
The U.S. Capitol Dome is seen behind the Peace Monument statue in Washington, D.C. Congressional Democrats on Capitol Hill are gathering input from industry on how to craft comprehensive climate legislation. |
U.S. utilities and power industry trade groups called for everything from easing transmission permitting to creating a new forward clean energy market in offering guidance to U.S. House of Representatives Democrats developing comprehensive climate legislation. The utility stakeholders also stressed that any national climate policy should be applied economywide and not just target the power sector, which has already achieved hefty cuts to greenhouse gas emission in recent years.
The feedback was due Sept. 13 in response to a request from the House Committee on Energy and Commerce on how to achieve net-zero U.S. greenhouse gas emissions by 2050. However, some stakeholders asked for more time to provide input, a committee spokesperson said.
The inquiry comes as Democrats in the U.S. Congress and on the presidential trail have set ambitious climate targets, many of which include the U.S. economy producing net-zero emissions by midcentury to avoid the worst projected impacts of climate change.
The American Public Power Association and the Electric Power Supply Association advocated solutions that lower greenhouse gas emissions on an economywide basis, with EPSA saying that targeting one sector such as electric utilities "will, over time, produce less environmental benefits at a greater cost."
The American Public Power Association said climate legislation should set "clear targets" and provide "maximum flexibility" to covered entities without threatening grid reliability or energy affordability.
American Electric Power Co. Inc. told the committee that domestic climate policy would be "best implemented through comprehensive federal legislation that covers all sectors of the economy" rather than a patchwork of local, state and national programs. The company said it preferred a cap-and-trade system for lowering emissions instead of a carbon tax or a "command-and-control regulatory scheme," and called for robust federal funding on research, development, and deployment of cutting-edge technologies.
AEP also backed policies and incentives to promote the deployment of electric vehicles and related charging infrastructure, including legislation from U.S. Sen. Debbie Stabenow, D-Mich., and U.S. Rep. Dan Kildee, D-Mich., that would expand tax credits for electric cars and hydrogen fuel cell technologies.
Fellow generator Duke Energy Corp. told the committee that it "does not believe climate legislation is needed" to achieve the company's decarbonization goals, which include cutting its emissions by 50% from 2005 levels by 2030 and achieving net-zero emissions by 2050. But the federal government could help Duke reduce carbon pollution by removing "unnecessary obstacles" to permitting natural gas pipelines and high-voltage transmission lines and by significantly increasing funding for technology development, the company said.
Independent transmission developer ITC Holdings Corp. echoed some of Duke's sentiments, saying that the expansion of grid infrastructure "must be a core element of carbon reduction." The company asked Congress to direct the Federal Energy Regulatory Commission to bolster its regional and cross-regional transmission planning requirements. It also said FERC should develop cost allocation methodologies that reflect the benefits of reduced emissions and should stop requiring regional transmission planning to be subject to open solicitations for right-to-construct.
The Nuclear Energy Institute asked that any legislation or regulatory action on climate "embrace all carbon-free sources of electricity" and apply to both new and existing sources, an NEI spokesperson said in an interview. The suggestions reflect industry concerns that many climate policies do not adequately support nuclear power, particularly plants already in operation.
The NEI also endorsed "tailored" tax incentives for next-generation reactors and the use of nuclear energy in non-electricity applications, the spokesperson said.
A novel approach
Some utilities offered more novel ideas to the committee for achieving net-zero emissions. NRG Energy Inc. commissioned The Brattle Group to craft a proposal for a "forward clean energy market" that rewards U.S. generating resources based on their clean energy attributes.
The plan centers on a state or group of states, regional grid operators, or a group of clean energy buyers creating a forward clean energy market that awards technology-neutral credits to carbon-free electricity sources. Forward auctions would be held to procure the credits three years in advance of the delivery year. New clean energy resources could be eligible for up to seven-year commitments, during which the price for the credits is locked in to guarantee revenue stability.
Brattle said the proposal would better align with wholesale U.S. power markets than state programs that provide subsidies to specific generation types, such as nuclear or renewable plants.
Regional grid operators including the ISO New England and PJM Interconnection have crafted rules to level the playing field between unsubsidized resources and energy assets that receive "out-of-market" payments, including zero-emission credits that some states have approved for nuclear facilities. The regulations, including the PJM's minimum offer price rule, could limit the participation of state-supported clean energy resources in those regions' forward capacity markets, according to the study.
But the credits under the Brattle plan would be considered "in-market" since they are earned in a competitive, resource-neutral market in which any merchant resource can participate, study co-author Kathleen Spees said.
Some industry legal experts are skeptical that the credits could skirt those limitations. Despite Brattle's assurances, critics of out-of-market subsidies, including EPSA, "would continue to argue that resources participating in the FCEM should be subject to a MOPR," said Ari Peskoe, director of Harvard Law School's Electricity Law Initiative.
