GHG

This year has marked a sea change in energy policy, from environmental compliance to transmission pricing. Fortnightly interviews top lawyers to better understand how regulatory developments are affecting the power and gas industries.

The potential for a federal renewable energy standard (RES) and carbon regulation, considered with the effect of state-imposed renewable energy standards, is fueling a strong, but challenging, market for renewable energy. Utilities are competing to sign up the best new projects, the types of renewable technologies available are increasing, and there are various government stimulus programs for energy; yet, the financial markets still are hesitant. Against this backdrop, how should contracts for power from new renewable resources be shaped so that those deals will look as good five, 10 and 15 years after execution as on the day the ink dries?

23 million square miles of tropical oceans daily absorb solar radiation equal in heat content to about 250 billion barrels of oil. Ocean thermal energy conversion technologies convert this solar radiation into electrical power by exploiting the thermal gradient temperature differences between the surface and the depths. This enormous resource merits a closer look as policy makers consider alternative technologies for serving future energy demands.

This summer marked the 40th anniversary of a pivotal event in the environmental movement. On June 22, 1969, the oily surface of the Cuyahoga River caught fire, drawing national attention to the plight of America’s lakes and rivers. However, clean water standards didn’t begin with the Cuyahoga River fire, the EPA or the Clean Water Act. A series of common-law nuisance lawsuits, combined with a patchwork of state laws and (weak) federal statutes, preceded the comprehensive legislation that emerged from the smoke of the Cuyahoga. Today we’re seeing a similar progression in greenhouse gas regulation, with civil suits, state initiatives and marginal federal actions apparently marching toward a national climate policy.

(September 2009) The industry’s best companies are weathering the financial storm reasonably well, with the F40 delivering equity returns in the 14-percent range for fiscal 2008. However, falling sales and rising costs are putting heavy pressure on balance sheets—and on regulatory relationships. Companies that balance customer value and shareholder value will be most likely to thrive in the new normal.

At the moment, the United States is experiencing a glut of natural gas with record underground gas storage inventories and prices around $4/MMBtu, which serves to underscore the new thinking about U.S. natural gas supply—i.e., future gas supplies might be less constrained than earlier studies suggested they would. Given the speed with which the expectations for U.S. natural gas have changed, it’s reasonable to ask how solid is this new thinking about U.S. natural gas supply and what should the role of natural gas be in meeting our long-term energy needs in a carbon-constrained economy?

For the past several months, analysts and pundits have been using the term “the new normal” to describe post-recession economic conditions. The phrase describes a variety of changes, from stock-market returns to personal savings rates, but it boils down to this: After the recession, the economy will go through a soft recovery, and it won’t return to pre-recession levels of financial and market activity in the mid-term future.

The Waxman-Markey bill proposes a federal renewable electricity standard. This standard, combined with state mandates, raises the risk of forest land shortages and higher prices for food and feedstocks.

As federal policy makers push for GHG regulation and transparent markets, the California experience shows what works and what doesn’t work.

In light of coming GHG legislation, price transparency is the key to achieving cleaner generation through the dispatch of lower-carbon sources.