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MAKING THE CASE FOR AN ORGANIZED SOUTHEAST POWER MARKET: It could be very expensive for utilities like Duke Energy and Southern Company to meet their net-zero emissions by 2050 goals if the Southeast doesn’t create an organized electricity grid.
That’s a major takeaway from an Energy Innovation and Vibrant Clean Energy report released this morning making the case for a fully competitive Southeast regional electricity market. Right now, the seven-state Southeastern region is the only one in the country without any such coordination.
The details are somewhat technical: But the point is that a competitive electricity market in the region could have a lot of benefits.
For example, Energy Innovation finds that on its own, creating a regional transmission operator across the seven Southeast states would slash carbon emissions by 37% below 2018 levels by 2040. Under a scenario based strictly on Southeast utilities’ future resource plans, Energy Innovation found carbon emissions in the region would actually increase in that same time period.
Establishing an RTO would also save money, around $384 billion, and create more than 280,000 jobs compared to business-as-usual, according to the report.
Why is that the case? A competitive electricity market across the region would prioritize the least expensive and most efficient resources, which in many cases would be renewable energy instead of coal-fired power, the report notes. Such a market would also share power, and costs, over a larger area.
“Regional markets have a unique role to play in balancing renewables over a larger footprint,” said Mike O’Boyle, Energy Innovation’s electricity policy director and an author of the report.
Ultimately, that could drastically reduce the costs of decarbonizing the electricity sector, he added. “If Duke and Southern can’t find ways to do that in their region, I think you’re going to see them struggling to do it all on their own cost-effectively,” O’Boyle added. “And it may force them to use really expensive pathways.”
That raises red flags for those utilities’ corporate customers: Those companies are concerned fossil fuel generation might stick around longer “than would be advantageous to meet” climate goals, driving up the overall customer costs of cutting emissions, said Bryn Baker, director of policy innovation for the Renewable Energy Buyers Alliance, which represents more than 200 large energy buyers.
“Whether you’re looking at clean energy standards or utility voluntary decarbonization commitments, organizing their markets make any of those deep decarbonization policies orders of magnitude cheaper,” Baker added.
Why does this matter now? Duke, Southern, and the Tennessee Valley Authority have recently suggested they’re going to propose a voluntary regional energy exchange to federal energy regulators. The details are sparse, but it’s likely that proposal wouldn’t function as a fully competitive market with an independent operator, as Energy Innovation models in their report.
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Josh Siegel (@SiegelScribe) and Abby Smith (@AbbySmithDC). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.
ENERGY DEPARTMENT’S NEW NO. 2 SEEKS ‘BREAKTHROUGH’: Mark Menezes, recently confirmed as deputy secretary of President Trump’s Energy Department, envisions a future electricity grid dominated by clean energy.
Menezes, however, is warning of the perils of pushing too quickly, citing the experience of California, which recently had to shut off electricity due to a shortage during a record heat wave.
“The concept is a good one, but technology has not caught up with the aspirational goals of those who want a system powered by intermittent renewables,” Menezes told Josh in his first interview after the Senate confirmed him this month. “They seem to take it out on their customers because of decisions made more on political science than engineering science.”
Technology agenda: Menezes is eager to showcase the less-noticed work the Energy Department does to help develop technologies that he believes will be crucial to realizing a lower-carbon energy future, such as small nuclear reactors, long-duration energy storage, carbon capture, and higher-efficiency solar.
Menezes said that wind and solar can generally function as “baseload” energy 90% of any given time but that more firm, around-the-clock generating sources are needed to balance out renewables.
“We are not going to be in that position until there are breakthrough technologies,” Menezes said. “We are working hard to get that, and it will probably be in the future some time off, but we are simply not there yet.”
RECOVERY OF WORLD OIL DEMAND HAS A CEILING: Global oil demand will plateau just below normal levels following a record pace of recovery in recent months, research group IHS Markit projected Tuesday.
World oil demand has grown at a record pace — by 13 million barrels per day in the last four months — since reaching bottom in April from the pandemic-fueled crash.
Demand has reached 89% of pre-pandemic levels. But demand won’t recover to what it was before the pandemic (roughly 100 million barrels per day) for the foreseeable future, plateauing at 92-95 million b/d (or 92-95% of previous levels) through the first quarter of 2021.
Staying grounded: The main cause for the limited recovery is that travel — especially by plane — shows no signs of returning until the pandemic is contained. Jet fuel consumption is still 50% off the level from last year.
“The meteoric rise of world oil demand from the lowest lows of the COVID crash is going to come up just short of a full comeback, at least for now. For demand to fully return, travel— especially air travel and commuting to work— needs to get back normal,” said Jim Burkhard, vice president and head of oil markets at IHS Markit.
EXXON’S GIANT FALL OUT OF THE DOW: U.S. oil and gas giant Exxon Mobil has been removed from the Dow Jones Industrial Average, a dramatic fall for what was once the largest company in the world.
Exxon was an original member of the Dow, first entering in 1928 as Standard Oil of New Jersey.
“Those changes are a sign of the times — out with energy and in with cloud,” Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, told Bloomberg, referring to the dominance of technology companies.
Exxon’s stock is down 40% since January, bruised from the oil price crash, and now worth about $180 billion compared to $450 billion as recently as 2014. Chevron, the second largest U.S. oil producer after Exxon, is the only energy company left in the Dow.
NUCLEAR ON THE RISE GLOBALLY, BUT FACING CHALLENGES: Electricity generated by nuclear reached a near-record in 2019, meeting 10% of the world’s power demand. But construction of new reactors is not keeping pace with retirements, the industry group World Nuclear Association said in its annual performance report Tuesday.
The group said policymakers should “kick start” more than 100 planned new reactor projects that have been approved and are ready to begin construction as part of clean energy recovery stimulus, in order to help nuclear reach 25% of future electricity by 2050.
By the numbers: Thirteen reactors shut down last year, the second higher number ever, mostly in Europe and Asia, but also two reactors in the U.S.: Three Mile Island and Pilgrim 1. The U.S. still has the largest nuclear fleet, providing 19.7% of electricity.
Only five reactors started construction in 2019, two in China and one each in Iran, Russia, and the U.K., the first reactor to be built in Britain in 30 years.
Asia is the largest area of growth for nuclear, where generation rose by 17% in 2019. China has more than tripled nuclear generation in six years, and is now responsible for more than half of nuclear generation in Asia.
IS PEBBLE MINE DEAD? The developer of the proposed gold and copper mine in Alaska is denying reports that prominent conservative opposition to the project, including from Donald Trump Jr., has turned the White House against the project.
Tom Collier, CEO of Pebble Limited Partnership, the mine’s owner and a subsidiary of Canadian-based Northern Dynasty Minerals, says the company has been preparing for weeks a plan to address concerns raised by the Army Corps in a letter made public Monday. In that letter, the agency asked the developers to take additional measures to compensate for damages the mine will have on wetlands and streams before it can be permitted.
Opponents see it as a death knell: The move could push a final decision on the mine until after the election, and Democratic nominee Joe Biden has said he would halt the project.
Critics of the project say it will be nearly impossible for Pebble Mine to meet the bar set by the Army Corps. The developers would have to compensate for damages to more than 3,200 acres of wetlands and more than 180 miles of streams.
LAWMAKERS FROM BOTH PARTIES DEMAND WITHDRAWAL OF METHANE RULES: A group of 87 lawmakers, mostly Democrats, are calling on the EPA to abandon rules that would eliminate direct regulation of methane, which they say would reverse U.S. progress on reducing the potent greenhouse gas.
GOP congressmen Brian Fitzpatrick and Francis Rooney, who have both previously expressed concerns about the EPA weakening methane rules, joined Democrats on the letter.
The letter also raises concerns about reports the White House was seeking a weaker rule than what the EPA finalized earlier this month. “This anti-science approach to rule making at the EPA is unacceptable and inappropriate meddling in the federal rule making process,” the lawmakers wrote.
DIRECT AIR CAPTURE’S TRADE-OFFS: Mass direct air capture — meaning, sucking carbon dioxide directly from ambient air — would be less taxing on the supply of food and land than other methods of removing and storing carbon, such as planting trees, according to new research.
All carbon removal methods have trade-offs, researchers from University of Virginia and University of Maryland find in a study published Monday. Using land to grow trees or biomass, for example, competes with agriculture and requires a lot of water.
But direct air capture would entail fewer sacrifices: In a world without widespread direct air capture deployment, food prices would increase seven-fold by the end of the century, as land use competition with carbon removal compounds with population growth. With direct air capture available, food prices would only increase three-fold, according to the research.
Water and energy use are a different story: Deploying direct air capture at a scale large enough to meet global climate goals could actually mean slightly higher water use overall than what is needed for growing trees and biomass, the research finds.
Direct air capture facilities also use a lot of energy. To heat up the system alone, the technology would require up to 115% of current natural gas consumption, according to the report. Thus, Jay Fuhrman, a graduate research assistant at UVA and lead author of the paper, told Abby it’s also important to “have really robust policies for addressing fugitive methane emissions.”
DFC’S ‘ALL OF THE ABOVE’ FUNDING MIX UNDER SCRUTINY: The U.S. International Development Finance Corporation has greatly expanded its financing of renewables projects in developing countries in recent years, but it still continues to fund fossil fuels.
A report by Friends of the Earth released Tuesday found that over the past 15 years, DFC (the Overseas Private Investment Corporation before 2019) invested an average of $357 million in fossil fuel projects and over $500 million in renewables per year.
From 2005 to 2009, OPIC almost exclusively supported fossil fuel and other non-renewable energy projects, but that has changed, continuing in the Trump administration. Now the agency often funds distributed solar projects that can quickly provide cheap power to rural populations.
But since Trump came into office, there has also been a spike in support for fossil fuels, comprising a few large oil and gas projects, including a $450 million investment in 2019 to develop oil and gas off the coast of Oman.
Renewables-only approach: Friends of the Earth calls on DFC, a greatly expanded successor to OPIC, to increase support for distributed renewables, which are “best able to provide energy access that is clean and less expensive than fossil fuels” and to stop funding oil and gas. The environmental group also opposes DFC’s recent move to lift its ban on funding nuclear projects, arguing small reactor technologies being developed are unproven and support for them would divert focus on renewables.
TRUMP’S PLEDGE IN IOWA HEATS UP BIOFUELS FIGHT: Trump promised during a trip to Iowa last week that he would personally talk to the EPA about dozens of Renewable Fuel Standard exemption waivers the agency is considering from small oil refiners. Now, both sides of the RFS fight are again ramping up pressure on the president.
The National Biodiesel Board on Monday launched a six-state, two-week radio ad campaign calling on farmers and biofuels producers in those Midwestern states to hold Trump to his pledge to talk to the EPA and to urge him to reject the waivers.
Oil refiners, on the other hand, are calling on Trump to close loopholes in the RFS instead. “[W]e ask that you resist efforts to harm the critical energy infrastructure you have fought so hard to protect during your Presidency under the false premise that doing so will help farmers,” 16 CEOs of small refineries wrote Trump in a letter Monday.
EPA BLAMES FORMER OBAMA OFFICIAL FOR CANCELED PFAS STUDY: EPA Administrator Andrew Wheeler is accusing Judith Enck, a former Obama EPA regional administrator, of “single-handedly” shutting down agency efforts to study emissions of “forever chemicals,” or PFAS (per- and polyfluoroalkyl substances).
For the study, the EPA planned to burn two non-toxic chemicals similar to PFAS at an incinerator in Rahway, New Jersey, to examine whether and how they break down. That would help EPA scientists determine whether incinerators could break down PFAS, which are found in everything from non-stick pans to cheeseburger wrappers. (For a deep dive on the study, see NJ Advance Media’s coverage here.)
Were Rahway residents left in the dark? Yes, and it raises questions about safety, said activists and Enck, who led the region overseeing New Jersey and New York during the Obama administration. The industrial waste company overseeing the incinerator ultimately pulled out of the study late last week.
Wheeler, though, is accusing Enck of politicizing the research. “Due to Enck’s meritless claims, the study has been cancelled to the detriment of science, a better understanding of PFAS, and the protection of public health and the environment,” Wheeler said in a statement.
LAWSUITS START FLOWING OVER TRUMP ANWR DRILLING PLAN: The Gwich’in tribe, along with environmental groups, filed a pair of lawsuits Monday challenging the Trump administration’s final plan to begin selling leases for companies to drill for oil and gas in the Arctic National Wildlife Refuge.
The lawsuits argue the Interior Department’s leasing plan violates the National Environmental Policy Act and the Endangered Species Act by downplaying potential damage to the long-untouched refuge, including to tundra and permafrost.
National Audubon Society, Center for Biological Diversity, the Natural Resources Defense Council and Friends of the Earth were on the second lawsuit, filed in the U.S. District Court of Alaska.
The Rundown
New York Times How decades of racist housing policy left neighborhoods sweltering
Washington Post After storm’s miss, Louisiana and Texas brace for hurricane round two: Laura
Reuters Gas and nuclear industries fight to the end for ‘green’ EU investment label
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