from clean energy resources by 2050 under a draft climate change bill that Democratic lawmakers will unveil later in January.

On Jan. 8, Democratic leaders of the U.S. House of Representatives' Committee on Energy and Commerce released details of a pending climate bill to be entitled The Climate Leadership and Environmental Action for our Nation's Future Act, or CLEAN Future Act.

The legislation, the text of which will be made public later in January, follows through on committee Democrats' plans to develop a proposal for achieving net-zero U.S. greenhouse emissions economywide by 2050 through sector-specific solutions. As part of that target, the CLEAN Act adopts a goal of creating a "100% clean economy" by midcentury.

Power provisions

The power sector part of the bill will incorporate proposals from Democratic U.S. Reps. Ben Ray Luján of New Mexico and Diana DeGette of Colorado to establish a national clean energy standard that would require all retail electricity suppliers to obtain 100% of their power from clean energy sources by 2050. The bill will define clean energy as electricity generated from a facility with an annual carbon intensity of less than 0.82 metric tons of carbon dioxide equivalent per MWh, according to a handout on the pending legislation.

Nonemitting generators would receive full credit for the electricity they produce, while coal- and natural gas-fired plants with carbon intensity below 0.82 metric tons per MWh, such as those with installed carbon capture technology, would receive a partial credit after accounting for upstream fossil emissions.

The committee, however, said it "seeks an analysis of alternative baseline options," including a lower 2050 carbon intensity limit.

Regulated electricity suppliers would need to provide an increasing amount of electricity from clean sources starting in 2022 before hitting the 100% target in 2050. Power suppliers must possess a sufficient number of clean energy credits at the end of each compliance year or else make "alternative compliance payments." The clean energy credits can be purchased through an auction.

The proposal will also include reforms "aimed at modernizing U.S. energy markets" overseen by the Federal Energy Regulatory Commission, the handout said. The CLEAN Future Act would seek to lower market barriers to new entrants and emerging technologies, facilitate the integration of clean and renewable resources on the power grid, and provide for retail choice of clean energy.

Additional regulatory reforms include "increasing oversight of the nation's transmission system," setting requirements for interregional transmission planning, and mandating the interconnection and coordination of facilities under an independent system operator or regional transmission organization.

The legislation will also amend the Public Utility Regulatory Policies Act to ensure states consider energy storage in the resource planning, promote the use of "non-wires solutions" for transmission, and protect qualifying clean energy facilities' "right-to-contract" under the act.

Rest of bill

The legislation would direct FERC to consider climate change when determining whether natural gas projects are in the public interest. In doing so, the plan seeks to remove ambiguities following a recent ruling in the U.S. Court of Appeals for the District of Columbia Circuit over the Sabal Trail Transmission gas pipeline related to how far FERC should go to weigh indirect emissions from downstream generation sources or upstream production. FERC commissioners have been divided over those parameters, and the question has spawned more litigation.

For gas project reviews, Democrats also want to update eminent domain laws to better protect landowners and bolster stakeholder engagement. Landowners in recent litigation have complained about FERC allowing projects to be built before they have their chance to be heard in court.

Also of importance to the natural gas sector, the measure would repeal exemptions for oil and gas production from key environmental laws. And it would direct the U.S. Environmental Protection Agency to regulate methane, a potent source of greenhouse gas emissions from the natural gas sector. Existing sources would have to cut emissions 90% below 2012 levels by 2030. Routine flaring would be barred for new sources and phased-out for existing sources. The EPA would also be tasked with addressing emissions from LNG facilities and offshore oil and gas operations.

Other energy provisions of the bill would provide grants for grid modernization, resilience and storage and establish loan and technical assistance grant programs through the U.S. Department of Energy to deploy distributed energy systems. The bill, however, will not include a tax on carbon emissions.

"We believe we can [get to net zero emissions by 2050] without carbon pricing," Energy and Commerce Committee Chairman Frank Pallone Jr., D-N.J., said during a Jan. 8 briefing with reporters to discuss the CLEAN Future Act.

In addition to the power sector, the bill lays out plans to decarbonize or cut emissions from buildings, transportation, and the industrial sector. The legislation would also create a first-of-its-kind national climate bank to mobilize private investment and public money to help states, cities, communities and companies to transition to a clean energy economy.

To accomplish the broader underlying goal of achieving net-zero greenhouse gases by mid-century, the CLEAN Future Act would allow states to form their own individual plans for meeting or exceeding the 2050 target and interim standards. Each state plan will be subject to EPA's approval. States can work either individually or as part of a compact, the handout said.

The plan is part of a broader push by Democrats to address climate change and lay out their vision on the issue ahead of the 2020 elections. But the draft proposal, like many bills on the topic, will face almost guaranteed opposition from the Republican-majority U.S. Senate and President Donald Trump.

GOP members of the House Energy and Commerce Committee have advocated legislation to support research and development of clean and lower-emitting energy technologies but have criticized more prescriptive policies for addressing climate change, such as cap-and-trade programs or carbon taxes. House Republicans have also complained that Democrats have excluded them from planning on broader climate legislation.

"If Democrats were serious about getting something done on climate change, they would seek to make law instead of engaging in partisan messaging exercises," Rep. Greg Walden, R-Ore., the top Republican on the House energy committee, said on Jan. 8. "Their climate bill is being developed without a single Republican member being involved."