There are many polarizing issues dividing America today, but support for reliable electricity is not among them. No one is in favor of power outages, and no one should be left in the dark.
Extreme weather events have stressed the grid in most regions of the country over the last decade, and the frequency and severity of these events are only expected to increase in the years ahead. Every type of generation has struggled through these events. To solve this problem, utility commissioners, grid operators and federal regulators must look beyond generation solutions.
The U.S. grid is aging and balkanized. Most regions have limited ties to one another, meaning there is little transmission capacity available to transfer electricity between neighboring areas. Yet studies show interregional transmission lines can serve as lifelines in an emergency — delivering power from unaffected areas to storm-ravaged regions where power plants were forced to halt operations.
As a recent U.S. Department of Energy (DOE) draft study demonstrated, increasing interregional transmission capacity yields the greatest value, improving access to affordable power and helping ensure a reliable supply of electricity. Interregional transmission lines allow grid operators to access more generation resources and are particularly useful for providing additional supply during extreme weather events, according to the DOE. The agency also identified a “pressing need” for more transmission infrastructure.
During Winter Storm Uri in February 2021, an additional gigawatt of transmission capacity between the Texas grid and the Southeast could have saved Texans nearly $1 billion and kept the lights on in 200,000 homes, according to a report from Grid Strategies. Meanwhile, interregional transmission ties allowed the Great Plains and Midwest grid operators to import 15 times more electricity during the storm than the Texas grid, helping avoid widespread outages that killed hundreds in the Lone Star state.
In December 2022, some grid operators in the Southeast were forced to conduct rolling blackouts when power plants came offline because of harsh winter weather. Those outages would have “undoubtedly been far more widespread” had operators not been able to access power imported through interregional transmission lines, according to a Rocky Mountain Institute analysis. Additional interregional capacity would have allowed the Southeast to access available Midwestern generation, alleviating the region’s supply shortage.
Forward-looking studies evaluating the grid under extreme weather conditions predict similar results unless significant interregional transmission is developed. At least 65 GW of new interregional transmission capacity was needed to keep the lights on during simulated extreme weather conditions from 2035 to 2040, according to a recent report by GE Energy Consulting.
American homes and businesses depend on FERC to access reliable, economically efficient energy services at a reasonable cost. To ensure reliability and low prices, commissioners must evaluate ways to remove barriers to and encourage the development of these interregional projects. Three near-term options are available.
First, a minimum interregional transfer capacity requirement would provide significant reliability benefits by producing much needed long-range transmission. FERC, having convened a technical conference on such a standard in late 2022, should pursue a rulemaking to establish a minimum threshold.
Second, the commission should accept Invenergy’s petition and host a technical conference to discuss removing barriers to merchant interregional high-voltage, direct-current transmission lines. FERC’s current transmission-related rulemaking proceedings do not consider the evolving role of these technologies, and a technical conference would allow regulators to consider the costs, impact and utility of such projects, as the National Association of Regulatory Utility Commissioners noted.
Third, the agency should ensure its forthcoming transmission planning and cost allocation rulemaking includes needed reforms that can benefit interregional planning, as well as regional transmission planning. Requiring planning regions to quantify a minimum set of transmission benefits metrics can help eliminate one of the main barriers to planning interregional lines. Going forward, FERC should also lay the groundwork for a future rulemaking focused on reducing obstacles hindering interregional project development.
U.S. grid operators have seen several major system failures in the last several years. Our aging grid has demonstrated it cannot meet today’s demands, leaving millions at risk for extreme weather events in the coming decades. Expanding transmission capacity to ensure customers have constant access to affordable power will require sound policies to strengthen interregional ties. It’s time for FERC to act.
Ted Thomas is founding partner at Energize Strategies and former chair of the Arkansas Public Service Commission.
BALTIMORE — The first U.S. wind farms are being connected to the grid with one-off radial transmission lines, but as the industry grows it will have to follow Europe’s recent example and build out meshed high voltage, direct current (HVDC) systems, experts told the Business Network for Offshore Wind’s International Partnering Forum last week.
“Why are we thinking about doing this?” asked Judy Chang, a fellow at Harvard’s Kennedy School. “Overall savings, reliability, resilience, maximizing the integration of renewables while strengthening the grid through offshore systems.”
The Elia Group, which runs the grid in Belgium and eastern Germany, last year created a new subsidiary called WindGrid to pursue such offshore transmission opportunities.
Having an independent set of eyes looking at the infrastructure needed to connect offshore wind farms has worked well in Europe and now Elia’s new unit is starting to bring that business to the United States market, said WindGrid CEO Markus Laukamp. One of the big challenges in the U.S. is that transmission planning and generation develop at the same time in parallel tracks. That makes it hard to build out the transmission system, which takes longer to complete, he said.
“I think one of the challenges that we see for the U.S. is really to get these things in order so that maybe not next year — maybe five to 10 years — you can do things in the way that makes the most sense for the ratepayer and that is optimizing a coordinated grid,” Laukamp said.
New York is hoping to start planning a meshed offshore grid in tandem with its upcoming wind procurements, said Georges Sassine, vice president of the New York State Energy Research & Development Authority.
Sassine said he has been urging NYISO to run a public policy transmission planning process under Order 1000 to help bring renewable power into New York City both from on and offshore resources. The planning process for transmission should happen at the same time New York is working to procure the offshore wind that needs to be connected to the grid, Sassine said.
WindGrid is building an artificial energy island in the North Sea that will initially help connect wind farms to the Elia Group’s grid in Belgium. It has planned expansions to connect to Denmark and the United Kingdom, said WindGrid’s Thomas Kobinger. His firm is also building a similar project in the Baltic Sea to connect Denmark and Germany with multiple offshore farms via equipment on the Danish island of Bornholm. Such major projects have benefits for the onshore grids they are connected to, Kobinger said.
“We can reduce bottlenecks in the AC system. We can even reduce losses on the AC system. So, there’s a lot of benefits from a system perspective,” said Kobinger.
One idea is to connect wind to shore through shared corridors where multiple wind farms would plug into the same place on the grid onshore. Connecting corridors together in a mesh means that power could flow to multiple cities from one wind farm, said James Ware, senior electrical project manager for Ørsted. Meshed networks can cut fossil generation, avoid congestion, offer more flexibility to the system and can facilitate transfers during emergency situations, Ware said.
“But the question still remains … how far does the benefit go?” Ware said. “And who pays for it? And what is that cost?”
While figuring out where the costs and benefits of the HVDC links flow is tricky, they are obvious enough that many in the United States are already thinking of using them, including Public Service Enterprise Group, said its Offshore Wind Development Manager Rafael Wilches.
The states’ and federal government’s increased offshore wind goals require a “serious” look at multi-terminal HVDC systems, Wilches said.
Getting there will require bringing HVDC vendors, transmission owners, the ISO/RTOs and other stakeholders together to plan out such systems to make sure that different pieces can operate with each other. Funding from the federal and state governments would also help move the ball forward, Wilches added.
The U.S. has a long-term goal of getting 110 GW of offshore wind by 2050, which represents a lot of power that needs to get to land, said Hannah Taylor of the Department of Energy’s Wind Energy Technology Office.
“We need to do that … cost effectively, efficiently, equitably and responsibly,” Taylor said. “And we view multi-terminal systems and HVDC technologies as a pathway to get to that solution.”
DOE has multiple funding opportunities for research and development into HVDC technologies, and its Loan Program Office is available for the next step of helping new technologies reach commercialization, she said. DOE can also convene stakeholders to gather input on how best to interconnect growing offshore wind.
The department’s National Renewable Energy Laboratory is working on a project to help understand the protection and HVDC breaker needs for such off-shore circuits, said Taylor.
“That will be a key technology in realizing multi-terminal DC in the U.S.,” she said.
MISO said it created more than $4 billion in value for its membership over the course of 2022.
That’s according to grid operator’s 2023 Value Proposition, which calculates last year’s collective annual savings for members versus the lack of a resource sharing pool.
MISO said it has saved members about $40 billion since the value proposition was first calculated at about $1 billion in 2007. The RTO said the value proposition shows a $12 return for every dollar of investment in MISO membership.
“I’m proud that MISO continues to deliver substantial benefits to our entire footprint,” MISO CEO John Bear said in a press release. “We spend a lot of time with our members and stakeholders to better understand their needs and ensure alignment as our industry continues to rapidly change.”
As with prior years, MISO said its large geographic footprint accounted for most of the cost savings. It said its ability to share capacity saved members between $2 billion and almost $3 billion.
MISO said its energy dispatch efficiencies, where its real-time and day-ahead markets deploy the most economic resources, saved members from $620 million to $690 million. The RTO also said its renewable resource optimization — which connects low-cost renewable resources where they’re helpful, thus reducing the need for more capacity investment — saved members between $410 million to $480 million.
“We work tirelessly to ensure that our region receives the most out of MISO membership,” said Wayne Schug, MISO’s vice president of strategy and business development. “Reliably building and operating the grid of the future while supporting our members’ sustainability and affordability objectives requires close collaboration. As we advance the work discussed in MISO’s reliability imperative and enable the future grid, we expect the value proposition to grow substantially.”
“Reliability imperative” refers to the responsibility to ensure the clean energy transition occurs in a reliable and orderly manner.
BALTIMORE — With major new projects coming online starting this year, the offshore wind industry is turning to longer-term goals of rolling out more than 100 GW of capacity and setting up the associated supply chains, speakers said Wednesday at the Business Network for Offshore Wind’s International Partnering Forum (IPF) Conference.
The conference marked the 10th anniversary for BNOW, as the conference has grown from occupying a small conference room to filling the Baltimore Convention Center, CEO Liz Burdock said.
“Together, we have grown the U.S. offshore wind industry,” Burdock said. “We’ve taken it from legislation to demonstration and this year to commercialization.”
The federal Inflation Reduction Act passed last year includes direct subsidies for offshore wind, but also seeks to grow new markets for OSW, such as hydrogen. Passage of the law makes it impossible to accurately forecast the industry’s eventual size, Burdock said, but the Biden administration has a goal of 110 GW by 2050, and states are starting to step up their own goals, which amount to about 77 GW.
Maryland Gov. Wes Moore (D) announced a new, more aggressive target for the technology than his predecessor, who had set a goal of 1.6 GW.
“Once the Bureau of Ocean Energy Management approves the new lease areas for our state, Maryland will aim to produce 8.5 GW of power through offshore wind,” Moore said. “And let’s be clear, that’s enough energy to power nearly 3 million homes.”
Other states either have raised — or are planning to raise — their targets for offshore wind, with New Jersey last year announcing a new 11-GW target, and New York considering raising its 9-GW goal to 16 to 19 GW.
Moore hopes that expanding Maryland’s goal will attract new industrial jobs to Baltimore, which used to be a major producer of steel.
“The steel we made in Baltimore helped win two world wars,” Moore said. “The steel we made in Baltimore helped stand up the tallest buildings in the world. The steel we made both helped create tens of thousands of jobs and millions of dollars of wealth.”
Demand dropped off in the later 20th century and the mills shut down, but now offshore developer US Wind is planning to lease 100 acres where an old steel mill stood as it builds out the resources needed for its planned offshore wind farms. Other firms are setting up shop in the state to further the industry as well.
“Maryland steel led the American economy in the 20th century,” Moore said. “I want Maryland wind to lead the American economy in the 21st century.”
Moore said he ordered the Maryland Energy Administration to focus on delivering grants to companies that make up key links along the offshore wind supply chain. Increasing the high-paying jobs associated with the industry can change lives and lead to generational prosperity, he said.
“That’s why I am deeply serious when I say that Maryland will lead in offshore wind,” Moore said. “I mean that. I am deeply serious. When I say that we have the real estate, the brainpower, the assets and the agenda to get it done, I mean that.”
President Biden in 2021 set a goal of building 30 GW of offshore wind by 2030, which many at the time thought was ambitious, White House National Climate Adviser Ali Zaidi said. But that target can be reached, and the industry could even go well beyond it, he said.
“And the reason is because this is not just an opportunity for electricity,” Zaidi said. “It’s an opportunity to create good-paying jobs across manufacturing, and shipbuilding and port operations — construction jobs, operations jobs and more as we build a brighter, more sustainable and fairer future for all of us all across the United States.”
Offshore wind investments tripled last year, totaling $10 billion, with 46 states having some piece of the supply chain for offshore wind, he added.
“Through the Inflation Reduction Act, the president has delivered game-changing support for building clean energy components here in the United States of America,” Zaidi said. “We’re working to swiftly implement the manufacturing tax credit to support U.S. production of offshore wind components, like blades and nacelles and towers and foundations.”
New York’s 9-GW target for offshore wind is just the start, said New York State Energy Research and Development Authority CEO Doreen Harris.
“New York certainly has some of the most aggressive and ambitious climate and clean energy objectives in the nation, and … talk about something we need more of: we need more offshore wind,” she added.
While New York and other states want to attract the same kind of jobs that Gov. Moore does, Harris said states could also benefit from working together to develop regional hubs for with their neighbors.
Setting ambitious, long-term goals is a big help for the industry because those, in turn, will attract the kind of supply chain investments needed to produce jobs and create the wind farms themselves, US Wind CEO Jeff Grybowski said.
“We know that we won’t be able to do it on our own here in the U.S. The supply chain is paying attention — a lot of attention — to U.S. projects,” he said. “The state policy goals are critically important to that because this industry needs the long-term vision.”
The policy support from states and the federal government has coalesced to the point where real investments are being made by global suppliers feeding domestic developers, he added.
The domestic industry will have to initially rely on foreign supply chains because the expertise in offshore wind is in Europe, although that will have to change over time.
“The global supply chain is not big enough to service the rest of the world, never mind throwing in the U.S. requirements as well,” said Tony Appleton, director of offshore wind for engineering firm Burns & McDonnell. “So, it’s very important the U.S. develops its own supply chain.”
On top of that, Americans will eventually get “pretty annoyed” about supporting European jobs in the supply chain through their electric bills, so developing domestic capacity will be more politically sustainable, he added.
Thirteen years after the Champlain Hudson Power Express was first proposed, the first shipment of HVDC cable needed to build it arrived in New York on Thursday.
The 35 drums each hold 2,000 to 3,000 feet of cable. More than 500 drums will be needed to build the roughly 140-mile underground sections of the 339-mile, 1,250-MW line from Quebec to New York City.
The 190-mile underwater portion of CHPE will require an even greater amount of cable, which will be essentially the same except for an extra layer of exterior protective material.
The logistics of the shipment were fairly straightforward: a 3,829-mile journey aboard a freighter from Karlskrona, Sweden, to the Port of Albany, then another 53 miles by truck to CHPE’s staging area in Fort Edward.
The regulatory process, not so much.
Since Transmission Developers Inc. submitted 10 paper and 10 electronic copies of its request for a certificate of environmental compatibility and public need to the New York Public Service Commission on March 29, 2010, the expected price tag has more than doubled; the designed electrical capacity has shrunk by more than a third; and 4,573 additional documents have been submitted into the public record as part of PSC case No. 10-T-0139.
The project is an important piece of New York state’s clean energy strategy, importing emissions-free hydroelectric power to the largest U.S. city, which has very limited options for siting renewable energy generation within its own borders and relies instead on fossil fuel plants.
When completed, it will be the longest fully underground power line in the U.S., with an expected carbon impact equal to taking more than half a million internal-combustion-engine cars off the road per year.
NYISO considers CHPE important to New York state’s future grid reliability, so much so that if it is delayed, New York City’s transmission security margins could be deficient.
Some developments in the last 13 years:
The initial proposal was for two 1,000-MW HVDC circuits; it was subsequently revised to a single 1,000-MW line; in its final form, CHPE is a single 1,250-MW line.
CHPE had to deal not only with state and federal regulators but owners of the railroad grades where much of the overland portion of the line will be buried. It also had to negotiate payments to 132 taxing entities along the route (total cost: $1.4 billion over the first 25 years) and execute project labor agreements with more than a dozen unions.
The initial 2010 request to the PSC indicated the developers would seek a $2.3 billion loan guarantee; the price tag was publicly estimated at $2 billion in 2013; the PSC raised the debt ceiling to $4.5 billion in early 2022 and then $6 billion later in 2022.
The PSC approved construction and operation of CHPE in April 2013, but the docket shows very few filings over the next six and a half years; the PSC did not approve the CHPE contract until April 2022.
CHPE in August 2022 said it was pushing the estimated in-service date of the line back from late 2025 to the spring of 2026, because of regulatory delays and supply chain constraints; on Thursday it said only that the line would start delivering power in 2026.
A ceremonial groundbreaking was held in November 2022, but that was only for two staging areas; the PSC did not issue the notice to proceed with actual construction of the line until Feb. 27, 2023.
And as all this was happening, the 2,100 MW of emissions-free energy produced by the Indian Point nuclear plant — 20 miles north of New York City and right along the path of CHPE — went offline permanently; New York state codified a clean-energy transition; and New York City moved to ban fossil fuels in new construction, simultaneously reducing the supply and increasing the demand for clean energy well beyond whatever CHPE will provide.
As of Thursday, 4,574 documents have been filed with the PSC in the CHPE case, for everything from the overland rock removal permit to requests for nondisclosure to electrical drawings to a special hauling permit (cost: $40) for an oversized office trailer.
One of the newest documents, filed Wednesday, is an update on the regulatory situation on the other side of the border. It indicated three main authorizations are still required for construction of the Hertel-New York Interconnection Project, the roughly 35-mile underground line in Quebec that will connect to CHPE.
They are: authorization from the government of Quebec under the Environmental Quality Act; a permit from the Canada Energy Regulator; and authorization from the Regie de l’energie du Quebec (the Quebec Energy Board). All are expected by the end of this summer, the filing indicates.
Anticipating long lead times, Hydro-Quebec already has signed a contract with NKT to manufacture underground cables and is negotiating with NKT to install them. It expects to execute a contract with Hitachi to manufacture converter equipment shortly.
Hydro-Quebec is still negotiating property easements to site the line but has been authorized by the government of Quebec to take what it needs by eminent domain if necessary.
The PJM Board of Managers on Monday announced that it will seek a delay in the 2025/26 Base Residual Auction (BRA), scheduled for this June, as well as future auctions to allow the RTO and stakeholders to draft market changes to address reliability concerns.
“In arriving at this decision, the board recognized that, despite the implications of auction delay, reforms are necessary to the capacity market design in order to conduct an effective Base Residual Auction,” the board stated in a communication to stakeholders. “The board therefore determined that PJM should postpone executing any further auctions under the current rules until we go through the stakeholder process and file resulting rule change proposals with FERC.”
A special meeting of the Members Committee has been scheduled for April 4, during which PJM is set to provide an update on the delay and consult with stakeholders. PJM’s tariff requires that it consult with stakeholders at least seven days prior to making any Federal Power Act Section 205 filing. The board said that PJM will continue pre-auction activities if the filing is rejected by FERC.
The board did not specify an alternative date for the 2025/26 BRA, nor which subsequent auctions PJM will seek to postpone in an upcoming filing with FERC. But the RTO had presented three options for delaying future BRAs during past stakeholder meetings, including postponing the 2025/26 auction to May 2024. The following three auctions would also be delayed by sixth months under that alternative, bringing the auction schedule back to its normal cadence of three years in advance of the corresponding delivery year in May 2026 for the 2029/30 DY.
During a March 15 meeting of the Resource Adequacy Senior Task Force (RASTF), several stakeholders questioned whether it was too ambitious to expect an order from FERC and implement the changes, particularly if the commission issues a deficiency notice, before May 2024. PJM’s Adam Keech told the task force he heard stakeholder’s concerns that May could prove too optimistic and would share that with the board. (See PJM, Stakeholders Present Initial Capacity Market Proposals to RASTF.)
PJM spokesperson Jeff Shields told RTO Insider the RTO has no comment beyond the scenarios presented to stakeholders.
In a letter initiating the Critical Issue Fast Path (CIFP) process on revising the capacity market, the board asked stakeholders to provide feedback on whether any changes should be made effective prior to the 2027/28 BRA and whether that should include delays to the auctions. The letter lays out a series of concerns the board has with reliability in future years and requested that PJM and stakeholders draft proposals for a capacity market overhaul. The board aims to evaluate the recommendations and vote on a proposal to file with FERC on Oct. 1, 2023. (See PJM Board Initiates Fast-track Process to Address Reliability.)
Stakeholders provided mixed feedback over a handful of meetings, with supporters believing a delay would provide time to change the auction parameters to yield more accurate price signals, while opponents worried about the impact to state auction timelines and the possibility that the market change proposal could be delayed or rejected by the commission.
The GOP-led House on Thursday passed a fossil-fuel friendly energy infrastructure package that Democratic Senate Majority Leader Chuck Schumer said will be “dead-on-arrival” in his chamber.
H.R. 1, the Lower Energy Costs Act, passed on a 225-204 vote with just four Democrats voting in favor: Jared Golden of Maine, Marie Gluesenkamp Perez of Washington and Henry Cuellar and Vicente Gonzalez of Texas.
At the heart of the bill is a raft of changes to the Mineral Leasing Act, National Environmental Policy Act (NEPA) and Clean Air Act intended to accelerate the permitting of oil, natural gas and mining projects, in part by reducing environmental reviews and protests.
The bill directs the Department of the Interior to “immediately resume” quarterly onshore oil and gas lease sales, requiring four such sales annually in nine Western and Plains states, while increasing the fees associated with protesting the sales. It also seeks to streamline the permitting process for drilling for oil and gas in the Gulf of Mexico and off the coast of Alaska.
H.R. 1 would additionally roll back Obama-era restrictions on leasing of coal mines on public lands and ease the process for the mining of other materials, such as uranium and minerals considered critical to the supply chain of clean energy resources, such as lithium. It also restricts ownership of that supply chain by China-based entities.
But conspicuously absent from the bill are any of the kind measures that Democrats — including West Virginia Sen. Joe Manchin — and clean energy advocates have been seeking to expedite permitting of new electric transmission. (See Republicans Opening Offer on Permitting is Missing Electric Tx.)
After Thursday’s vote, House Speaker Kevin McCarthy (R-Calif.) tweeted that H.R. 1 is “an important bill that lowers energy costs, reduces global emissions and strengthens America’s national security” — although that second claim sparked criticism from Twitter users who pointed out the bill actually contains a provision to repeal the Inflation Reduction Act’s greenhouse gas reduction fund, which provided competitive grants, emphasizing projects that benefit disadvantaged communities.
Cathy McMorris Rodgers (R-Wash.), chair of the House Committee on Energy and Commerce, said the vote showed her party is “prioritizing the American people over the Democrat’s radical climate agenda.”
“Reform of our broken permitting process will spur greater energy production, boost economic growth, create jobs and bring down costs for American families. It will limit the threat posed by hostile nations like Russia and China,” said Sen. John Barrasso (R-Wyo.), ranking member of the Senate Committee on Energy and Natural Resources.
Reactions
House passage of the bill predictably received support from the fossil fuel sector and its allies.
“It is clear now that both Republicans and Democrats share the common goal of providing reliable energy to Americans and making energy safer, cleaner and more affordable,” American Petroleum Institute CEO Mike Sommers said in a statement. “This is a positive step towards enacting serious, bipartisan permitting reform, and we look forward to continuing to collaborate on real solutions that will modernize our infrastructure and benefit all Americans.”
Thomas Pyle, CEO of the American Energy Alliance, a group with financial ties to participants in the oil and gas industry, said the bill signals that Republicans “are keeping their promise to fight the Biden administration’s radical approach to energy policy.”
Pyle said the bill will reduce the U.S.’s dependence on China for minerals and mineral processing.
The National Rural Electric Cooperative Association (NRECA) called the development a “meaningful step forward” on permitting modernization, citing a provision to expedite reviews under NEPA and other federal processes.
“As threats to electric reliability mount and our nation increasingly relies on electricity to power more of the economy, it is critical that Congress streamline the process to permit, build and maintain the infrastructure that keeps the lights on across the country,” NRECA CEO Jim Matheson said.
Critics of the bill pointed to the lack of provisions pertaining to electric infrastructure.
Steven Nadel, executive director of the American Council for an Energy-Efficient Economy, criticized H.R. 1 for attempting to repeal energy efficiency and electrification investments from the Inflation Reduction Act, including the greenhouse gas reduction fund.
“This bill would leave many Americans continuing to live in homes with outdated heating equipment, poor insulation and high energy costs,” Nadel said. “This is a repeal of investments that enable households and businesses to make energy-saving improvements. It’s a repeal of funding for low-carbon technologies in low-income and disadvantaged communities. It’s a repeal of job training programs.”
Gregory Wetstone, CEO of the American Council on Renewable Energy (ACORE), said “any truly comprehensive permitting bill needs to help streamline the nation’s unworkable approval process for electric transmission lines.”
DOA — or Possible Compromise?
Wetstone also was among those calling for compromise as the bill heads to the Democrat-controlled Senate.
“We remain hopeful Congress can negotiate a bipartisan, bicameral solution this year,” Wetstone said.
Utah Gov. Spencer Cox (R) and Louisiana Gov. John Bel Edwards (D), co-chairs of the National Governors Association’s Energy and Infrastructure Working Group, issued a joint statement calling for Congress and the Biden administration “to work together to find common ground to improve the energy and infrastructure delivery process.”
A spokesperson for Sen. Joe Manchin, chair of the Senate’s Energy and Natural Resources Committee, said Manchin could see the bill becoming the foundation for a cross-party effort on permitting.
“Sen. Manchin is taking a close look at HR1 and is hopeful there might be a pathway to permitting legislation that could gain bipartisan support,” spokesperson Sam Runyon said in a statement.
But the response from other Congressional Democrats suggests H.R. 1 might not be the right vehicle for such compromise.
“By passing this legislation today, House Republicans are putting polluters over people. This bill is nothing more than a grab bag of Big Oil giveaways and loopholes that endanger the health, safety and security of Americans,” said Rep. Frank Pallone (D-N.J.), ranking member of the House’s Energy and Commerce Committee.
“The House has passed HR1 — the GOP ‘energy package’ that would gut environmental safeguards and lock us into dirty energy sources. It would set the U.S. back decades in our transition to clean energy,” Schumer tweeted Thursday. “HR1 is dead-on-arrival in the Senate.”
WASHINGTON — FERC received passionate, emotional and sometimes angry testimony from panelists Wednesday at its roundtable on incorporating environmental justice and equity into its infrastructure permitting (AD23-5).
Acting Chair Willie Phillips and his colleagues seldom spoke, giving speakers plenty of time to lambast the commission for, as they said, failing to adequately assess how the projects it “rubberstamps” affect environmental justice communities.
EPA defines EJ communities as “minority, low-income, tribal or indigenous populations or geographic locations … that potentially experience disproportionate environmental harms and risks.” Speakers and audience members traveled to D.C. from the Texas cities of Port Arthur and Freeport, southwest Louisiana, Southern Virginia and West Virginia, among other U.S. locations where large-scale natural gas projects have been permitted — and are extremely controversial among residents.
Communities along the Gulf Coast have been particularly impacted by the boom in LNG exports, especially since Russia invaded Ukraine last year, causing an energy crisis in Europe. With seven active terminals, the U.S. is now the world’s No. 1 exporter of LNG, as suppliers rush to fill the void left by European countries reducing their imports of Russian gas.
John Beard, Port Arthur Community Action Network | FERC
Another terminal in Port Arthur is under construction; last year FERC granted developer Sempra Energy more time — until 2028 — to complete the project. John Beard, founder and president of the Port Arthur Community Action Network, told commissioners about the 120 years of environmental injustice his city has suffered.
Because of the city’s high levels of benzene and sulfur in the air, it has twice the national average for not only cancer, but also heart, lung and kidney disease, Beard said. Two-thirds of the city’s population of 55,000 are economically disadvantaged, with 30% of those being at or below the poverty line.
“This is what environmental injustice looks like, by the very companies, and others that share space with them, that are now coming before you with [applications for] permits to do more work; to heap more of a disproportionate burden on communities such as mine, and others along the Gulf Coast,” he said.
“If you don’t believe me, y’all come on down. … And all I will ask you is this one question: Were it your community, would you be breathing that kind of air? In a matter of minutes or in hours, in one simple visit, in and out, you will begin to feel the effects of what we have felt for 120 years.”
What Can FERC Do?
Among Phillips’ first acts upon being named acting chair was to schedule the roundtable, saying it would help the commission further its goals of its Equity Action Plan, initiated by the previous chair, Richard Glick. (See Phillips Presides over 1st FERC Meeting as Chair.)
The plan was in response to President Biden’s first executive order after taking office in 2021, 13985: Advancing Racial Equity and Support for Underserved Communities Through the Federal Government. As an independent agency, FERC is not required to comply with the order, but Glick opted to participate. As part of the commission’s minority under former president Donald Trump, Glick was a frequent critic of FERC’s decisions approving gas infrastructure without fully laying out the greenhouse gas emissions that would result from the projects.
“The Equity Action Plan is a roadmap for FERC to build a culture and program that ensures the commission is appropriately integrating environmental justice and equity issues into our decision making and day-to-day operations,” Glick said in April 2022, when the plan was first released. “FERC must meet its responsibility to ensure our decisions do not unfairly impact historically marginalized communities. This plan ensures that environmental justice and equity concerns finally get the attention they deserve at the commission.”
Among the elements of the plan was setting up the Office of Public Participation and creating a new position, senior counsel for environmental justice and equity, currently held by Conrad Bolston.
On Wednesday, Phillips and commissioners Allison Clements and Mark Christie solicited three sets of panelists for advice on how to fully integrate environmental justice into the commission’s decisions on infrastructure permits, including those for electric transmission. Commissioner James Danly listened to the conference by phone but did not ask any questions.
There were many different suggestions, but speakers tended to focus on broadening how the commission quantifies the cumulative impacts from projects when it conducts its environmental analyses, and creating meaningful opportunities for communities to engage with commission staff and project developers.
Ben Jealous, Sierra Club | FERC
“It’s important to endeavor to quantify the costs that this community has already been asked to endure and how much we are adding to that,” Ben Jealous, executive director of the Sierra Club, said. “And in that cost, I would include how much we estimate their property values have been suppressed. How much do we estimate the financial burden on their families due to the health impacts that past decisions have made? And how do we estimate the long-term earning potential of children who grew up with lead poisoning?
“We have the math; we have centuries of it. … We can make these algorithms. There’s very smart people … who are quite capable. So I would encourage us to get serious about the quantitative analysis and to really do our best to estimate all of the costs in dollar terms everybody can understand.”
“One of the things that makes me nervous is that folks want clear expectations,” said Matthew Tejada, EPA’s deputy assistant administrator for environmental justice. “And I completely value that. Businesses need clear expectations to make business decisions. But it’s going to take us a minute. We’re unwinding centuries of assumptions and policies here. … It is absolutely about changing the math. And that math has evolved over time to the benefit of some and disadvantage of others.”
Christie noted that each project has its own unique set of circumstances. He gave the hypothetical example of a transmission line in which the record shows one route would cost more than the other. “What do you mean by ‘changing the math?’” he asked Tejada.
Matthew Tejada, EPA | FERC
“In my experience, that math does not consider all of the impacts of that project,” Tejada replied. “There will be externalized costs to many of them. And we’re still not really good at fully capturing the societal costs, the health impact costs … things that are really hard to value; things like loss of heritage, loss of culture. … We need to know what the full cost impact of those projects are so we can look at things like community benefit agreements. … [In 10 years, we might say], ‘Yeah, using the math we use right now, that project would have been cheaper, but when we take in the full costs, that one that engineering-wise is twice as expensive? It’s actually cheaper because you don’t have all these externalized costs as a result of it.”
Anger over Lack of Engagement
Kari Fulton, Center for Oil and Gas Organizing | FERC
The second panel featured many familiar complaints about the commission’s process to include public participation in its decision-making: a lack of adequate notice of public hearings; companies sending employees to such hearings to express support, crowding out local residents; and the difficulty in accessing FERC’s arcane online docket system, eLibrary.
The panel was titled, “From the Front Line: Impacted Communities and their Challenges.” But Kari Fulton, a climate advocate speaking on behalf of the Center for Oil and Gas Organizing, expressed outrage that only two people from frontline communities — those that are already experiencing the effects of climate change — were invited onto the panel.
“Our ability to come here every month wouldn’t happen without the real, intentional buildout of the Office of Public Participation,” said Fulton, who wept as she spoke. “Every single month, they support us. I don’t know what happened with this roundtable.”
She also noted the absences of Christie, who had left after the first panel, and Danly. “I also don’t know why I’m only looking at the two Democratic commissioners for this one panel for frontline voices, with only two frontline voices. … How can we have meaningful participation, how can we create bipartisan collaboration, when there’s obviously one side that’s not even listening.”
One of those voices was Port Arthur’s Beard. The other was Roishetta Ozane, founder and director of The Vessel Project of Louisiana, who said she was prepared to not only reject the invitation, feeling it unfair to speak on behalf of her entire state, but to protest the event over the lack of frontline community speakers.
“But even in accepting the invitation, the injustices that we faced were prevalent,” she said. “We had two choices … do it virtually or come in person. Now as frontline folks, we’re tired of doing stuff virtually because we feel like you can’t feel our emotion and our tone. You can’t see our faces. We don’t know if you’re paying attention or if you’re watching so easily like Commissioner Danly, who is somewhere in the stratosphere somewhere, I guess watching online or pretending. …
Roishetta Ozane, Vessel Project of Louisiana | FERC
“But we’re here because we wanted you to see us; we wanted you to feel our emotion and feel our pain.”
Ozane noted that FERC did not provide compensation for travel, meals or hotels; instead, they relied on “coalitions that we have built; coalitions that should have been involved in the creation of this roundtable.”
Once the session reached the question-and-answer portion, Danly chimed in, making his only comments after his opening remarks apologizing for not being able to attend in person. “I just wanted to make one quick comment here, which is just to reassure everybody I am not stratospheric; I am firmly on terra firma, and I am listening to the entire proceeding with interest.”
Cumulative Impact Assessments
The third panel addressed how FERC and energy infrastructure applicants can better identify and minimize the impact of projects on environmental justice communities, including through cumulative impacts assessments.
EPA defines cumulative impacts as the “totality of exposures to combinations of chemical and non-chemical stressors and their effects on health, wellbeing and quality of life.”
Al Huang, NYU | FERC
Al Huang, director of environmental justice at the New York University School of Law’s Institute for Policy Integrity, said, “FERC needs to demonstrate a foundational commitment to environmental justice, and that means identifying who EJ communities are, engaging with them, providing support for them [and] building trust. Building that foundation can yield substantive advantages such as … identifying viable alternatives to opposed projects that can mitigate adverse impacts, and fully understanding the vulnerabilities that communities might face.
“FERC also, I believe, needs to adopt a systematic and transparent process for conducting … cumulative impact analyses through the publishing of a guidance or policy statement,” Huang said. “I think it’s so important to have a policy statement because it provides a clear understanding of how FERC does its assessments in the future.”
Establishing a clear policy is key, he said, because the “communities that are impacted will [then] have an expectation of what the analysis and process will be and can therefore participate in a meaningful way. The policy statement should identify the methodology of how EJ communities will be identified, what data will be used, what tools will be used … and a process for evaluating disproportionate impacts.”
Panelists emphasized the need for extensive outreach to encourage community members to participate in the planning process. They also urged FERC to consider the long-term impacts on disadvantaged communities of past decisions to site utility infrastructure such as power lines, pipelines and generation facilities in those communities.
Beth Rose Middleton Manning, UC Davis | FERC
Beth Rose Middleton Manning, a professor of Native American studies at the University of California, Davis, said her “primary engagement with FERC is in looking at the history of hydroelectric project permitting and the contemporary processes renewing those licenses.” She has worked with tribes in Alaska, California and elsewhere.
“The unique and important thing about these [hydroelectric] licenses is that they extend 30 to 50 years, so they’re very long in duration … and much has changed socially and politically in those time periods,” Middleton Manning said.
“What I think is very important to recognize is the lack of participation, the lack of ability to participate, the flooding of people’s lands, the taking of their rights, the annihilation of culturally important species,” she said. “All of those processes were set in place when the licenses were permitted 30 to 50 years ago, and they have never been remediated.”
“Licenses for some of these longstanding projects were developed under conditions of injustice,” she said. “And if we don’t analyze that and look very carefully at the very specific impacts, then we continue to perpetuate that injustice with decisions today.”
Aram Benyamin, LADWP | FERC
Aram Benyamin, chief operating officer at the Los Angeles Department of Water and Power, said public outreach needs to be more than “just putting a public notice out there and saying, ‘Please come at 5 p.m. to give your opinion to us, and if you don’t show up that means that you’re not interested.’ Some communities might have difficulties with transportation, difficulties with working multiple jobs, so that doesn’t count as public outreach.”
LADWP has plans to spend billions of dollars to transition to 100% clean energy, including projects for utility-scale battery storage, electric vehicle infrastructure and transmission, Benyamin said. Meaningful engagement with environmental justice communities means going to the communities and talking with residents, he said.
Carolyn Nelson, director of the Environmental Policy and Justice Division at the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration, also said it was important for those investigating cumulative impacts to understand lower-income communities and how they work.
Carolyn Nelson, PHMSA | FERC
“We have to go to the communities to understand their needs, but to also understand their histories,” Nelson said.
Even relatively small takings of homes and land to build infrastructure can have a large impact, she said.
“We may move only two houses out of 10,” she said. But if the residents of those houses are “babysitting for the rest of us … that’s a huge impact to the community. You don’t know that until you go to these communities and really talk to them and understand how they operate, how their livelihoods are. You cannot do a cumulative effects analysis without looking at the past and it being a bridge to the present.”
The U.S. Treasury Department just made its March deadline for issuing guidelines on the domestic content provisions for electric vehicle tax credits in the Inflation Reduction Act, with the Friday release of a Notice of Proposed Rulemaking that a senior department official said could cut the number of EVs eligible for the credit in the short term.
At present, 21 models qualify for the full $7,500 tax credit for new EVs authorized in the IRA, the official said during a prerelease press briefing. But, he said, “the critical minerals and batteries component requirements will reduce the number of electric vehicles currently eligible for the full credits in the short term in order to create incentives to bring supply chains and manufacturing to the United States. However, we believe these requirements will significantly increase the number of vehicles made and sold in the U.S. over the next decade as new investments and American production come online.”
The new rule will go into effect April 18, and the Treasury Department will update its list of models that qualify for either the partial or full tax credit, the official said.
With the new rules, the Biden administration appears to be balancing implementing the IRA as written — a flashpoint between the White House and Sen. Joe Manchin (D-W.Va.) — and providing a pathway for European and Asian manufacturers to qualify for the credits and remain competitive in the U.S. market at the behest of allies.
The new rules “will give manufacturers more certainty so they can make plans to onshore more of their supply chains in the coming years, and it will ensure we can work with our allies and partners to reduce our reliance on China and bolster our national security,” a senior White House official said.
China’s global dominance in the processing of critical minerals, like lithium and cobalt, and EV battery components has become a national security issue, one that Manchin intended the EV tax credits in the IRA to address while also building out domestic supply chains.
The law originally required Treasury to issue the domestic content guidelines in December. In January, Manchin took to the Senate floor in an unsuccessful bid to get an immediate vote on a bill that would have required Treasury to immediately implement the domestic content provisions.
But the NOPR hews closely to the language and intent of the IRA provisions that require that EVs meet specific domestic content percentages to qualify for the full $7,500 tax credit. For example, this year 40% of the value of critical minerals contained in an EV battery “must be extracted or processed in the United States or a country with which the United States has a free-trade agreement, or recycled in North America,” according to the Treasury Department announcement. That percentage will go up 10% every year, through 2027, at which time the required percentage will be 80%.
Similarly, the domestic content provisions set a 50% requirement for battery components in 2023, increasing 10%/year to 100% by 2029.
In addition, beginning in 2024, “an eligible clean vehicle may not contain any battery components that are manufactured by a foreign entity of concern,” the Treasury announcement said. In 2025, critical minerals extracted, processed or recycled by a foreign entity of concern will also be prohibited. At present, the U.S. State Department identifies China, Russia, North Korea and Iran as foreign entities of concern.
The NOPR also provides a list of countries that currently have free-trade agreements with the U.S.: Australia, Bahrain, Canada, Chile, Columbia, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Israel, Japan, Jordan, Mexico, Morocco, Nicaragua, Oman, Panama, Peru, Singapore and South Korea.
Chile is a key source of lithium, and Canada also mines a range of critical minerals. Japan and the U.S. signed a critical mineral agreement on Tuesday that appears to meet the free-trade provisions in the NOPR, such as refraining from imposing new trade barriers or restrictions on exports of critical minerals.
A Bumpy Road to Implementation
Since Biden signed the IRA in August, the law’s EV tax credits have had a bumpy path to implementation, with consumers and car dealers alike trying to untangle the law’s limits not only on domestic content but on consumer income and EV prices.
The 30D tax credit, as it is officially known, provides consumer incentives of up to $7,500 for the purchase of a new EV. The two-part credit includes $3,750 for EVs assembled in North America and another $3,750 based on whether the minerals in the battery are produced or processed in North America or a free-trade country.
In addition to qualify for the credit, the manufacturer’s suggested retail price for a light-duty passenger vehicle cannot exceed $55,000. The limit for SUVs and pickups is $80,000.
The income limits are $150,000 per year for individuals, $225,000 for single heads of house and $300,000 for couples filing joint tax returns. The Treasury Department issued the guidelines for these requirements in December.
Some details of the NOPR remain to be worked out. For example, the Treasury guidelines include complex, multistep processes for determining the percentages of critical minerals and battery components that will be needed to meet the domestic content requirements. For example, the three-step process for determining critical mineral content will include first determining procurement chains, then identifying qualifying critical minerals and finally calculating critical mineral content.
Senior administration officials said the Internal Revenue Service will be working with manufacturers on compliance with this process. Automakers will be incentivized to ensure they supply the IRS with accurate information, the officials said; providing false or inaccurate information could put them at risk for penalties of perjury.
WASHINGTON ― The Biden administration will deliver long-awaited guidelines for the domestic content provisions of the Inflation Reduction Act’s electric vehicle tax credits by Friday, White House Senior Adviser John Podesta told a packed ballroom at the SAFE Summit on Tuesday.
The administration has also threatened to veto H.R. 1, a Republican energy package that could roll back certain provisions of the IRA, Podesta said during a “fireside chat” with Robbie Diamond, CEO of SAFE (formerly called Securing America’s Future Energy). But the White House still hopes to work across the aisle for bipartisan legislation to streamline and accelerate permitting of energy projects.
Podesta’s top-line pronouncements kicked off the two-day summit, which focused on a “minerals to markets” analysis of U.S. efforts to end its dependence on China for the critical minerals and battery components needed to decarbonize the U.S. transportation sector, which pumps out 27% of the country’s greenhouse gas emissions. President Biden wants 50% of all new passenger vehicle sales to be EVs by 2030.
But the domestic content provisions, written into the IRA by Sen. Joe Manchin (D-W.Va.), are complicated and “very technically challenging … to implement,” Podesta said. Under the law, the Treasury Department was supposed to issue the guidelines by Dec. 31 but pushed the release back to March.
The 30D tax credit, as it is officially known, provides consumer incentives of up to $7,500 for the purchase of a new EV. The two-part credit includes $3,750 for EVs assembled in North America and another $3,750 “based on the whether the minerals [in the EV battery] are produced or processed in North America or a free-trade country,” Podesta said.
Specifically, the law requires that 40% of the value of critical minerals in an EV battery — such as lithium, cobalt and nickel — be produced and processed in North America or a free-trade country, while 50% of the value of other battery components must be similarly sourced, with the percentages increasing annually.
The law also contains a $4,000 tax credit for the purchase of a used EV, similarly, split in two.
What this means, Podesta said, is that “in the near term, auto companies are kind of scrambling to meet the terms of the credit. But over the very near term, I think we’ll see both the supply chain and the production of electric batteries [and] vehicles in the United States happening quickly. And so I’m very optimistic that this program will deliver on its promise to get people into electric vehicles.”
The Biden administration may also have found a workaround for the domestic content provisions, with its announcement on Tuesday of a new agreement with Japan on critical minerals. The agreement “memorializes the shared commitment of the United States and Japan with respect to the critical mineral sector to facilitate trade, promote fair competition and market-oriented conditions for trade in critical minerals,” according to a press release from the U.S. Trade Representative.
The IRA has a very vague definition of what constitutes the kind of free-trade agreement that will qualify a foreign automakers’ EVs for the tax credit, and Biden and Ursula von der Leyen, president of the European Commission, recently agreed to work on a similar agreement for the EU.
Permit Twice as Fast
Building out that supply chain — which will require opening new mines, processing plants and other factories — will also mean cutting down the sometimes decades-long time frames needed to permit such projects, Podesta said. For example, he said, getting to Biden’s goal of 50% EV sales by 2030 will increase electricity demand and the need for high-voltage DC transmission.
“We need to increase our high-voltage, high-performance transmission in the electric sector by 60% by 2030,” Podesta said. “In order to do that, we need to permit twice as fast as we’ve been permitting, maybe even faster than that, quite frankly. … It’s a tremendous bottleneck, both [having] the ability to build high-voltage transmission as well as the problems of interconnection, of [a] balkanized grid.”
Biden supported a Manchin-proposed bill aimed at improved permitting, which died on a 47-47 vote in the Senate in December. Republican opposition was more political than based on “substance of what was in the legislation,” Podesta said. “It would have been very helpful. … It was a balanced bill that dealt with energy security.” (See Manchin Permitting Bill Falls Short in Senate.)
On the other hand, Podesta slammed H.R. 1, the Republican energy bill now in the House of Representatives, which, he said, “has nothing that deals with these clean energy challenges.”
Dubbed the Lower Energy Costs Act, the GOP bill would repeal “several very important provisions in the Inflation Reduction Act, particularly those oriented towards providing support for middle- and low-income Americans,” he said. “It’s got some very dubious environmental giveaways, including exposing workers to hydrochloric acid.”
Debate on H.R. 1 is ongoing in the House, where Republican leaders may attempt to turn some of the bill’s provisions into bargaining chips in negotiations over raising the debt ceiling, according to a report in The Hill. While the bill could pass in the House on a party-line vote, it will likely die in the Senate. Even so, “we’ve issued a veto threat,” Podesta said.
With energy policy increasingly divisive and politicized, Podesta said, Biden is not waiting on Congress to advance his clean electricity and transportation agendas.
On the permitting front, “we’ve reorganized the White House to create a permanent council amongst the cabinet secretaries,” he said. “I’ve served in in three White Houses. I have never seen the top tier of political appointees pay attention to individual permitting decisions. That’s always well down; things get stuck, they drift.
“No one sort of gets in and unties the knot, [but] the president is demanding action from us, and we’re going try to produce that,” he said.
Tax Credit Pushback
The IRA’s EV tax credits have had a bumpy path to implementation as consumers and car dealers alike try to untangle the law’s limits not only on domestic content but on consumer income and EV prices. To qualify for the credit, the manufacturer’s suggested retail price for a light-duty passenger vehicle cannot exceed $55,000. The limit for SUVs and pickups is $80,000.
The income limits are $150,000 per year for individuals, $225,000 for single heads of house and $300,000 for couples filing joint tax returns. The Treasury Department issued the guidelines for these requirements in December.
The delay on guidelines for the domestic content provisions was widely seen as a result of the pushback from U.S. allies in Europe and Asia, who argued that the requirements were exclusionary and would draw investment away from their markets to the U.S.
“At the end of the day, if we’re going to be reaching our climate goals, we need to have consumers being able to select the cars they prefer from all the available options among countries that compete fairly in trading,” Lambrinidis said. “And if we cut that off, what you have is probably cars that cost more … so we basically undermine our capacity to meet our climate goals.”
With domestic content provisions on hold, Treasury has allowed qualifying consumers to claim the full $7,500 tax credit on EVs bought since Jan. 1, provoking an angry reaction from Manchin. Taking to the Senate floor, he made an unsuccessful bid for a quick vote on a bill that would have forced Treasury to immediately implement the domestic content provisions. (See IRA’s EV Tax Credits Spark Senate Debate.)
But some U.S. automakers began thinking about domestic supply chains well before passage of the IRA, said Jeffrey Morrison, vice president of global purchasing and supply chains for General Motors, during his fireside chat with David Shepardson of Reuters.
The law is “completely aligned with what we’re trying to do,” Morrison said. “We had this strategy, probably a year or a year and a half before the IRA came out. We knew that the capacity we needed wasn’t there. We had to build new capacity, and we wanted to have a more resilient value chain … than what exists today. So, we were already on a path of how do we look at critical minerals and all the chemical processing that’s required to make battery components and battery cells and how do we rebuild that.”
GM is working with companies in “allied countries;” for example, its partnership with Korea’s LG Energy Solution (LGES) to produce the Ultium battery packs for its electric models. The two companies in December announced plans to expand a production facility in Tennessee, and LGES just announced expanded plans for an Arizona battery plant. (See LG Energy Solution Quadruples Size of Ariz. Factory Plan.)
The IRA’s tax credits, domestic content provisions and all, are “wind in our sails,” Morrison said. “The challenge really is how do you pick the right partners? And then how do you execute as fast as you possibly can to get there with what ends up being major industrialization projects?”
Ted Thomas | © RTO Insider LLC
