President Joe Biden is walking a fine bipartisan line to get an infrastructure deal passed for the country, but some Democrats say they won’t follow along without a complementary piece of legislation that makes a larger investment in tackling the climate crisis.
That legislation could take the form of a reconciliation bill, which would ignite a special process that expedites tax, spending and debt legislation, avoiding the kind of hold-ups impinging the infrastructure deal.
Budget resolutions can’t be filibustered and set the priorities for a reconciliation bill, which can be passed with a simple majority instead of 60 votes.
“We’re at a turning point here,” Sen. Ed Markey (D-Mass.) said at an OurEnergyPolicy panel discussion on Tuesday. The “planet is running a fever,” and “we have to engage in preventative care.”
Markey and other Democratic leaders are looking to the reconciliation process to find a formula that works for funding programs that address the climate crisis, he said.
But when Biden expressed support for a reconciliation bill as a parallel track to the infrastructure deal, previous Republican backers of the infrastructure package said they would pull their support. It is still unclear whether either option will be successful, but Markey said Tuesday: “No climate, no deal.”
He is calling for $100 billion for spending on the climate crisis, but at minimum there will be $27 million for public and private investment, Markey said.
Along with Rep. Alexandria Ocasio-Cortez (D-N.Y.), Markey is also pushing for funding for a Civilian Climate Corps as part of a reconciliation bill. The civilian corps would operate under Americorps to bring young people in to help ameliorate the climate crisis.
Budget resolutions would also create tax breaks for wind, solar and battery storage projects, while eliminating all tax breaks for oil, coal and gas.
Markey said that what is making climate rise to the top of the issue list in Washington is the movement of young people, such as the Sunrise Movement, speaking out and pushing for immediate change.
“It’s what changed the dynamic of where we are right now,” Markey said.
Relationships between state and federal entities on large-scale infrastructure projects featured prominently at the second day of the Mid-Atlantic Conference of Regulatory Utilities Commissioners’ (MACRUC) 26th annual Education Conference at the Nemacolin Woodlands Resort in western Pennsylvania on Tuesday.
The annual conference was one of the first in the energy sector to return to in-person attendance after lockdowns and other preventative health measures stemming from the COVID-19 pandemic forced the cancellation of events around the country. (See In-person MACRUC Conference Scheduled for June.)
Attendees filled the Marquis Ballroom of the Nemacolin as others participated virtually in the hybrid event, of which this year’s theme was “policy, process and people.”
Moderators Beth Trombold, of the Public Utilities Commission of Ohio, and Talina Mathews, of the Kentucky Public Service Commission, led the first panel discussion of the morning on the impacts of the Biden administration’s new direction in energy policy on regulators and utilities. They asked panelists whether it would be more effective for the federal government or state governments working together to lead the development of infrastructure projects.
Kevin Gunn, an energy attorney with Paladin Energy Strategies and former chairman of the Missouri Public Service Commission, said a “master class in federalism” is about to play out as conflicts arise over federally funded infrastructure projects and how individual state processes handle money coming in to develop projects.
Gunn said it will probably take the intervention of the federal government to develop multistate transmission projects because of the logistics involved. Each state has its own siting processes, Gunn said, but the federal level can help streamline the process.
“For this to really work, you need transparency, communication and working together,” Gunn said. “It absolutely has to be a partnership.”
Kelly Speakes-Backman, the acting assistant secretary for the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy (EERE), said not only will it take federal and state governments working together on infrastructure planning, it will also involve other stakeholders providing “unprecedented coordination” to make projects happen.
She said EERE has taken on state and local coordination as one of its core principles as projects are developed. The administration is also looking at what legislative or policy changes need to be made to make sure infrastructure and transmission projects happen. “We’re not looking to just put technologies out there in the field or improve transmission without first understanding what communities need and what their priorities are,” she said.
Phil Moeller, executive vice president of the Edison Electric Institute, said FERC’s recent announcement that it’s creating a task force to work with the National Association of Regulatory Utility Commissioners (NARUC) on transmission policy was a “good sign” for electric transmission projects. (See FERC Sets Federal-State Taskforce to Spur New Tx.)
Moeller also highlighted the work started a decade ago in MISO of the Multi-Value Project (MVP) portfolio as an example of how transmission can be examined today. (See MISO Stakeholders: New Blueprint Needed for Tx Planning.) He called the portfolio an “extraordinary effort” as one of the few large-scale transmission project buildouts completed in the U.S. in the last 20 years.
The projects had to be sold by investor-owned utilities and cooperatives to multiple states, Moeller said, and relationships had to be built for success. He said the model will now have to be duplicated across the country as more transmission is needed.
“We can’t kid ourselves; this is going to take a lot of work,” Moeller said. “It’s got to be done, but it’s going to take time and effort from a lot of the people in the NARUC community, federal agencies, private energy companies and co-ops to get these massive transmission projects done.”
The Oregon legislature’s passage of a 100% clean energy bill on Saturday could mean the entire West Coast — California, Oregon and Washington — could see a sharp reduction in greenhouse gas emissions by mid-century along with a growing number of states in the interior West.
The measure, HB 2021, requires the state’s investor-owned utilities to serve retail customers with 100% clean energy by 2040. Only New York shares such an ambitious timeline. Neighboring California and Washington require utilities to rely on zero-emitting resources by 2045.
The efforts of Oregon Democrats to enact broader carbon cap-and-trade bills in the past two years were thwarted when Republican lawmakers staged walkouts, preventing a quorum for voting.
“HB 2021 isn’t the sweeping cure-all carbon cap bill many in Oregon have sought,” Angus Duncan, Pacific Northwest consultant to the Natural Resources Defense Council wrote in a blog post after the bill’s passage. “In some ways it’s Oregon catching up to similar standards adopted by our neighbors north [Washington] and south [California] and seven other states.”
The bill would require Oregon’s large investor-owned utilities, primarily Portland General Electric and PacifiCorp, to reduce greenhouse gas emissions 80% by 2030 and 100% by 2040. IOUs serve about three-quarters of the state’s population.
Oregon’s energy mix currently consists of 37% hydropower, 27% coal and 25% natural gas, along with smaller contributions from wind, nuclear and solar power, according to the Oregon Department of Energy. The state’s numerous energy cooperatives and municipal and publicly owned utilities rely largely on hydropower.
Gov. Kate Brown, a champion of electric vehicles and other environmental causes, is expected to sign the measure soon. She placed it on her list of bills of “particular significance.”
“Whether it’s fire recovery, infrastructure, clean energy, or education, we passed significant legislation that will have a lasting impact,” Brown said in a statement upon the conclusion of the 2021 legislative session Saturday night.
Other states in the Western Interconnection with 100% clean energy mandates include Nevada and New Mexico. Colorado legislation requires utilities that serve more than 500,000 customers to adopt 100% clean-energy standards.
Hawaii, Maine, New York and Virginia have similar mandates.
PSEG is accelerating its greenhouse gas reduction efforts to reach net-zero emissions by 2030, 20 years earlier than its previous target, by modernizing its natural gas and electric transmission and distribution networks and investing in new technologies that enhance electrification and improve efficiency.
In an announcement June 24 the company said it has already cut emissions by 50% from 2005 levels and will now focus on transitioning further to zero-carbon electricity generation and reducing emissions related to providing natural gas to almost 2 million New Jersey customers.
PSEG said the initiative stems partly from the company’s recognition of the “importance of sustainability and environmental, social and governance considerations in the strategic planning and decision-making process.”
The company said in July 2019 that it would cut its power fleet’s carbon emission by 80% from 2005 levels by 2046 and attain net-zero emissions by 2050. The decision to move that target early is “in line” with President Biden’s desire for the U.S. electric sector to be carbon-free by 2035, the company said.
“The federal goal of achieving a 100% carbon-free electric supply by 2035 is an ambitious one that will require technology innovation, new policy frameworks, and a commitment by businesses and consumers across the economy,” PSEG CEO Ralph Izzo said. “With our new comprehensive vision for net-zero by 2030, we’ve set an ambitious goal to reduce or eliminate greenhouse gas emissions across our business — including our facilities and vehicles — in less than a decade, doing our part to support state and national objectives.”
Top 5%
The new target puts PSEG in the top 5% of utilities studied nationwide by EQ Research, a North Carolina-based policy research, analysis and data services consulting company. However, that study did not include utilities in New York and New Jersey because they are not required to publish integrated resource plans, CEO Miriam Makhyoun said. The same study of 94 utilities nationwide found 45 had set goals by 2030, yet only five of those set a target of 100% emissions reduction, she said.
PSEG said it will direct half its capital spending program of $14 billion to $16 billion from 2021 to 2025 toward decarbonization, emission reduction, methane reduction, clean energy transition and adapting to climate change, including readiness for storms.
Programs to replace old cast-iron and unprotected steel gas mains and evaluate alternatives to natural gas will help reduce methane and other emissions, such as sulfur hexafluoride, the company said. And if the company cannot reduce its carbon footprint entirely, “PSEG will explore high-quality offsets,” the company said.
Greg Gorman, conservation chair for Sierra Club New Jersey, said PSEG “deserves credit for recognizing the urgency of the climate crisis and accelerating their net-zero pledge to 2030.”
“PSEG’s climate plan is a good step forward and opens the door for awesome innovations, job creations and lucrative opportunities,” Gorman said. “We also fully support PSEG’s decision to invest in offshore wind development. In addition to fully decarbonizing its business operations, the utility must plan for eventual replacement of its nuclear units with clean, renewable generation.
“However, we believe that PSEG could do a whole lot more,” he added. “Their plan involves purchasing carbon offsets instead of reducing their direct emissions by phasing out gas delivery completely and helping their customers to fully electrify their buildings and vehicles.”
Responding to a question from NetZero Insider, PSEG declined to specify the extent of its use of offsets.
Changing Business Model
The utility’s latest announcement comes in a period of significant company milestones. In April, the New Jersey Board of Public Utilities voted to award $300 million in annual subsidies over three years to the state’s three nuclear power plants, which are mainly operated by PSEG. The plants are key to the state’s ability to reach the goal of 100% emission reduction by 2050. (See NJ Nukes Awarded $300 Million in ZECs.)
PSEG said last year said it is exploring “strategic alternatives” for its fleet of fossil fuel-fired generating facilities that generate more than 6,750 MW of power in New Jersey, Connecticut, New York and Maryland. And the 1,100-MW Ocean Wind offshore wind project, of which PSEG owns a quarter share, to put 98 wind turbines 15 miles off the Jersey Shore is moving ahead. Construction on the project, the remainder of which is owned by Ørsted, is expected to begin next year.
Raymond Cantor, a lobbyist for the New Jersey Business & Industry Association, one of the state’s largest business groups, said that although PSEG is divesting its fossil fuel plants, they will still be used to generate electricity for the state.
“Those plants aren’t going away,” and the state will continue to rely on natural gas for a while, he said. “From a company perspective, PSEG is making the decision to go in a certain direction. But from a New Jersey overall generation perspective, we’re relying on natural gas and we will be for quite some time.”
Pam Kiely, associate vice president of U.S. climate at the Environmental Defense Fund, welcomed the move and noted PSEG’s support for regional and national decarbonization efforts, which she called “absolutely essential and a critical component of leadership.”
“Taking action across your own system is valuable, but PSEG has really stepped up to the plate when it comes to advocating for solutions that will help accelerate the decarbonization trajectory across the industry,” she said. She added that PSEG was a signatory to a letter sent to the Biden administration pledging support for its emissions-reduction policies.
“To have companies like PSEG stepping up to affirm that not only is that level of ambition feasible, but also necessary, is a critical addition to the discussion,” she said.
The NYISO Business Issues Committee on Wednesday voted to recommend Management Committee approval of an update to the Market Administration and Control Area Services Tariff to explicitly allow municipal electric utilities to provide metering and/or meter data services for demand side resources and, in the future, distributed energy resources, consistent with the ISO’s historical practices.
Distributed resources operations analyst Alexis Hormovitis presented the tariff revisions to the BIC.
The update is to close an unintended gap in the tariff arising from the ISO’s 2019 DER Participation Model tariff revisions, approved by FERC, which modified the types of entities eligible to provide metering and/or meter data services, Hormovitis said.
NYISO has historically accepted demand side resources meter data from Transmission Owners and meter service or meter data service providers, including municipal electric utilities. The 2019 revisions required that metering and/or meter data services for demand side resources be procured from a member system or a meter services entity, which unintentionally disqualified municipal electric utilities.
The DER-related tariff language is currently expected to go into effect with the DER Participation Model in Q4 2022. Pending approval of the proposed tariff revisions by the Management Committee and the NYISO Board of Directors, and acceptance by FERC, the NYISO would subsequently propose updates to the applicable manuals to align with the updated tariff language.
Elects NYPA’s John Cordi Vice Chair
The BIC also elected John Cordi, Senior Energy Market Advisor with the New York Power Authority, to serve as vice chair for the upcoming 2021-2022 term. Cordi will also serve as the BIC vice chair for the remainder of the current 2020-2021 term. Cordi previously served as vice chair and chair of the Operating Committee.
He represents NYPA at NYISO stakeholder meetings and at the New York State Reliability Council’s Installed Capacity Subcommittee, US Energy Storage Association, American Public Power Association and National Hydropower Association.
Thousands of customers of Avista Utilities lost power during a record-smashing heat wave on Monday and Tuesday when the utility ordered rolling blackouts in Spokane, Wash.
About 9,300 customers lost power on Monday, when Spokane temperatures hit 105 degrees Fahrenheit. Power was cut to about 24,000 customers on Tuesday, as the city hit an all-time high of 112 F.
They were the first heat-related power outages to hit the inland Pacific Northwest in at least 20 years. California last year experienced its first rolling blackouts since the Western energy crisis of 2000/01.
While Spokane-based Avista has not announced further blackouts, it has asked customers to cut back on power use from 1 p.m. to 8 p.m. through at least Friday.
“While we plan for the summer weather, the electric system experienced a new peak demand, and the strain of the high temperatures impacted the system in a way that required us to proactively turn off power for some customers. This happened faster than anticipated. Moving forward, we’re committed to reducing the length of outages and supporting our customers during this time with proactive information to manage through the protective outages that are expected this week,” Avista CEO Dennis Vermillion said in a press release.
Avista blamed Tuesday’s rolling blackouts — averaging about an hour each — on its distribution system, especially transformers, being overloaded.
“I do want to clarify that this was a distribution constraint issue; it’s not a supply-side [issue],” Heather Rosentrater, Avista senior vice president for energy delivery, said during a press briefing Tuesday. “When people think about rolling outages, I think they think about those that they’ve heard about in California or even in Texas and have seen those spread across broad areas in their system.”
The utility serves about 340,000 electric customers in Washington and Idaho.
Washington state has experienced a record heat wave since Sunday, with Seattle temperatures reaching a record-shattering 108 F on Monday.
In Oregon, where Portland set successive record highs of 112 F and 116 F on Sunday and Monday, about 6,300 customers of Portland General Electric lost power over the weekend because of localized stresses on the distribution system. Power went out for another 3,500 PGE customers in the Salem area on Monday, where the temperature hit 117 F.
No utilities in the region have reported supply shortages during the heat wave.
Connecticut’s electric vehicle program got a boost on Monday with the announcement of improvements to a consumer rebate program and the award of a federal grant to purchase battery electric buses (BEBs) and DC fast chargers.
New incentives for the Connecticut Hydrogen and Electric Automobile Purchase Rebate (CHEAPR) program increase rebate amounts, expand coverage to used as well as new EVs and provide an additional income-eligible incentive. CHEAPR provides a cash rebate for any Connecticut resident who purchases or leases an eligible EV costing up to $42,000. EVs covered by CHEAPR include battery electric (BEV), plug-in hybrid electric (PHEV) and fuel cell electric vehicles (FCEV).
The new incentive levels for CHEAPR, funded through a fee on vehicle registrations and new vehicle sales, include:
$2,250 for a new BEV (previously $1,500)
$750 for a new PHEV (previously $500)
$7,500 for a new FCEV (previously $5,000)
There are additional rebates for new and used EVs called Rebate+ New and Rebate+ Used, open to individuals meeting certain income qualifications. These rebates allow purchasers or lessees to receive an additional $2,000 for a new BEV ($3,000 used); $1,500 for a new PHEV ($1,125 used) and $2,000 for a new FCEV ($7,500 used). Rebate+ applicants must be enrolled in qualifying state or federal programs.
Also Monday, the state Department of Transportation was awarded a $7.4 million grant from the Federal Transit Administration to purchase 10 BEBs and 10 DC fast chargers. The upgrades will make the city of Waterbury’s bus depot the first facility in the state capable of running a 100% BEB transit fleet. The federal grant will be matched with $5.7 million in state funding and other sources. Connecticut has a goal of a fully electric bus fleet statewide by 2035.
In an interview with NetZero Insider, state Sen. Will Haskell (D), chair of the General Assembly’s Transportation Committee, said Connecticut has an “ambitious goal” of 500,000 EVs on the road by 2030 to meet its statutorily mandated greenhouse gas reduction target of 45% below 2001 levels.
“Unfortunately, we’re nowhere near that goal,” he conceded. ”We’ve got to do a better job of promoting more equitable access to green technology and 21st-century infrastructure, and that means doing everything we can to make it more affordable for people to get behind the wheel of an electric vehicle,” Haskell said. “And for those who can’t afford to own a vehicle and rely on public transit to get to work, let’s make sure that diesel exhaust isn’t pumped into their lungs each and every day.”
Haskell said he applauds the improvements in the CHEAPR program even as Connecticut lags behind other states in adopting EVs. Haskell said he recently visited Connecticut-based JuiceBar EV Charging’s manufacturing plant, which he said was bustling with orders.
“What’s so frustrating is that they send the vast majority of their products out of state because Connecticut lags behind not just in EV adoption but also in the deployment of EV infrastructure,” Haskell said.
JuiceBar and EV charger manufacturer EVSE are two companies that could turn Connecticut from a laggard to a leader in EV infrastructure.
“We’re lucky that these jobs happen to be in Connecticut right now, but what if we decided as a state, we’re going to orient our policy for public health reasons, for environmental reasons but also for economic development reasons toward really embracing this new industry,” Haskell said.
If there is one thing Republicans and Democrats on the House Energy and Commerce Subcommittee on Energy can agree on, it is the need to reform the yearslong, expensive and often project-killing process that permitting new, interregional transmission lines has become.
However, as seen at Tuesday’s subcommittee hearing on transmission, sharp disagreements arise on what reforms may be needed and whether they can be put in place in time to permit the thousands of miles of new transmission required for President Biden’s vision of a decarbonized U.S. power system by 2035 and a net-zero economy by 2050.
“Successfully siting interstate transmission lines is notoriously difficult … in large part because of the burdensome and unworkable regulatory environment we face,” said Rep. Scott Peters (D-Calif.), introducing his Prevent Outages With Energy Resiliency Options Nationwide (POWER ON) Act (H.R. 1514). The bill would, he said, “clarify the Federal Energy Regulatory Commission’s backstop siting authority for interstate transmission projects, while establishing more inclusive engagement processes for states, tribes [and] property owners.”
Other proposed legislation being discussed at the hearing — all sponsored by Democrats — included the:
Climate Leadership and Environmental Action for our Nation’s (CLEAN) Future Act (H.R. 1512), an omnibus bill that, among other provisions, would require FERC to reform its interregional transmission planning, while providing financial and technical assistance to state, local and private governments for planning and permitting;
Interregional Transmission Planning Improvement Act (H.R. 2678), which also focused on FERC reform; and
Efficient Grid Interconnection Act (H.R. 4027), which would promote more equitable cost allocation for transmission and using grid-enhancing technologies to increase efficiency and capacity. (See New Bill Would Tackle Tx Cost Allocation.)
The CLEAN Future Act, in particular, would also make sure transmission buildout occurs responsibly and does not result in overbuilding, said Rep. Frank Pallone (D-N.J.), chair of the full committee. “New and innovative technologies can allow us to use our existing transmission infrastructure more efficiently. Transmission planning processes can be made more transparent to the public, allowing us all to better understand how need transmission needs are identified,” he said. “These and other measures will help protect ratepayers from unnecessary and excessive transmission infrastructure costs.”
The Republican response to the Democrats’ bills amped up what they see as the practical and economic obstacles to transmission and clean energy buildout. Meeting Biden’s targets for cutting emissions would require “massive electrification on an unprecedented scale and pace for the next 15 years, and it would amount to a construction program 600% larger than any utility buildout that we’ve seen in the last half century,” said Rep. Cathy McMorris Rodgers (R-Wash.), the ranking member of the full committee.
“You cannot do this without extraordinary mandates and costs on workers and families,” said Rodgers, speaking during the three-hour morning session of the daylong hearing. “That’s why it seems unrealistic, unattainable.”
Rep. Gary Palmer (R-Ala.) raised concerns that building out the interregional, high-voltage lines would require “a very aggressive use of eminent domain,” which would “usurp the rights of states in regard to controlling what gets built in their states.” He pointed to Iowa’s 2017 law prohibiting the use of eminent domain for high-voltage transmission lines across the state and a list of failed transmission projects, such as the Northern Pass transmission line, intended to bring Canadian hydropower to the U.S., which was rejected by New Hampshire.
Even using existing right of ways may not be a solution, Rep. Morgan Griffith (R-Va.) said, arguing that rail and highway easements are not sufficiently wide and existing transmission corridors already have high-voltage lines. “How do you envision we have these double-decker lines?” he said. “How are you going to have all these power lines in the same easement?”
Multipronged, Collaborative and Holistic
The GOP arguments were largely directed at Patricia Hoffman, acting assistant secretary of the Department of Energy’s Office of Electricity, who was the sole witness before the subcommittee’s morning session. While acknowledging the challenges ahead, Hoffman repeatedly focused on the benefits of expanding transmission to meet Biden’s clean energy goals.
Investing in a robust transmission system, she said, “will help minimize power outages, protect the grid against climate-induced extreme weather [and] restore electricity more quickly when outages occur. But most importantly, expanding transmission capacity improves the resilience and flexibility of the energy system by creating more numerous energy delivery pathways.”
Underlining the need for reform, Hoffman pointed to a recent study from Americans for a Clean Energy Grid (ACEG) that identified 22 “ready to go” transmission projects that might be helped by a transmission investment tax credit, which is included in Biden’s American Jobs Plan. Another report found 755 renewable generation projects, most of them solar, sitting in interconnection queues across the country, she said.
Overcoming the barriers will require a “multipronged” approach, Hoffman said. “We have to think about a national plan for interregional transmission projects; really look at the states and what they’ve done for their 10-year plans [and] how can we integrate that so that we actually can address transmission across the United States. It will require a collaborative process with the states to think about the transmission needs where we’d like to develop the next-generation clean generation resources and how to get all that built in a holistic fashion.”
In her written testimony, Hoffman highlighted the DOE’s Transmission Congestion studies conducted every three years and its ability to designate “national interest transmission corridors” in regions where transmission is constrained.
Former FERC Commissioner Critiques Bills
In the afternoon session, ACEG Executive Director Rob Gramlich and Analysis Group’s Susan Tierney endorsed the legislation. Tierney said the bills incorporate many of the recommendations in two recent National Academies of Sciences, Engineering and Medicine reports in which she participated on the future of electric power and decarbonization.
“The bills … would constructively address very persistent impediments to planning for, investment in and siting of transmission infrastructure that is so needed for the U.S. electric system to be fit for purpose in the 21st century,” she said.
Republican members of the committee repeatedly called on former FERC Commissioner Tony Clark, now a senior adviser to law firm Wilkinson Barker Knauer, who expressed concerns over many of the proposals in the legislation.
Clark said he backs efforts to clear roadblocks to needed investment and said he was heartened by FERC’s creation of a state-federal task force on transmission. (See FERC Sets Federal-State Taskforce to Spur New Tx.)
But he said Congress should pursue policies that reflect “bottom-up, not top-down,” decision-making and respect regional differences.
“Any efforts at interregional and regional planning and cost allocation for electric transmission should reflect the plans that are developed first at the local and state levels; they should not be an imposition of a predetermined federal ‘solution’ that may not meet the needs of end-use consumers in each of the states,” said Clark, a former North Dakota regulator.
“This is a large country with diverse natural resource bases and different regional supply-and-demand characteristics. This diversity should caution against the federal government adopting policies that assume all regions need to meet their needs in the exact same way. Indeed, transmission might be the best way to serve customers in a particular state or region, but in another state or region, those goals might be better met by accessing generation that’s closer to load,” he continued.
“What I don’t think you would want to have happen is someone sitting in a conference room in Washington, D.C., drawing bubbles around certain areas of the map that are windy areas and other areas of the map where there are load centers and then drawing a line in between the two and developing plans based simply off that.”
Clark said the federal siting provisions in H.R. 1514 are “much, much broader” than the limited federal backstop authority included in the Energy Policy Act of 2005, which was limited to transmission needed for reliability and which he said were “neutered” by court rulings.
“As proposed in this legislation, it broadens it out to include projects that might just be good for renewables, and it does so in a way that pre-empts states probably more aggressively than the original legislation did,” he said.
Gramlich said Congress should fix the two-step process in EPAct05, which had DOE designate transmission corridors and FERC issue permits, with multiyear National Environmental Policy Act reviews required at each step.
“Let’s keep it surgical and targeted. Maybe just say something over 1,000 MW that crosses multiple states is FERC-jurisdictional,” he said. “That gets closer to [the law on] gas pipelines. We’d love to have parity with gas pipelines’ permitting on the electric side.”
Maine Gov. Janet Mills has signed a bill setting a 300-MW energy storage goal by 2025, rising to 400 MW by 2030.
The Act to Advance Energy Storage in Maine (LD 528) also directs regulators to open a docket to investigate time-of-use rates to signal to consumers when to reduce demand. The proceeding will include implementation of a pilot program for energy storage time-of-use rates.
The Energy Storage Association (ESA) applauded Maine for becoming the ninth state to set a storage target.
“It’s the summer of storage in New England,” ESA CEO Jason Burwen said in a statement.
Maine’s law directs Efficiency Maine Trust, the independent administrator for state programs to improve energy efficiency and reduce greenhouse gases, to consider expanding its current programs to support energy storage measures that reduce or shift demand or balance load. The trust also must establish a pilot program at the beginning of next year to deploy up to 15 MW of energy storage capacity for critical care facilities, such as hospitals and fire departments.
In addition, the law directs regulators to consider deploying a power-to-fuel pilot program for projects that convert renewable energy to hydrogen gas, methane or other fuel. The Public Utilities Commission will submit a report on the pilot next year to the Energy, Utilities and Technology Committee. The committee may report out a bill related to the agency’s findings during the next regular legislative session.
“Exploring and investing in energy storage will help Maine take better advantage of renewable energy sources,” Sen. Eloise Vitelli (D) said in a statement on the bill’s passage. “It will also increase the overall stability of our energy grid and support more jobs that come with our growing green energy industry.”
The law is designed to address shortfalls in Maine policy regarding storage that were identified by a 2019 state commission on energy storage, of which Vitelli was a member.
Green Bank
Mills also signed a bill last week that creates the Maine Clean Energy and Sustainability Accelerator, an entity to help deploy private capital in support of low- or zero-emissions goods and services.
“It is fantastic that Maine has joined a growing number of states in establishing its own green bank, and it has done so on a bipartisan basis,” Jeffrey Schub, executive director at Coalition for Green Capital, told NetZero Insider. “This continues the national trend of bipartisan support for mobilizing private investment and creating jobs while lowering energy costs through green bank investment. But to bring this policy to life, it needs funding from the matching bipartisan federal legislation.”
Rep. Debbie Dingell (D-Mich.) and 10 other Democrats joined with Republican Reps. Brian Fitzpatrick (Pa.) and Don Young (Alaska) to sponsor legislation earlier this year that would create a federal clean energy accelerator (HR 806).
“Congress must pass the Clean Energy and Sustainability Accelerator act to ensure Maine and every other state can realize these economic and energy benefits for their communities,” Schub said.
The law establishes the accelerator as a specialized financial entity under Efficiency Maine Trust. Its mandate is to support a rapid transition to a clean economy, and it must ensure that 40% of its investments are directed toward low-income communities and households, communities of color and tribal communities.
Offshore Wind Array
An act that directs Maine regulators to enter a long-term contract for a 144-MW floating offshore wind research array also gained the governor’s approval.
Mills signed the Act to Encourage Research to Support the Maine Offshore Wind Industry (LD 336), which allows a state utility to contract with New England Aqua Ventus — a joint venture between Mitsubishi Corp.’s Diamond Offshore Wind and RWE Renewables — for the project.
The bill builds on the current Aqua Ventus pilot project, which secured a 20-year power purchase agreement in 2019 for installation of one semisubmersible concrete floating platform for an 11-MW wind turbine. The pilot will be deployed near Monhegan Island about 14 miles from the Maine coast.
Aqua Ventus will test deep-water floating OSW technology designed by the University of Maine’s Advanced Structures and Composites Center. UMaine’s patented VolturnUS floating concrete hull is designed to hold turbines in waters deeper than 147 feet.
Any contract for the new array would require Aqua Ventus to build a facility in Maine to manufacture the VolturnUS, or similar hulls, for the project.
The U.S. lags other wealthy countries in prioritizing sustainable investing, participants in virtual panel hosted by the Institute for Energy Economics and Financial Analysis (IEEFA) said last week.
Despite progress in recent years, the panelists said, the mainstreaming of sustainable investing still faces structural hurdles, particularly at the institutional level, with financial service providers and regulators only slowly responding to the impact of climate change.
Tanya Kar, Sunrise Project | IEEFA
Tanya Kar, finance campaigner for the Sunrise Project, laid much of the blame on the country’s top investment houses.
“I think it’s clear that the leading asset managers fundamentally misunderstand climate risk,” she said.
The “big three” investment firms — BlackRock, Vanguard and Fidelity — manage more than $26 trillion in combined assets, more than the U.S. GDP of about $21 trillion.
“Yet these asset managers have failed to act in a way that protects the global economy from what is arguably the biggest threat of systemic risk, which is climate change,” Kar said.
Kar called out BlackRock and Vanguard as the most “egregious laggards” among asset managers in climate-conscious investing, pointing to their “enormous exposure to the full breadth of the economy.”
“Vanguard alone has stakes in more than 10,000 companies. This entails a significant amount of influence through shareholder power, which these firms could easily leverage to push their portfolio companies toward more robust climate action — but they don’t,” Kar said.
Kar said that in response to growing criticism about their shareholder voting, both firms have begun making limited disclosures of their votes on climate-related issues, but “usually well after the decisions have been made.” She contended that in the “climate-critical” sectors where they have investments, such as energy, utilities, industrial and automotive, BlackRock and Vanguard “shield” company managers from accountability over climate issues and nearly always vote for company-proposed directors.
“BlackRock and Vanguard also tend to vote overwhelmingly against climate shareholder resolutions, even ones that are flagged by Climate Action 100+, which BlackRock joined last year in the wake of [CEO] Larry Fink’s promise to center climate in a renewed emphasis on sustainable investing,” Kar said.
Kar accused the two companies of “greenwashing” their reputations, noting that while both have recently signed on to the Net Zero Asset Managers Initiative, Vanguard has recently surpassed BlackRock as the largest coal sector investor among managers.
“Despite public commitments to align portfolios with the goals of the Paris Agreement, the biggest fund managers have actually increased investments in thermal coal — which is the dirtiest of the deadliest fossil fuels — since 2016, when the Paris accord was signed,” Kar said.
Sustainable Still the Alternative
Diederik Timmer, Sustainalytics | IEEFA
Diederik Timmer, executive vice president at Sustainalytics and chair of US SIF, a U.S.-based association working to improve the country’s sustainable investing environment, agreed that “the U.S. is really significantly behind what … is happening in Europe, in Australia or in Japan.”
But he added that the “investment space” is not a “homogenous field,” noting the roles of asset owners, such as pension and venture funds and insurance firms; retail investors and their advisors; and asset managers that create investment products.
“We think they operate in very different ways and have different objectives, so I think it’s hard for me to just use one paintbrush to color it all,” Timmer said.
After moving from Europe to the U.S. nearly a decade ago, Timmer visited the boards of large state pension funds and found only a few — including California’s CalPERS and Florida — were “super active” in sustainable investing. At the time, Timmer had to explain the concepts of environmental, social and governance (ESG) investing to many fund managers, he said.
“I think we’re really beyond that point, especially in the institutional asset owner space,” he said. “I don’t think that there’s many professionals that haven’t heard about sustainability, or ESG, and how it relates to their investment decision-making. It doesn’t mean that they’re all doing things, but it certainly hit their radar, and they have that first level of awareness.”
For many investment firms, sustainable investing has been relegated to the alternative portion of their portfolio, rather than being included in their normal fixed income allocations, Timmer said.
Timmer said the U.S. is unique in that sustainable investing is being driven by retail and private wealth investors who want their portfolios to reflect their concerns about the climate, rather than institutions.
“What you’re describing is really fascinating to me, because I’m familiar with this institutionally driven process out of Europe and in other markets,” responded panel moderator Melissa Brown, IEEFA director of energy finance studies for Asia. In the U.S., she said, “we’ve got this bottom-up process that’s at play.”
Hurtling Toward the ‘Climate Cliff’
Kar said the market’s adaptation to “environmental realities” is being hampered by the predominance of index — or passive — funds, which were first created by Vanguard to passively track the S&P 500. The funds offered diversification, lower risk, low fees and strong long-term returns compared with active investment, which requires investors to select and track individual stocks.
As a result, passive index investing has surpassed active investing in the U.S. and is surging worldwide as well, Kar said.
“Index investing has not only set the economy on autopilot toward a climate cliff. It’s also turned the asset management industry into an oligopoly that is quickly becoming a duopoly dominated by BlackRock and Vanguard,” she said.
Vanguard, BlackRock Respond
Reached for comment after the panel, Vanguard spokesperson Alyssa Thornton said, “We represent our investors, who have chosen to predominantly invest in broad-based index funds.
“Index funds have revolutionized investing, and our funds are designed to provide low-cost, broadly diversified exposure to a market or market segment and closely track the risk and return characteristics of a clearly defined, target benchmark,” Thornton said. “In accordance with this mandate, our index funds do not divest from specific securities in their benchmarks, including those in fossil fuel-intensive industries.”
Thornton said that because climate risk can undermine long-term investor returns and Vanguard’s index funds are “essentially permanent owners of the companies in which they invest,” Vanguard believes its “investment stewardship” activities “are the principal levers Vanguard can use to help oversee, engage upon and safeguard fund investors from climate change risk.”
Through the program, Thornton said, Vanguard engages with the boards of carbon-intensive companies on climate risk. She said Vanguard has published “clear expectations” that boards oversee their companies’ climate-related risks and disclose climate strategies and progress in hitting mitigation targets “using widely recognized investor-oriented reporting frameworks.”
“Vanguard’s attention to climate risk and engagement with issuers will continue and, importantly, complement our work with the Net Zero Asset Managers initiative. Where our research and engagement identify companies that are not moving in line with market regulation or taking the necessary action to mitigate climate risk, we will take action on behalf of Vanguard funds,” Thornton said.
“Our conviction is that climate risk is investment risk,” BlackRock said. “Among the many initiatives to help our clients navigate this risk, we have both achieved 100% ESG integration in our active strategies and, where we have discretion in these strategies, completed the exclusion of equity and bond holdings in companies generating more than 25% of revenues from thermal coal production.”
BlackRock said it provides customers investment choice in its strategies “through the industry’s largest ESG index offering.”
“We ask all companies to disclose their plan for alignment with a global net zero economy by 2050. Companies should set short, medium and long-term targets, and carbon-intensive companies should disclose scope 3 emissions. Where we do not see sufficient progress, we take voting action,” BlackRock said.
Conflict of Interest?
Kar said asset managers are reluctant to “engage or vote” in ways that compromise their financial viability, “lose access to sources of corporate power” or lose clients, including among fossil fuel companies “that bring in millions of revenues every year.”
“Investors who own such a representative swath of the whole market should be aligning incentives and interests with the whole market, not just the potential profits and losses of individual companies,” she said. “The market has actually evolved in a way to create all the wrong incentives for climate. Asset managers should not be focused on low fees or low-cost products.”
Kar called for government intervention “to realign incentives away from following a free-market ideology, which will ultimately destroy the planet.”
US SIF has been “deeply involved” in U.S. policy for many years, Timmer said, but ESG and sustainability “weren’t particularly popular topics” with the Trump administration. And while he sees a shift in momentum under President Biden, he thinks there’s a “lack of knowledge and understanding” of what is necessary to adapt the financial markets for climate action. US SIF has recommended that the White House create an advisory committee focused on sustainable finance and business, which would work across departments to implement climate-friendly policies.
Timmer also believes the Securities and Exchange Commission has “a lot of catching up to do.”
“I really hope that they will hire more people that have knowledge on this front, and then they just need to develop policies that support environmental change,” he said.
Timmer wants the SEC to start validating the claims that asset managers make with respect to their sustainability products.
“Basically, a lot of asset managers and products are being created that state that they really have significant positive impact on the environment, and I think it would be really good to make sure that the SEC validates that these claims that are being made are actually there so that we get away from the greenwashing that’s going on,” he said.
Timmer also expressed optimism over a bill Democrats introduced into the House and Senate last month to amend the Employment Retirement Income Security Act (ERISA) guidelines to clarify that retirement plan administrators can consider ESG factors when making investment decisions and that ESG can function as a “tie-breaker” when competing investments can serve a plan equally as well. The Financial Factors in Selecting Retirement Plan Investment Act would also allow ESG assets to be allowed as default investment alternatives in ERISA-covered plans.
“This risk guideline was actually a significant hindrance for many trustees of pensions to, for instance, accept ESG or climate criteria as an important metric for investing,” Timmer said.
