Waiting for Perry: Leaked draft gives us a glimpse into the study he should release

By Jim Marston

It’s been 100 days (and counting) since Secretary Perry ordered the U.S. Department of Energy (DOE) to conduct a 60-day study of the U.S. electricity system. We expect the final report to be issued any day now.

The initial focus of the study was clear: to determine whether renewable energy policies or regulations have accelerated the retirement of coal and nuclear plants. Perry himself admitted the so-called study was intended to reassess “politically driven policies driven by a hostility to coal,” implying he intends to use the study to discriminate against renewables in favor of dirty, expensive coal.

But a bombshell recently hit. A leaked draft of the study seems to contradict Sec. Perry’s pro-coal thesis and rhetoric.

The draft is thoughtful, and it boils down to some conclusions that Sec. Perry’s political appointees – ahem, editors – will be hard pressed to massage into policy recommendations that call for more coal. Namely, America’s grid reliability remains strong with more clean energy and less coal.

Top 5 takeaways

Environmental Defense Fund conducted a detailed analysis of the draft, outlining the top five takeaways that demonstrate a clean grid is a reliable grid. EDF’s analysis can be found here.

1 – “Baseload” resources, as Perry defines them, are not necessary to preserve grid reliability

Sec. Perry refers to coal and nuclear plants as “baseload power plants,” and wants them to appear as critical to grid reliability. But “baseload” is not even a term industry uses to describe reliability.

The draft notes that “baseload” is a dated term and is not a core ingredient of reliability.

“[B]aseload power was useful to a well-functioning grid over the decades from 1960 to 1990, when these plants were initially built. But with technology and market changes, the bulk power system has changed markedly and high-value market and reliability require different services and capabilities to attain high reliability and resilience.”

In other words, America’s energy system is evolving, and coal and nuclear plants aren’t needed like they used to be.


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2 – Coal and nuclear plants have been retiring primarily due to low gas prices and flattened demand

The draft study concludes that many baseload retirements are consistent with observed market forces, stating quite plainly, “Many baseload plant retirements are not premature.” Nor are they the result of regulations:

“Retirements have been due primarily to flattened demand and low electric prices and the inability to compete successfully due to plant age, inefficiency and capital needs rather than regulatory burdens.”

The draft cites outside studies that address the cause of baseload power plant retirements, noting the key role of low natural gas prices and flattened demand.

Conclusion: You can’t blame coal’s woes on renewable energy.

3 – The U.S. grid is operating reliably, with ample resources to meet demand

This quote pretty much says it all: “Most of the common metrics for grid reliability suggest that the grid is in good shape despite the retirement of many baseload power plants.”

But there’s more. Reserve margins – a measure of whether the grid has extra energy capacity to satisfy potential demand – are “comfortably or significantly higher than the levels which would raise a resource adequacy flag or signal potential reliability problems.”

4 – Renewable energy sources like wind or solar can improve grid reliability

The draft includes an entire section named “High levels of wind penetration can be integrated into the grid without harming reliability.”

The reality is, renewables can be – and have already been – integrated into the grid, and reliability remains strong.

The vice president of Texas’ grid operator, ERCOT, himself recently confirmed “We can perform reliably with renewable generation; there are just things you have to do with renewables that you don’t have to do with (conventional) power generation.”

5 – Clean energy can lower costs for customers

The draft carefully points out that future electricity costs are hard to predict. But it suggests a diversified fuel mix, including more renewable energy, can help control costs to customers.

For example, the draft reports that:

  • Coal and nuclear power have become more costly while natural gas has remained at historic lows;
  • Wind and solar generation’s marginal cost is nearly zero; and
  • Trying to keep aging baseload plants “may end up raising rather than lowering the average cost of wholesale electricity for many customers.”

Perhaps most important, the draft notes what polling has shown for years: Americans, over 80% in fact,  want more renewable energy.

Fortunately, wind and solar has significant momentum, regardless of policies. The draft asks, “Will removing renewables subsidies and [renewable portfolio standards] make renewable generation go away (and presumably put less pressure on coal and nuclear plants)?” The answer: “No.”

The real vs. the political

The draft study has real conclusions, which should be included in Perry’s final version. But standing between the draft and the final study is a review by Sec. Perry’s political appointees at DOE. Given the administration’s promise to “bring back coal” and attempts to slash important clean energy and efficiency DOE programs, we anticipate Perry’s final study may look quite different from this initial draft. A DOE spokesperson has already confirmed that large chunks of the draft have been deleted.

Extensive research and analysis supports the initial draft’s conclusions, which you can find on EDF’s website here. If Perry’s final study conflicts with these fact-based findings, the administration’s coal propaganda will be on full display.

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Goodbye, internal combustion! Electric Vehicles are rolling in

By EDF Blogs

By Rory Christian and Larissa Koehler

Electric vehicles (EVs) don’t make much noise on the road, but they’re generating a lot of buzz about the future of this technology and what it means for business and the environment.

Cars, buses, and trucks are the second biggest source of pollution in the U.S. after electricity production. They are responsible for over 26 percent of emissions that adversely affect the health and well-being of the population, and put communities located close to highways and other major thoroughfares at risk. These communities, typically low-income, are often plagued by elevated asthma rates and other pollution-induced health conditions.

When thinking about ways to reduce pollution, EVs can make a world of difference. And, when charged using renewable energy sources, they produce no emissions and can be much cheaper to operate than traditional, internal combustion vehicles. As such, let’s take a look at the global EV market and impacts in the U.S. on the electric grid in two environmentally progressive states ‒ New York and California.

The global market – and future outlook

More and more automakers are shifting their focus to EVs, a market that is expected to grow faster every year. A few examples:

These exciting developments all point to a trend where electric cars are much more than just a niche – indeed, they show that global competition is heating up quickly and that companies around the world see EVs as key to the automobile industry. These movements should not be understated, as it gives a hint of a clean energy future that can’t come fast enough.

EVs on the grid

Overall, strategic deployment of charging stations will be essential to EV growth – drivers need convenient places to charge. What’s more,

EV expansion must be paired with strategies for how best to integrate them without negatively impacting the electric grid.

Here’s what we can do now to prepare for a clean car economy:

  • Chase innovation: Testing out more nascent technologies, such as vehicle-to-grid capabilities, will ultimately help make EV charging more convenient and ensure the electric grid can cleanly and reliably handle a significant uptick in electrified transport.
  • Educate consumers: Utilities must ensure their customers are well-positioned to take advantage of EV benefits by educating them about how their charging behavior can impact the grid and the integration of renewable energy. More specifically, utilities must exercise load management via well-designed rates and other means in order to ensure their customers are charging their vehicles at times when renewables (rather than fossil fuels) are abundant and when the grid can best handle it. By reaching out to their customers through multiple means and languages, utilities can better ensure the robust participation needed in order to bring success.
  • Emphasize vulnerable communities: Plans must genuinely consider benefits to and impacts on communities most likely to be harmed by pollution. Environmental Defense Fund (EDF) recommends a minimum percentage of charging stations be placed in these communities where applicable, and that all projects focus on enhancing transportation electrification in areas positioned to benefit them most.

New York

Earlier this year, New York State committed to the purchase of two thousand electric vehicles by 2025, more than doubling its current fleet of government automobiles.

New York is also doing its share to expand electrification to make it easier for customers to buy and use electric vehicles. The State’s Reforming the Energy Vision (REV) aims to align utility needs with marketplace innovations, and is doing the following:

  • Decentralizing the electric grid so customers can make and buy renewable energy, New York is working toward a future where EVs and less pollution are commonplace.
  • Developing favorable electricity rates to encourage charging of EVs at times when renewable energy is readily available and affordable. This way, EV adoption will benefit the grid and the environment.

Con Edison’s Smart Charge NY program, an early stage effort in New York City,  is paving the way for mainstream EV use; the results will be an example for how other cities can adopt the policies and tools necessary to seamlessly integrate EVs.


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California

With over 300,000 EVs and more than 12,000 charging stations, California leads the nation in clean car sales. Moreover, that number is poised to grow rapidly ‒ California EV sales rose 91 percent in the first quarter of 2017 from the same time last year.

Even in the face of threats from the current Environmental Protection Agency head Scott Pruitt to take away California’s waiver allowing the state to exceed national clean car standards, the Golden State has made clear its progress won’t be stalled anytime soon. State legislators, cities, and agencies have taken a tremendous amount of initiative on EVs, including:

  • The California Air Resources Board (CARB) has reaffirmed its commitment to maintaining stronger vehicle emissions standards.
  • Volkswagen updated its plan for investing $800 million to accelerate electrified transportation in California, with input from CARB.
  • Senate Bill 350 (SB 350) prioritizes widespread transportation electrification.
  • In Los Angeles, half of all municipal vehicle purchases will be electric starting this year, and that share will increase to 80 percent by 2025. The city is also moving forward with a pilot EV ride share program to extend their benefits to communities with fewer car owners.

Moreover, as part of SB 350, investor-owned utilities filed applications with the California Public Utilities Commission (CPUC) for investments in light-duty, medium-duty, and heavy-duty sectors.

The utility plans in particular represent an exciting new opportunity to accelerate electric transportation in all its forms. With planned projects from placing charging infrastructure for passenger EVs in single family homes, to providing car dealers with incentives and education to sell more EVs, to electrifying buses and ship ports – and everything in between – these plans are well-designed to clean the sector most responsible for harmful emissions.

Still, changes to the utility proposals would further strengthen them. EDF recommended to the CPUC that the plans focus more on load management as well as the other key elements listed above.

Forging ahead

Despite obvious benefits, widespread EV adoption around the U.S. faces a number of challenges. For example, some analysts believe that even California will need another 200,000 charging stations to properly serve the number of EVs expected by 2030.

The internal combustion engine has had a long run, but it’s about to burn out. As we work to address domestic barriers to EV adoption, it is important to note that even if it is a global effort, this is a race the U.S. may need to catch up on. As the electric vehicle market continues to flourish, EDF will continue to advocate and make sure environmental benefits follow financial rewards.

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California Models Climate and Air Pollution Action with Balanced Approach

By Quentin Foster

Air pollution visible in downtown Los Angeles | Photo by Diliff, via wikipedia comms

California is once again demonstrating its bold climate leadership. As Washington, D.C. continues to abdicate its role as a climate champion, California is stepping up to extend its landmark cap-and-trade program, address local air pollution, and push California businesses forward toward a cleaner economy.

Environmental Defense Fund strongly supports AB 398 (E. Garcia) and AB 617 (C. Garcia), as well as their authors, Legislative leadership, and the Brown Administration. We commend their vision and initiative on a bill package that addresses the growing threat from climate change and improves public health outcomes by addressing local air pollution in the most impacted neighborhoods.

AB 398: Extending the cap-and-trade program

This bill seeks to extend California’s groundbreaking cap-and-trade program until 2030, with a 2/3 vote. We support this bill for 3 key reasons:

  1. This bill maintains the environmental integrity of California’s cap on emissions. By introducing a price ceiling on allowances, the Air Resources Board with the Legislature’s guidance provides greater certainty on costs. Done poorly, such a ceiling can put environmental outcomes at risk. This proposal addresses that concern by requiring that any excess emissions be made up for by high-integrity emissions reductions outside the cap. This ensures that California does not bust through its emissions cap.
  2. This proposal extends the economic benefits of cap and trade. California has added over a million jobs since cap and trade launched in 2013, and this bill includes important provisions to further develop a green workforce for the 21st century economy. At the same time, cap and trade encourages investments in alternative forms of fuel. This decreases our dependence on fossil fuels, which protects consumers from volatile gas prices.
  3. Extending cap and trade sets a national example for other states to follow. California is on track to meet our 2020 target of reducing emissions to 1990 levels, and the 2030 goal is even more ambitious. We are demonstrating that emissions reduction and a thriving economy can go hand-in-hand. And we will not leave our most vulnerable communities behind.

AB 617: Clean air for California’s most vulnerable communities

The second part of this essential package is an unprecedented air quality bill which seeks to address local air pollution in California’s most impacted neighborhoods. For EDF, these are the 3 main reasons we are committed to supporting this bill:

  1. This measure targets neighborhoods burdened by multiple sources of air pollution. California communities like Richmond, Modesto, or Torrance aren’t polluted by just cars or one refinery – they have many different sources of air pollution. This bill identifies these neighborhoods and focuses monitoring and emissions reduction plans based on burden, rather than source.
  2. Industrial facilities are required to upgrade their technology. There are many facilities that have not been upgraded in decades. This means they emit far more pollution than if current technology were used. This bill requires that industrial sources covered by cap and trade are retrofitted to a standard that reflects technological advances, but are also cost-effective.
  3. This bill increases penalties for big polluters. Many air pollution penalties haven’t been adjusted since the 1970’s. This bill increases these so big polluters no longer have an advantage over facilities that follow the law. This is critically important to hold polluters accountable, especially for the residents who live nearby.

Yes, there is still compromise in politics

California can address climate change without leaving communities behind.

The ability to compromise seems absent from most political arenas these days. The zero-sum strategies of filibusters and government shutdowns are more the norm than a negotiated settlement. However, the California State Senate and Assembly Leadership, along with Governor Brown’s Administration have re-discovered the art of the possible, and isn’t that what politics is all about? They have managed to find the compromise with stakeholders that addresses the twin challenges of climate pollution and air quality.

This package is a path forward that demonstrates to the country and to the world that California can address climate change without leaving communities behind.

There is no silver bullet to accomplish this, despite what we all wish. The environmental community needs businesses to thrive so California’s economy remains strong. Business needs the environmental community to hold them accountable. The Legislature needs all of us to help continue setting the standard on climate policy. We don’t get to take our ball and go home because things aren’t going our way.

As we demonstrate how to address climate change and air pollution, let’s also demonstrate to Washington, D.C. how to compromise. We urge the Legislature to support AB 398 and AB 617.

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Two more rockfish species declared “rebuilt”

By Shems Jud

Photos: Vicky Okimura

Rapid comebacks mean greater fishing opportunities, more sustainable seafood for U.S. markets

EDF’s Pacific team is pleased to share the news that stocks of both Bocaccio and Darkblotched rockfish have been declared rebuilt on the West Coast, well ahead of schedule. Commercial fishermen – who have worked for years to avoid catching the species – will soon be much freer to harvest them and to supply consumers with these beautiful, delicious, sustainable rockfish.

Previously declared overfished, Bocaccio and Darkblotched are among several species that have been under strict rebuilding plans in recent years.  As such, they’ve been among the “constraining species” that fishermen have intentionally avoided catching since 2011, when the trawl fishery’s quota-based catch share management system was implemented. (Fishermen sought to avoid them prior to 2011 also, but under less effective management systems.)

Partly due to the fact that Bocaccio and Darkblotched commingle with many more abundant stocks, the rebuilding plans have required not just cooperation, but real sacrifice from fishermen.

A record of remarkable progress

According to NOAA: “(West Coast) Lingcod was declared rebuilt in 2005, and Widow rockfish in 2012. Both Petrale sole and Canary rockfish were declared rebuilt in 2015. Rebuilding plans remain in place for three remaining overfished species: Cowcod, Pacific Ocean perch, and Yelloweye rockfish. New assessments for Pacific Ocean perch and Yelloweye rockfish will be reviewed this summer and may be adopted in September. Cowcod is expected to be rebuilt by 2019.”

As NOAA said in their announcement, “(Rebuilding) plans required sharp reductions in commercial and recreational fisheries targeting groundfish, which included widespread fishing closures through the establishment of Rockfish Conservation Areas off the West Coast and other measures. Since 2003, managing overfished species through area closures such as the Rockfish Conservation Areas has helped to reduce fishing impacts and rebuild overfished groundfish species. In addition, the groundfish fleet has had to limit fishing for other more abundant species to avoid unintentional catch of the overfished stocks.”

EDF has worked with fishermen for years during this rebuilding process, as they’ve adapted to the new management structure and taken the painful steps necessary to avoid constraining species. They deserve a great deal of the credit for this remarkable conservation win. As Barry Thom, Regional Administrator of NOAA Fisheries West Coast Region put it, “By working together, we’ve brought Bocaccio and Darkblotched rockfish back to where they will again be part of a sustainable West Coast groundfish fishery that creates renewed opportunity for the fishing fleet, as well as more options for seafood consumers.”

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The secret sauce for preventing another Aliso Canyon-sized gas leak in California

By Adam Peltz

More than a year and a half after the Aliso Canyon natural gas storage facility caused more than 100,000 tons of methane to leak into the atmosphere – amounting to be our nation’s largest-ever gas leak,  California regulators continue to labor away at improving the rules  that could prevent another gas storage disaster.

That leak was a wake up call to regulators around the country charged with protecting workers, people and the environment from gas storage facility accidents.  

In early 2016, California implemented some “emergency” standards for the state’s gas storage facilities, and is currently in the process of developing a more permanent solution through a rulemaking with the Division of Oil, Gas and Geothermal Resources (DOGGR), which just wrapped up its public comment period.

It is widely accepted that more oversight and smarter management of gas storage facilities can go a long way to prevent another disaster from happening. Adopting a few key improvements to the leading standards in the current rulemaking will give California the most robust, protective gas storage regulatory program in the United States.

A smart and successful natural gas storage program must include proper risk management and emergency response planning. That’s a lot of the secret sauce right there. These plans should outline the risks each facility faces, the practices and procedures for reducing those risks, and the playbook for dealing with problems. If California gets that right – along with a number of targeted rules on well integrity, monitoring and maintenance — the state will be in good shape to deal with whatever lies ahead.

California can and should be a leader on gas storage regulation in the United States. Many jurisdictions, the federal government included, are looking closely at their gas storage rules in the wake of the Aliso Canyon disaster, and California’s experience will have a huge impact on how this issue is handled at the 400+ gas storage facilities around the country. If California gets this right, it will help reduce safety and environmental risks from gas storage nationwide.

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Global investor touts methane opportunity with oil & gas industry

By Sean Wright

Institutional investors worldwide are increasingly encouraging oil and gas companies to improve and disclose their management strategies to minimize methane risk.

Methane – an invisible, odorless gas and main ingredient in natural gas – is routinely emitted by the global oil and gas industry, posing a reputational and economic threat to portfolios.

Natural gas is widely marketed as a low-carbon fuel because it burns roughly 50 percent cleaner than coal. But this ignores a major problem: methane. Natural gas is almost pure methane, a powerful pollutant that speeds up Earth’s warming when it escapes into the atmosphere.

Last month marked a significant milestone in investor action on the methane issue. The Principles for Responsible Investment (PRI) launched a new initiative representing 35 investors and U.S. $3.8 trillion in assets that will engage with the oil and gas industry across five different continents to improve its methane management and disclosure practices. The PRI initiative complements existing methane engagement efforts focused on the U.S. led by the Interfaith Center on Corporate Responsibility and CERES.

EDF Senior Manager Sean Wright recently sat down with Sylvia van Waveren, a Senior Engagement Specialist with Robeco Institutional Asset Management, a Dutch-based investment firm managing over $160 billion, to discuss the matter and understand why some investors are keen to affect the status quo on methane.

Wright: Why is methane a focus of your engagements? What do you see as the risks of unmanaged methane emissions? 

Sylvia van Waveren, Senior Engagement Specialist, Robeco Institutional Asset Management

van Waveren: Methane is one of the most important drivers of engagement with the oil and gas industry. We invest in oil and gas companies worldwide. A year ago, we started engaging them, specifically on climate change – and within that the methane issue is included.

In the past, methane was viewed as a U.S. shale gas issue, but more recently it has become important in Europe as we learned that methane is a powerful greenhouse gas. So in that sense, we learned a lot from the U.S. discussions and we still do.

I would like to stress that we see the methane issue more as a business opportunity than a risk. What we often say to companies is that methane is a potential revenue source. It would be a waste if companies do not use it. 

Wright: The scope of PRI’s initiative is global, with investors from 3 different continents as far away as Australia and New Zealand, and a plan to engage with companies from the Latin America, Europe, North America and Asia-Pac. What does this level of global collaboration convey about methane emissions? 

van Waveren: I am happy and it is good to see that others have taken up the seriousness of this issue, as well.  Methane is no longer a U.S. only problem. The issue is being raised and discussed in all kinds of geographies.

I’m a firm believer in collective engagements. They can be a powerful force when the issue is not contained within borders. That is the case with greenhouse gases. So yes, I’m happy to see the PRI initiative taking off and I am an active believer in getting this solved and bringing attention to this subject.  


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Wright: In your conversations thus far with companies about methane, what resonates best when making the business case for improving methane management and disclosure?

van Waveren: When we talk about motivation at the company level, I have to be honest, it’s still early days. The European companies are talking in general terms and just now conceptualizing methane policies. If we’re lucky, they have calculated how much methane is part of their greenhouse gas emissions. And if we’re more fortunate, they are producing regional and segregated figures from carbon, but it’s really very meager how motivated the companies are and what triggers them most.

I really feel we should emphasize more with companies to get them motivated and to really look at the seriousness of methane. One issue that is particularly bothersome is that many companies do not know how to calculate, estimate and set targets to reduce methane. It is still a mystery to many of them. That’s why we come in with engagements. We need to keep them sharp on this issue and ask them for their actions, calculations and plans. 

Wright: Who are other important allies that have a role in solving this problem, and why?

van Waveren: We always would like to have an ally in the government. For example, carbon pricing or carbon fixations are all topics that we look for from the government. But in practice, that doesn’t work. Governments sometimes need more time. So we do not always wait for the government. When companies say they will wait for government, we say, “You should take a proactive approach.”

We rely very much on our knowledge that we get from within the sector. We review data analyses and make intermediate reports of scoring. We find best practice solutions and we hold companies accountable. There are also times when we name names. So in that sense, that is how engagement works. The data providers and other organizations with good knowledge and good content on methane – and EDF is certainly one of them – are very instrumental to get the knowledge that we need.

Wright: Can you give me an example of a widespread financial risk facing an industry in the past that was proactively improved by investors leading the charge – similar to this initiative?

van Waveren: More than 20 years ago, we had a greenhouse gas issue – acid rain. Investors helped solve that problem. Because of this, I’m hopeful that investors can also play a positive role in reducing methane.

I would also say the issue of Arctic drilling. Not so long ago, this was top of mind when we talked to our portfolio companies. A lot of companies have now withdrawn from Arctic drilling, especially from offshore Arctic drilling. I think investors were quite successful in sending a clear signal to the industry in a collective way that we didn’t see Arctic drilling as a good process. Maybe profitable – if at all – to the companies, but certainly not for the environment.

Wright: Thank you, Sylvia. We really appreciate your time and your thoughtful answers showing how investors can be part of the solution on methane.

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