In terms of the political calculus, GHG regulation faces an uncertain future, at least into 2013. And as a flood of cheap gas erodes the perception of an impending environmental crisis,...
The Art of the Plausible
Prospects for clean energy legislation in 2011.
plant efficiency improvements would use annual CO 2 emissions as a metric—requiring that annual CO 2 emissions don’t increase as a result of the efficiency improvements—but wouldn’t allow use of efficiency improvements on a megawatt-hour basis. Thus, some power plant efficiency improvements, such as turbine projects that might result in lower CO 2 emission rates but higher annual emissions, wouldn’t be allowed. As well, new high efficiency supercritical coal plants didn’t qualify under the legislation, 13 nor did other utility power sources such as pumped storage.
In addition, neither bill specifically allows for offsets—such as domestic agriculture or international deforestation credits. Notably, there’s nothing obviously inconsistent with the use of offsets under a clean energy standard since incremental biomass growth provides an offset of greenhouse gas emissions; the carbon reduction that makes biomass power clean doesn’t come from the combustion of biomass, which produces carbon, but rather from sustainable forestry practices in the designated fuel shed. Hence, use of domestic and international GHG offsets might become part of the CES debate.
In selecting eligible clean energy resources, there are both policy drivers, and political and cost drivers. In addition to the issues affecting how to define qualifying sources, time frames and percentage requirements, others include whether adding natural gas will crowd out other technologies; whether credit should be given for retirement of coal units; and whether both provisions would ease the transition toward, and costs of, achieving the clean energy mandate.
The political issues are relatively straightforward and are largely regional.
One reason there’s no national RES in place today is because thus far it has been a state-level decision, and states in the Southeast and lower Midwest have far fewer renewable resources available to them than other states, and therefore will incur higher costs to comply—or will have to send ratepayer money to other states to buy credits. Hence, selecting a broader array of qualifying clean technologies is intended, in part, to mitigate these regional disparities.
In addition, coal-state legislators (Republican and Democrat alike) require measures to promote clean coal and ease the transition to a cleaner coal future. Thus, the addition of clean coal technologies, which could include, in addition to CCS, credit for coal plant retirements and credit for coal plant efficiency upgrades, might be necessary to address these politics. In addition, many Republicans and a number of moderate Democrats have voiced strong support for nuclear—a position that might be revisited after the Fukushima-Daiichi nuclear plant incident in Japan—so including that technology, as well as other nuclear incentives, might also help address some of these issues.
Indeed, from a broader perspective, it would seem that a big tent of qualifying technologies would have political advantages because everybody gets something. In addition, the bigger the tent, the less likely it will be that the legislation itself picks winners and losers, since the market will select the ultimate mix of technologies. However, federal energy politics isn’t so simple. Many Democrats will want to see strong renewable legislation, while proponents of capital intensive technologies such as nuclear or CCS will be concerned